The Analytical Overview of the Main Currency Pairs on 2022.12.08

The EUR/USD currency pair

• Prev Open: 1.0461
• Prev Close: 1.0505
• % chg. over the last day: +0.42 %

European Central Bank spokesman Kazimir pointed out yesterday that the inflation figure alone is not enough to slow rates down, so the ECB has plenty of “reasons” to keep tightening. Kazimir is considered among the most hawkish spokespeople and favors a 75 bps rate hike. Also, Kazimir is not convinced that Eurozone inflation has peaked but believes that the Eurozone recession will be short.

• Support levels: 1.0483, 1.0361, 1.0332, 1.0284, 1.0193
• Resistance levels: 1.0562, 1.0610

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading at the level of the moving averages, the MACD indicator is positive again, and buying pressure is coming back. Buy trades are best considered from support levels of 1.0483, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0562, but better with confirmation in the form of reverse initiative, as the price may react to the border of the inclined descending channel.

Alternative scenario: if the price breaks down through the support level of 1.0332 and fixes below it, the downtrend will likely resume.

• – Eurozone ECB President Lagarde Speaks at 14:00 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2134
• Prev Close: 1.2208
• % chg. over the last day: +0.61 %

UK Chancellor of the Exchequer Jeremy Hunt is expected to unveil a series of reforms later this week that will help make London more competitive. The new chancellor wants to reduce cap rules for Britain’s biggest banks and adjust Solvency II rules to make the insurance sector more competitive. Next week, a host of major central banks will announce their latest monetary policy decisions ahead of the Christmas break. The Bank of England is expected to raise its interest rate by 0.5%.

• Support levels: 1.2117, 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 GBP/USD currency pair trend on the hourly time frame is bullish. The price is trading at the level of the moving averages. The MACD indicator has returned to the positive zone, and there is a slight buying pressure inside the day. Under such market conditions, it is better to look for buy deals from the support level of 1.2127 but with confirmation because the level has already been tested. Sell trades are best looked for on intraday time frames from resistance levels of 1.2254, but they are also better with confirmation in the form of a reverse initiative or a false breakout.

Alternative scenario: if the price breaks down of the 1.1965 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 136.95
• Prev Close: 136.58
• % chg. over the last day: -0.27 %

Japan’s economy shrank at an annualized rate of 0.8% in real terms over the last quarter, down from 1.2% last quarter. Inflation-adjusted real gross domestic product declined by 0.2% on a quarterly basis. There was a sharp increase in imports in the July-September quarter due to higher energy prices and a sharp weakening of the yen, which inflated the value of imported goods. The increase in imports has a negative impact on GDP, which measures the total value of goods and services produced in a country.

• Support levels: 135.34, 133.53
• Resistance levels: 137.15, 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 has become inactive, and the price forms a flat structure. Under such market conditions, buy trades can be sought on intraday time frames from the support level of 135.34 or from the uptrend line, but only with confirmation. Sell deals can be sought from the resistance level of 137.15, provided there is a reverse reaction and a change in the structure on the intraday time frames.

Alternative scenario: If the price fixes above 139.08, the uptrend will likely resume.

• – Japan GDP (q/q) at 01:50 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.3648
• Prev Close: 1.3652
• % chg. over the last day: +0.03 %

The Bank of Canada went for a more aggressive rate hike of 50 bps, although analysts had expected a 25 bps increase. The Bank of Canada’s overnight rate is now 4.25%, the highest since 2008. The Bank of Canada and the Reserve Bank of New Zealand currently hold the highest rates of any major economy. The statement indicates that inflation growth has been more robust than expected, while Canada’s labor market remains “tight” and the economy continues to operate in excess demand. Nevertheless, there is growing evidence that monetary tightening is holding back domestic demand, citing slowing consumer spending growth and a weakening housing market.

• Support levels: 1.3637, 1.3520, 1.3438, 1.3386, 1.3360, 1.3281, 1.3212
• Resistance levels: 1.3682, 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. The price is trading above the moving averages. But the MACD indicator shows a strong divergence, and there is a change in the structure of the lower time frames. Buy trades should be considered after a slight pullback from the support level of 1.3637, but with additional confirmation. For sell deals, it is better to consider the resistance level of 1.3683 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.