The Analytical Overview of the Main Currency Pairs on 2022.12.23

The EUR/USD currency pair

• Prev Open: 1.0604
• Prev Close: 1.0597
• % chg. over the last day: -0.07 %

Yesterday, US GDP data showed that the US economy increased by 3.2%, higher than the expected 2.9%. This brought back some investor fears about an interest rate hike. The important indicator today will come from the major PCE prices, where a rise in the numbers could put some hawkish pressure back on the markets, causing the dollar index to rise again (EUR/USD to fall). Low liquidity over the holiday period could lead to stronger moves if economic data is significantly different from estimates.

• Support levels: : 1.0549, 1.0483, 1.0361, 1.0332, 1.0284, 1.0193
• Resistance levels: 1.0632, 1.0647, 1.0695

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is forming a price corridor. The MACD indicator has become negative, and sellers’ pressure prevails throughout the day. Under such market conditions, buy trades are best considered from the support level of 1.0549 but with additional confirmation. Sell deals can be considered from the resistance level of 1.0632, but it is better with a confirmation in the form of a reverse initiative or false breakout because 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.

• – US Core Durable Goods Orders (m/m) at 15:30 (GMT+2);
• – US PCE Price index (m/m) at 15:30 (GMT+2);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+2);
• – US New Home Sales (m/m) at 17:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2074
• Prev Close: 1.2039
• % chg. over the last day: -0.29 %

In UK GDP revised downward, the actual value is 0.3%. Most services sub sectors showed a slowdown, but output rose by 0.1% in Q3 2022. With the dollar index rising, GBP/USD quotes have declined, and this trend could continue if PCE data today does not point to a slowdown, which could trigger a drop in the dollar index and a rise in GBP/USD quotes.

• Support levels: 1.1979, 1.1684, 1.1476, 1.1418
• Resistance levels: 1.2091, 1.2218, 1.2308, 1.2431, 1.2519

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. Yesterday, the price tested the priority change level but failed to consolidate higher. A false breakdown area was formed. The MACD indicator has become inactive, and the volatility on the threshold of the holidays is low. Under such market conditions, it is better to look for buy trades from the support level at 1.2092 but with a confirmation at the intraday time frames. Sell trades are best sought from the resistance level of 1.2218 but also better with confirmation.

Alternative scenario: if the price breaks down from the 1.2092 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 132.40
• Prev Close: 132.36
• % chg. over the last day: -0.03 %

The Bank of Japan surprised investors this week with a change in its Yield Curve Control Policy (YCC). This caused a moderate sell-off in Japanese bonds: the yield on Japan’s 10-year government bonds (JGBs) rose 15 basis points. And this is still having an effect on financial markets and the Japanese yen in particular. New inflation data showed that consumer prices (excluding food energy prices) rose from 3.6% to 3.7% on an annualized basis, the highest level since 1981.

• Support levels: 132.16, 131.22
• Resistance levels: 133.53, 134.73, 135.88, 137.03, 138.00, 139.09

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 a narrow price range in the form of a “wedge” pattern is being formed. During the day, there is a slight buyers’ pressure. Buy trades are best considered on intraday time frames from the support level of 132.16, but only with confirmation. Sell deals can be looked for from the resistance level of 133.53, provided there is a reverse reaction.

Alternative scenario: If the price fixes above 137.00, the uptrend will likely resume.

• – Japan National Core CPI (m/m) at 01:30 (GMT+2);
• – Japan Monetary Policy Meeting Minutes at 01:50 (GMT+2).

The USD/CAD currency pair

• Prev Open: 1.3606
• Prev Close: 1.3645
• % chg. over the last day: +0.28 %

The Canadian dollar is a commodity currency and is highly dependent not only on the monetary policy of the Bank of Canada but also on oil prices. The oil prices decreased yesterday while the dollar index went up, which eventually led to the growth of the USD/CAD. China reiterated its focus on boosting economic growth in 2023, which helped revise the impact of demand for crude oil upwards. Increased demand for oil with limited supply is helping oil prices and the Canadian dollar to strengthen.

• Support levels: 1.3590, 1.3521, 1.3438, 1.3386, 1.3360, 1.3281, 1.3212
• Resistance levels: 1.3656, 1.3700, 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 MACD indicator is in the positive zone, but inside the day, there is a weakness of the buyers. Yesterday, the price made a false breakout of the level 1.3656 resistance level, which will now serve as a sell zone. Buy trades should be considered from the support of 1.3590 but with a confirmation in the form of a reversal. Sell deals are best to look for on intraday time frames from the resistance level of 1.3656, but with confirmation in the form of a reverse initiative on the lower time frames.

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

• – Canada GDP (m/m) at 15:30 (GMT+2).