The Analytical Overview of the Main Currency Pairs on 2022.10.26

The EUR/USD currency pair

• Prev Open: 0.9872
• Prev Close: 0.9961
• % chg. over the last day: +0.90 %

In Germany, the IFO Business Activity Index declined for the fifth month in a row to 84.3 points from a revised 84.4 points in September. But despite the decline, there are signs of stabilization. Although investor expectations have slightly improved for Germany and Europe as a whole, the current component of the assessment is still weak. Germany’s Q3 GDP data will be released later in the week. Analysts expect the economy to contract as companies and households are increasingly affected by higher energy bills and continued high inflation, adjusting consumption and investment.

• Support levels: 0.9897, 0.9873, 0.9835, 0.9755, 0.9601
• Resistance levels: 0.9961, 1.0058, 1.0111, 1.0162, 1.0230

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages. The MACD indicator is in the positive zone, and the buyers’ pressure remains. Under such market conditions, buy trades should be considered from the support level of 0.9897 or 0.9873, but with additional confirmation in the form of reverse initiative. Sells deals may be considered from the resistance level of 0.9961 or 1.0058, but also with confirmation.

Alternative scenario: if the price breaks down through the support level of 0.9755 and fixes below it, the downtrend will likely resume.

• – German Ifo Business Climate (m/m) at 11:00 (GMT+3);
• – US CB Consumer Confidence (m/m) at 17:00 (GMT+3);
• – FOMC Member Waller Speaks at 20:55 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1275
• Prev Close: 1.1465
• % chg. over the last day: +1.69 %

In his first speech as British Prime Minister, Rishi Sunak promised to right the wrongs of the outgoing administration but hinted that “difficult decisions” lie ahead. This is not surprising since Britain is facing serious fundamental problems: inflation is at a 40-year high, the economy is falling, and there are an energy crisis and rising heating and energy bills. Investors are now turning their attention to the budget proposal due later this month and the upcoming Bank of England meeting on November 3.

• Support levels: 1.1382, 1.1338, 1.1172, 1.1093, 1.0915, 1.0817
• Resistance levels: 1.1478, 1.1693, 1.1816, 1.1901

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price is trading above the levels of the moving averages. The MACD indicator has become positive, and there is still buying pressure. Under such market conditions, buy trades can be considered from the support level of 1.1382 or 1.1337, but better after confirmation. Sell trades are best to look for on intraday time frames, the nearest resistance level is 1.1478, but it is also better with confirmation since the level has already been tested.

Alternative scenario: if the price breaks down of the 1.1172 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 148.88
• Prev Close: 147.94
• % chg. over the last day: -0.63 %

According to estimates by broker Central Tanshi Co. the Japanese authorities have spent as much as 5.5 trillion yen (almost $37 billion) to support the yen. Analysts are sure that if the yield of inflation-adjusted government bonds does not improve, this step will only have a temporary effect, as the divergent policies of the Bank of Japan and the US Federal Reserve lead to an increase in the interest rate differential, which is very negative for the Japanese currency. However, BoJ governor Kuroda said last week that the central bank would keep monetary policy soft for at least the rest of the year.

• Support levels: 146.63, 145.88, 144.91, 144.16, 143.00
• Resistance levels: 148.64, 150.00, 151.05

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish despite the currency intervention. The price is trading below the levels of the moving averages. The MACD indicator has become negative, and there is slight sellers’ pressure. Under such market conditions, buy trades can be sought on intraday time frames from the support level of 146.63, but with confirmation. Sell deals can be searched from a resistance level of 148.64, but only with additional confirmation in the form of a reverse initiative.

Alternative scenario: If the price fixes below 145.88, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3705
• Prev Close: 1.3606
• % chg. over the last day: -0.72 %

The central Bank of Canada will hold a monetary policy and interest rate meeting today. Analysts expect the Bank of Canada to raise the rate by 0.75%, although some experts think the Bank of Canada might raise the rate by 0.5% as the core inflation is growing, the overall consumer inflation has been falling for three months in a row. As a result, the Bank of Canada might need to take a smaller step to avoid “plunging” the economy into a recession.

• Support levels: 1.3583, 1.3535, 1.3454
• Resistance levels: 1.3678, 1.3795, 1.3855, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bearish. The price has consolidated below the priority level and traded below the moving averages. The MACD indicator has become negative, but there is a divergence, indicating the sellers’ weakness. The best way to sell is to consider the resistance level of 1.3678, but only after additional confirmation in the form of reverse initiative. Buy trades should be considered on the lower time frames from the support level of 1.3583, but it is also better after confirmation.

Alternative scenario: if the price breaks out and consolidates above the resistance level of 1.3855, the uptrend will likely resume.