The Analytical Overview of the Main Currency Pairs on 2022.12.12

The EUR/USD currency pair

• Prev Open: 1.0555
• Prev Close: 1.0532
• % chg. over the last day: -0.21 %

This week, the ECB will hold its last monetary policy meeting of the year. Analysts expect the ECB to raise the interest rate by another 50 basis points. But the main focus of investors right now is not on the size of the rate hike but on the final rate level and what the rate difference will be between the US Fed and the ECB. The bigger the difference between the two, the stronger the dollar index against the euro.

• 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. But at the moment, the price is trading below the moving averages, and the MACD indicator has become negative. On the intraday time frames, the sellers have taken over the initiative. Under such market conditions, buy trades are best considered from the support level of 1.0483 but with additional confirmation. Sell deals can be considered from the resistance level of 1.0584, but better with a confirmation in the form of a reverse initiative or a false breakout, as the level has already been tested.

Alternative scenario: if the price breaks down through the support level of 1.0446 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

• Prev Open: 1.2231
• Prev Close: 1.2266
• % chg. over the last day: +0.28 %

The UK government on Friday announced sweeping financial regulatory reforms that, according to Jeremy Hunt, will change the EU laws that have prevented the country from developing normally after Brexit. The package of 30 measures includes easing a rule requiring banks to separate their retail operations from their investment units. The changes announced in the package, dubbed the “Edinburgh Reforms,” also include a review of short-selling rules, stock exchange listings of companies, insurers’ balance sheets, and real estate investment funds. Treasury Secretary Jeremy Hunt said he wants to ensure Britain’s status as “one of the most open, dynamic, and competitive financial services centers in the world.”

• Support levels: 1.2177, 1.2024, 1.1964, 1.1684, 1.1476, 1.1418
• Resistance levels: 1.2279, 1.2304, 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 become inactive. Under such market conditions, it is better to look for buy deals 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 1.2100 support level and fixes below it, the downtrend will likely resume.

• – UK GDP (m/m) 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: 136.68
• Prev Close: 136.58
• % chg. over the last day: -0.07 %

The Japanese Yen will now be completely dependent on the Dollar Index, as the divergent policies of the Japanese central banks and the US Federal Reserve leave no chance for the yen. Since a rate hike from the Fed on Wednesday is largely seen as a foregone conclusion, investors are focused on the Fed’s projections regarding the final rate point. Therefore, fundamentally, USD/JPY quotes are prone to further growth.

• 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 is positive again, and the buyers’ pressure on the intraday time frames is increasing. Sell deals may be looked for from the resistance level of 137.24, provided that there is a reverse reaction. 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: 1.3590
• Prev Close: 1.3645
• % chg. over the last day: +0.40 %

The Canadian dollar is a commodity currency. Falling oil prices last week caused the Canadian dollar to fall against other currencies, especially against the US dollar. On the one hand, this is a negative sign. On the other hand, a decrease in oil prices will have a downward effect on inflation, leading to an increase in production figures. Currently, the Bank of Canada keeps the rate higher than the US Federal Reserve and the ECB, so the Canadian dollar has a solid fundamental basis.

• Support levels: 1.3621, 1.3518, 1.3438, 1.3386, 1.3360, 1.3281, 1.3212
• Resistance levels: 1.3690, 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, and the MACD indicator is in the positive zone. But the price is in front of the resistance level. Under such market conditions, buy trades should be considered after a slight pullback to the support level of 1.3621, but with additional confirmation. For sell deals, it is best to consider the resistance level of 1.3690 but with a confirmation in the form of a reverse initiative or after a false breakout, as the level has already been tested.

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

• – Canada BoC Gov Macklem Speaks at 22:25 (GMT+2).