The Analytical Overview of the Main Currency Pairs on 2022.12.09

The EUR/USD currency pair

• Prev Open: 1.0504
• Prev Close: 1.0554
• % chg. over the last day: +0.47 %

Initial jobless claims jumped to the highest level since February, indicating that unemployed people need more time to find work. These are the first signs that the US labor market is beginning to “cool down,” which will affect the Fed’s monetary policy toward slowing the rate hikes. The end of the tightening cycle is close.

• Support levels: 1.0483, 1.0361, 1.0332, 1.0284, 1.0193
• Resistance levels: 1.0584, 1.0610

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading above the moving average lines, the MACD indicator is positive again, and buyers’ pressure remains. But now that the price has reached the resistance level, a pullback is possible. It is better to consider buy deals from the support level of 1.0483 but with additional confirmation. Sell deals can be considered from the resistance level of 1.0584, but it is better with confirmation in the form of reverse initiative.

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

• – US Producer Price Index (m/m) at 15:30 (GMT+3);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.2199
• Prev Close: 1.2236
• % chg. over the last day: +0.30 %

The Bank of England will raise the interest rate next week. Analysts are leaning that it will be a 50 bps increase, raising the bank rate to 3.50%. Further, the Bank of England is projected to add another 50 basis points in the first quarter of 2023 and 25 basis points in the second quarter, with medians showing that the bank rate will peak at 4.25%. The UK is almost certainly headed for recession, with economists giving an average 85% chance of a recession within a year. Quarterly forecasts suggest that the economy will contract by 0.4% this year, which fits the technical definition of a recession.

• Support levels: 1.2177, 1.2016, 1.1964, 1.1684, 1.1476, 1.1418
• Resistance levels: 1.2279, 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 average lines. The MACD indicator returned to the positive zone, and there is a slight buying pressure inside the day. Under such market conditions, buy trades are better to look for from the support level of 1.2177, but with confirmation on intraday time frames. Sell trades are best looked for from the resistance level of 1.2279 but also better with confirmation in the form of a reverse initiative or a false breakout.

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

The USD/JPY currency pair

• Prev Open: 136.64
• Prev Close: 136.67
• % chg. over the last day: +0.02 %

According to the Japan Foreign Trade Council, Japan’s exports and imports hit a record high in fiscal 2022 in value terms after rising energy prices and a weaker yen. The country’s trade balance is expected to be negative for the third consecutive year. Imports and exports will rise only slightly, while in value terms, they will both be markedly higher due to higher prices. This suggests that the Bank of Japan will continue to stimulate the economy.

• Support levels: 135.33, 133.53
• Resistance levels: 137.42, 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 negative, and sellers’ pressure is increasing. Sell deals can be looked for from the resistance level of 137.24, provided that there is a reverse reaction and change in the structure on the intraday time frames. Buy trades are best considered on intraday time frames from the support level of 135.33, but only with confirmation.

Alternative scenario: If the price fixes above 138.00, the uptrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3654
• Prev Close: 1.3591
• % chg. over the last day: -0.46 %

The Bank of Canada made it clear this week that the price appreciation cycle is coming to an end as serious signs of slowing economic growth are emerging. The Canadian dollar is a commodity currency, so it faces further pressure as oil prices continue to decline, hitting new lows since the beginning of the year amid demand and recession fears. This has led investors to return to safe-haven assets such as the US dollar and gold.

• Support levels: 1.3518, 1.3438, 1.3386, 1.3360, 1.3281, 1.3212
• Resistance levels: 1.3658, 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. But the price is trading below the moving averages, and the MACD indicator has become negative. The price is correcting. Buy trades should be considered after a slight pullback from the support level of 1.3518 or 1.3438, but with additional confirmation. For sell deals, it is best to consider the resistance level of 1.3658 but with confirmation in the form of reverse.

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