The Analytical Overview of the Main Currency Pairs on 2022.12.02

The EUR/USD currency pair

• Prev Open: 1.0405
• Prev Close: 1.0525
• % chg. over the last day: +1.15 %

Eurozone manufacturing PMI showed a decline from 47.3 to 47.1. Data for European countries were mixed. Germany posted a decline from 46.7 to 46.2, France showed a decline from 49.1 to 48.3, but Spain’s PMI rose from 44.7 to 45.7, and Italy also saw an increase from 46.5 to 48.4. The unemployment rate in Europe declined from 6.6% to 6.5%. A strong labor market is room for the ECB to act more aggressively, but a drop in overall business activity is a sign of rate pressure on the economy. Therefore, the ECB is likely to choose a less aggressive path, especially given the fact that there are signs of slowing inflation.

• Support levels: 1.04554, 1.0361, 1.0332, 1.0284, 1.0193, 1.0092, 1.0043, 0.9968
• Resistance levels: 1.0504, 1.0562

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, without any signs of reversal but with signs of overbuying. Buy trades are best considered from the support level of 1.0455, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0504 or 1.0562, but it is better with confirmation in the form of reverse initiative.

Alternative scenario: if the price breaks down through the support level of 1.0284 and fixes below it, the downtrend will likely resume.

• – Eurozone ECB President Lagarde Speaks at 04:40 (GMT+3);
• – Eurozone Producer Price Index (m/m) at 12:00 (GMT+3);
• – US Nonfarm Payrolls (m/m) at 15:30 (GMT+3);
• – US Unemployment Rate (m/m) at 15:30 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2055
• Prev Close: 1.2255
• % chg. over the last day: +1.65 %

The UK Manufacturing Business Activity Index is starting to show small signs of recovery. Whether this is a temporary spike in activity in the run-up to the holidays or whether it is consistent growth, data will show next month. For now, the British pound is rising on the back of a declining dollar index. Data from retail traders show that about 35% have a net long position, and the ratio of short to long traders is 1.87:1. Usually, analysts take the opposite view of the “crowd” sentiment. The fact that traders are closing short positions suggests that GBP/USD prices may continue to rise.

• Support levels: 1.2154, 1.2016, 1.1964, 1.1684, 1.1476, 1.1418
• Resistance levels: 1.2254, 1.2381, 1.2431

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 levels MACD indicator is in the positive zone, and there are signs of overbuying. Under such market conditions, it is better to look for buy deals from the support level of 1.2154, but with confirmation. It is better to look for sell deals on intraday time frames from the resistance level of 1.2254, but it is also better with confirmation because the level has already been tested.

Alternative scenario: if the price breaks down of the 1.1900 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 138.02
• Prev Close: 135.33
• % chg. over the last day: -1.98 %

Bank of Japan Governor Kuroda said Friday that the bank expects inflation in Japan to start slowing in 2023. That suggests the Bank of Japan won’t change its soft monetary policy until at least the spring of 2023, when Mr. Kuroda’s term ends. The Japanese yen is now strengthening only at the expense of the dollar index on the back of the fact that the Fed will slow the pace of interest rate hikes.

• Support levels: 135.20, 133.53
• Resistance levels: 137.65, 139.09, 140.75, 143.17, 145.16

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The MACD indicator is in the negative zone, but on the higher time frames, a divergence is formed, which indicates a certain weakness of the sellers. Under such market conditions, buy trades can be sought on the intraday time frames from the support level of 135.20, but only with confirmation. There is none at the moment. Sell deals can be sought from the resistance level of 136.65 or 139.09, provided there is a reverse reaction.

Alternative scenario: If the price fixes above 140.75, the uptrend will likely resume.

• – Japan BoJ Kuroda Speaks at 03:30 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.3424
• Prev Close: 1.3431
• % chg. over the last day: +0.05 %

Canada’s manufacturing economy remained in contractionary territory in November, but only because the rate of decline in output and new orders slowed compared to October. But overall, there are signs of an improving business climate. The Industrial PMI rose from 48.8 to 49.6 and is as close to 50 as possible. Values above 50 mean that the economy is recovering.

• Support levels: 1.3386, 1.3360, 1.3281, 1.3212
• Resistance levels: 1.3479, 1.3522, 1.3658, 1.3682, 1.3776, 1.3855

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish. But the price is close to changing the priority. The MACD indicator is in the negative zone, but sellers’ pressure is weak. The deals to buy should be considered on the lower time frames from the support level of 1.3386 or 1.3360, but with additional confirmation. For sell deals, it is better to consider the resistance level of 1.3479 but with confirmation in the form of reverse initiative.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3386, the downtrend will likely resume.

• – Canada Unemployment Rate (m/m) at 15:30 (GMT+3).