The Analytical Overview of the Main Currency Pairs on 2022.11.09

The EUR/USD currency pair

• Prev Open: 1.0016
• Prev Close: 1.0072
• % chg. over the last day: +0.56 %

The preliminary results of the US Congressional elections show a significant Republican lead, which means that the US is close to a government split. This may lead to a rise in the dollar index, as the new Congress will want to deal with inflation more quickly and push the US Federal Reserve to raise interest rates even more aggressively. Republicans are willing to accept a recession, but only if it is quick. Therefore, once inflation begins to decline, the US Fed may return to stimulative methods for the economy.

• Support levels: 1.0012, 0.9946, 0.9838, 0.9794, 0.9755, 0.9702, 0.9601
• Resistance levels: 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 still bullish. The price is trading above the moving averages. The MACD indicator is positive, but there is a divergence, indicating the weakness of the buyers and approaching a corrective movement. Under such market conditions, buy trades should be considered from the support level of 0.9946 or 0.9838, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0111, but also with confirmation.

Alternative scenario: if the price breaks down through the support level of 0.9838 and fixes below it, the downtrend will likely resume.

• – FOMC Member Williams Speaks at 10:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.1514
• Prev Close: 1.1544
• % chg. over the last day: +0.26 %

Bank of England Chief Economist Huw Pill said that the sharp decline in the UK labor force is putting upward pressure on inflation and points to further interest rate hikes. The shrinking labor force is one of the reasons Bank of England policymakers point to why they are likely to raise the benchmark lending interest rate above 3%.

• Support levels: 1.1491, 1.1348, 1.1230, 1.1172, 1.1093, 1.0915, 1.0817
• Resistance levels: 1.1643, 1.1698, 1.1816, 1.1901

From the technical point of view, the GBP/USD currency pair trend on the hourly time frame is bullish. The price is trading above the moving averages. The MACD indicator is positive, but a divergence has appeared, which indicates that further growth is limited. Under such market conditions, buy trades are better to look for on intraday time frames with short targets. Long trades can be considered from the support level of 1.1491 or 1.1348. Sell trades are best sought from the resistance level of 1.1643 but better with confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down of the 1.1231 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 146.63
• Prev Close: 145.66
• % chg. over the last day: -0.67 %

Japan’s current account surplus hit an eight-year low in fiscal 1 due to a record trade deficit caused by a sharp rise in imports and a sharp fall in the yen. The country’s trade deficit stood at 9.23 trillion yen after imports rose twice as fast as exports. The sharp decline underscores a country’s vulnerability that relies heavily on imports. The government is counting on a rebound in inbound tourism, as the weak yen will make travel to Japan and shopping in the country cheaper for foreign tourists.

• Support levels: 145.50, 144.91, 144.19, 143.00
• Resistance levels: 146.24, 147.34, 148.82, 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 below the moving average levels. The MACD indicator is in the negative zone, and sellers’ pressure temporarily prevails. Under such market conditions, buy trades can be searched for on intraday time frames from the support level of 145.50, but with confirmation in the form of a reverse initiative. Sell deals can be searched from the 146.24 or 147.34 resistance level, but only with additional confirmation.

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

The USD/CAD currency pair

• Prev Open: 1.3493
• Prev Close: 1.3426
• % chg. over the last day: -0.50 %

The Canadian dollar is a commodity currency, so it is highly dependent not only on the monetary policy of the Bank of Canada but also on the dollar index and oil prices. Oil prices dropped sharply yesterday, which led to weakness in the Canadian currency. Interest rates in the US and Canada are at about the same level, so the imbalance in USD/CAD pricing will mainly come from the dynamics of oil prices and the dollar index.

• Support levels: 1.3486, 1.3400
• Resistance levels: 1.3608, 1.3682, 1.3776, 1.3855, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The MACD indicator is negative now, but there is a divergence, which indicates the weakness of the sellers. The best way to sell is to consider the resistance level of 1.3479, but only after the additional confirmation. Buy trades should be considered on the lower time frames from the support level 1.3297, but with additional confirmation.

Alternative scenario: if the price breaks out and consolidates above the resistance level of 1.3682, the uptrend will likely resume.

• – US Crude Oil Reserves (w/w) at 17:30 (GMT+2).