The Analytical Overview of the Main Currency Pairs on 2022.10.31

The EUR/USD currency pair

• Prev Open: 0.9963
• Prev Close: 0.9964
• % chg. over the last day: +0.01 %

Eurozone’s inflation data will be released today. General inflation is expected to hit a new high again, while core inflation (excluding energy and food prices) will remain about the same. Third-quarter GDP data will also be released and is expected to show modest growth. Still, most economists believe the bloc economy will enter the contractionary territory in the fourth quarter.

• Support levels: 0.9897, 0.9873, 0.9835, 0.9755, 0.9601
• Resistance levels: 1.0055, 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 has dropped below the average lines, but the correction is close to the end. The MACD indicator is in the negative zone, but sellers’ pressure is weak due to divergence. 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. Sell deals may be considered from the resistance level of 1.0055, but also with confirmation.

Alternative scenario: if the price breaks down through the support level of 0.9834 and fixes below it, the downtrend will likely resume.

• – German Retail Sales (m/m) at 09:00 (GMT+2);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+2);
• – Eurozone GDP (q/q) at 12:00 (GMT+2);
• – US Chicago PMI (m/m) at 15:45 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.1557
• Prev Close: 1.1609
• % chg. over the last day: +0.45 %

Most economists believe that the turmoil in the British market is largely solely due to British policy, not to a tightening of Fed policy and a strengthening of the dollar. However, the new UK government is creating positive sentiment for investors, temporarily returning confidence in the British currency. This positive sentiment will likely last at least until November 17, when the new budget and exit plan will be released.

• Support levels: 1.1467, 1.1337, 1.1172, 1.1093, 1.0915, 1.0817
• Resistance levels: 1.1698, 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 at the level of the moving averages. The MACD indicator has become inactive, and buyers’ pressure remains. Under such market conditions, buy trades can be considered from the support level of 1.1467 or 1.1337, but better after confirmation. Sell trades are best to look for on intraday time frames, the nearest resistance level is 1.1698, but it is also better with confirmation in the form of a reverse initiative.

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: 146.26
• Prev Close: 147.46
• % chg. over the last day: +0.82 %

The Japanese yen declined against the dollar on Friday after the Bank of Japan kept its monetary policy and supported ultra-low interest rates again, while the dollar strengthened after US data showed that the core PCE Index remained at its peak. Bank of Japan Governor Haruhiko Kuroda said that Japan will not raise the rates and that the country’s inflation rate will probably not reach the 2% target for many years. Kuroda also rejected the notion that the Bank of Japan’s yield ceiling was to blame for the yen’s recent sharp decline, reinforcing the view that the Central Bank will not use rate hikes to support the currency anytime soon. With the US Federal Reserve raising interest rates once again this week, pressure on the Japanese currency will resume.

• Support levels: 146.64, 145.50, 144.91, 144.19, 143.00
• Resistance levels: : 148.64, 147.75, 148.64, 148.64, 150.00, 151.05

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price is trading at the level of the moving averages. The MACD indicator has become positive, and buyers’ pressure is coming back. Under such market conditions, buy trades may be sought on intraday time frames from the support of 146.64 or 145.50. Sell deals can be sought from the resistance level of 148.64, but only with additional confirmation.

Alternative scenario: If the price fixes above 150.00, the uptrend will likely resume.

• – Japan Industrial Production (m/m) at 01:50 (GMT+2);
• – Japan Retail Sales (m/m) at 01:50 (GMT+2).

The USD/CAD currency pair

• Prev Open: 1.3561
• Prev Close: 1.3604
• % chg. over the last day: +0.32 %

Canada’s real gross domestic product (GDP) rose by 0.1% in September after a slight (+0.1%) increase in August. Growth in service-producing industries (+0.3%) was partially offset by a decline in goods-producing industries (-0.3%). Thus, although the Canadian economy is not showing rapid growth, it is not pointing to contraction either. Lower inflation will allow the Bank of Canada to be more flexible in its monetary policy planning. The Bank of Canada has already slowed the pace of interest rate increases to ease pressure on economic indicators.

• Support levels: 1.3542, 1.35000, 1.3454
• Resistance levels: 1.3597, 1.3679, 1.3795, 1.3855, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The price is trading at the level of moving averages, wide-volatility balance is formed. The MACD indicator has become positive, there is a slight buying pressure. The best way to sell is to consider the resistance level of 1.3679, but only after additional confirmation in the form of a reverse initiative. Buy trades should be considered on the lower time frames from the support level of 1.3542, but it is better after confirmation.

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