The Analytical Overview of the Main Currency Pairs on 2022.11.11

The EUR/USD currency pair

• Prev Open: 1.0008
• Prev Close: 1.0207
• % chg. over the last day: +1.97 %

The US Consumer Price Index annualized declined from 8.2% to 7.9% (expectations of 8.0%). Core inflation, which excludes food and energy, also declined from 6.6% to 6.3% (6.5% expected). The decline in inflation figures indicates that the peak of inflation is likely to be over, which means the US Fed can reduce the pace of interest rate hikes so as not to put additional pressure on the economy. The probability of a 0.5% rate hike in December rose to 81% (vs. 56% the day before). Against this backdrop, the dollar Index fell sharply against the major basket of currencies. Investors have partially regained interest in risky assets, and this trend may continue at least until the end of the year.

• Support levels: 1.0092, 1.0043, 0.9993, 0.9838, 0.9794, 0.9755, 0.9702, 0.9601
• Resistance levels: 1.0238, 1.0286, 1.0363

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, and the MACD indicator is in the positive zone, but the price has deviated strongly from the averages. For buy deals, it is best to wait for a corrective movement to the support levels of 1.0043 or 0.9993, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0238, but also better confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down through the support level of 0.9945 and fixes below it, the downtrend will likely resume.

• – Eurozone German Consumer Price Index (m/m) at 09:00 (GMT+2);
• – Eurozone Economic Forecasts (m/m) at 12:00 (GMT+2);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.1356
• Prev Close: 1.1712
• % chg. over the last day: +3.13 %

The Bank of England outlined demand-oriented plans for a timely and orderly wind-down of recent securities purchases to ensure financial stability. This is positive for the British currency, especially against the backdrop of a falling dollar Index. Today, the UK will also release its Q3 GDP data as well as industrial production data. Analysts expect the economy to contract and other economic indicators to decline. If the expectations align with the actual data, the GBP might see a sell-off.

• Support levels: 1.1477, 1.1417, 1.1231, 1.1172, 1.1093, 1.0915, 1.0817
• Resistance levels: 1.1760, 1.1848, 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 moving averages. The MACD indicator has become positive, but there are signs of overbuying. Under such market conditions, it is better to look for buy deals after a slight correction to the support levels of 1.1477 or 1.1417. It is better to look for sell deals from the resistance level of 1.1760, but it is better with a confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down of the 1.1345 support level and fixes below it, the downtrend will likely resume.

• – UK GDP (q/q) at 09:00 (GMT+2);
• – UK Industrial Production (m/m) at 09:00 (GMT+2);
• – UK Manufacturing Production (m/m) at 09:00 (GMT+2).

The USD/JPY currency pair

• Prev Open: 145.45
• Prev Close: 140.94
• % chg. over the last day: -3.19 %

The Japanese yen strengthened sharply yesterday as the dollar Index fell. Falling inflation in the US raised hopes for a less aggressive rate hike by the Federal Reserve, which led to the dollar selling off and buying riskier assets such as the yen. But even as the pace of interest rate increases slows, the interest rate differential between the US Federal Reserve and the Bank of Japan will continue to widen as the BoJ keeps a loose monetary policy without raising rates. And this difference will still put negative pressure on the Japanese currency in the mid-term perspective.

• Support levels: 140.60, 139.61, 138.78
• Resistance levels: 143.17, 145.16, 146.06, 147.34, 148.82, 150.00

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 averages. The MACD indicator is deeply negative, there are signs of overselling, plus the price is near the support level. Under such market conditions, buy trades can be sought on intraday time frames from the support level of 140.60, but only with confirmation in the form of reverse initiative. Sell deals can be searched from the resistance level of 143.17, but only with additional confirmation.

Alternative scenario: If the price fixes above 146.06, the uptrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3526
• Prev Close: 1.3319
• % chg. over the last day: -1.55 %

The Governor of the Bank of Canada indicated in his speech yesterday that the Canadian labor market remains very overheated. The Bank of Canada is now in a very similar situation to the US Fed, with the only exception that Canada’s GDP is still showing growth. Inflation is falling in both Canada and the United States, and interest rates are about the same. The only imbalance is created by oil prices, as the Canadian dollar is a commodity currency.

• Support levels: 1.3297, 1.3212
• Resistance levels: 1.3508, 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 in the negative zone, but there is a divergence, and the price is in front of the support level. The best way to sell is to consider the resistance level of 1.3508. Still, there is a lot of space before this level, so buy trades are very appropriate. They should be considered on the lower time frames from the support level of 1.3297, but with an additional confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks out and consolidates above the resistance level of 1.3607, the uptrend will likely resume.