InvestMacro

The EUR/USD currency pair

• Prev Open: 0.9921
• Prev Close: 0.9903
• % chg. over the last day: -0.18 %

The US service sector PMI Index rose to a four-month high due to increased demand. The dollar Index and Treasury yields rose sharply after strong economic data, with the 10-year Treasury yield reaching a new three-month high. This in turn, put negative pressure on the European currency, which is trading near multi-year lows again.

• Support levels: 0.9900
• Resistance levels: 0.9963, 0.9988, 1.0016, 1.0046, 1.0077, 1.0111, 1.0150

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. EUR/USD quotes are trading below parity. Technically, there is a formation of a wide balance with a range of 0.9912-1.0077, but the price is now trading below the level of 0.9912. The MACD indicator is in the negative zone, and selling pressure remains, but there are signs of divergence. Under such market conditions, it is better to look for buy trades on intraday time frames from the support level of 0.9912 after the price fixes higher. Sell trades can be considered from resistance levels of 0.9963 or 0.9988, but only after the additional confirmation.

Alternative scenario: if the price breaks out of the 1.0047 resistance level and fixes above, the uptrend will likely resume.

• – German Industrial Production (m/m) at 09:00 (GMT+3);
• – Eurozone GDP (q/q) at  2:00 (GMT+3);
• – US FOMC Member Mester Speaks (m/m) at 17:00 (GMT+3);
• – US FOMC Member Brainard Speaks (m/m) at 19:35 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1508
• Prev Close: 1.1517
• % chg. over the last day: +0.08 %

UK 10-year bond yields exceeded 3%, the highest level in over a decade, amid expectations that new Prime Minister Liz Truss will trigger a wave of government spending. Swaps related to the Bank of England policy meetings show that expectations of a rate hike have been rising steadily since early August, meaning that the key rate will more than double by the end of the year. There are fears that inflation, which was 10.1% in July, will spiral out of control, even after six consecutive rate hikes by policymakers.

• Support levels: 1.1500, 1.1400
• Resistance levels: 1.1669, 1.1816, 1.1901, 1.1994, 1.2035, 1.2167

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. At the moment, the price is trading below the moving average levels, and below the psychological level of 1.1500, the MACD indicator is negative again. It is best to look for sell trades on intraday time frames, the nearest resistance level is 1.1500. Buy trades can be considered from the support level of 1.1500 if the price consolidates above the round level.

Alternative scenario: if the price breaks out through the 1.1670 resistance level and fixes above, the uptrend will likely resume.

• – UK BOE Monetary Policy Report (m/m) at 12:00 (GMT+3);
• – UK BOE Gov Bailey Speaks (m/m) at 12:00 (GMT+3).

The USD/JPY currency pair

• Prev Open: 140.57
• Prev Close: 142.78
• % chg. over the last day: +1.57 %

From a fundamental point of view, the Bank of Japan is firmly committed to its soft policy through its Yield Curve Control (YCC) program, while the US Fed continues to aggressively raise interest rates in an attempt to rein in inflation. And until the BoJ starts to worry about inflation or the Fed sees that the US economy has slowed enough to suspend rate hikes, these fundamental dynamics will continue to push USD/JPY quotes up. With 2-year Treasury yields hitting 3.50%, the highest level in 15 years, there is little sign of the fundamental momentum weakening yet. But after the yen plunged sharply yesterday, the Bank of Japan said it would increase its planned bond purchases as an escalating sell-off in Treasuries puts upward pressure on global yields and weakens the yen.

• Support levels: 142.83, 141.77, 141.00, 139.61, 138.78, 137.65, 136.80, 135.20
• Resistance levels: 144.00, 145.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading above the average lines, and the buyers’ pressure is still there. The MACD indicator remains positive, there is no sign of reversal. Under such market conditions, buy trades can be sought from the support level of 142.83 or 141.77, but with additional confirmation. Sell deals can be considered on the intraday time frames from the psychological level of 144.00, but only with additional confirmation, as fundamentally, USD/JPY quotes are inclined to grow.

Alternative scenario: If the price fixes below 139.61, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3134
• Prev Close: 1.3149
• % chg. over the last day: +0.11 %

The Bank of Canada will hold a monetary policy meeting today. The Bank of Canada is expected to raise its key rate by 75 basis points to 3.25% as another step in the fight against inflation. The focus is on whether the bank will call for further tightening or not. In its latest statement released July 13, the bank said, “The Board of Governors continues to believe that interest rates will need to be raised further, and the pace of the increase will be determined by the bank’s current assessment of the economy and inflation.” Going forward, analysts expect the BoC to pause in its October 26 policy decision.

• Support levels: 1.3157, 1.3077, 1.3020, 1.2989, 1.2958, 1.2936, 1.2900
• Resistance levels: 1.3220

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is now trading above the moving averages, the MACD indicator is positive, and there is slight buying pressure. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3157, but only with confirmation. For sell deals, it is better to consider the resistance level of 1.3220, but only after a false breakout, as the level has already been tested, and a lot of liquidity has been formed above the level.

Alternative scenario: if the price breaks down and consolidates below the 1.3077 support level, the downtrend will likely resume.

The EUR/USD currency pair

• Prev Open: 0.9921
• Prev Close: 0.9922
• % chg. over the last day: +0.01 %

The euro fell to a new 20-year low on Monday after Russia cut off gas supplies through its main pipeline to Europe, heightening fears of a deepening energy crisis in the region. Europe is struggling to cut supplies from Russia and build up reserves ahead of the winter months. Investors believe the blow to the Eurozone economy will be huge. Investors are also preparing for the European Central Bank (ECB) meeting this Thursday, and markets are estimating an almost 80% chance of a 75 basis point (BPS) interest rate hike.

• Support levels: 0.9912, 0.9928
• Resistance levels: 0.9988, 1.0016, 1.0112, 1.0046, 1.0077, 1.0111, 1.0150

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. EUR/USD quotes are trading below parity again. Technically, there is a formation of a wide balance with a range of 0.9912-1.0077. The MACD indicator is in the negative zone, and the selling pressure remains, but there are the first signs of divergence. Under such market conditions, it is best to look for buy trades on intraday time frames from the support level of 0.9912, since the zone below0.9912 may act as a false breakdown area. The support level of 0.9928 is also interesting, but a confirmation is needed. The sell deals can be considered from the resistance levels of 0.9988 or 1.0016, but only after an additional confirmation.

Alternative scenario: if the price breaks out of the 1.0077 resistance level and fixes above, the uptrend will likely resume.

• – US ISM Service PMI (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1476
• Prev Close: 1.1513
• % chg. over the last day: +0.32 %

The British pound fell to a new yearly low on Monday, ahead of the official vote results. The British Chamber of Commerce (BCC) predicts that Britain is already in the middle of a recession and that inflation will reach 14% later this year. Liz Truss won a majority in the second round to become Britain’s third female prime minister. She will officially take office on Tuesday after Johnson tendered his resignation to Queen Elizabeth II. Investors are now watching to see what steps the new UK government will take to reduce the negative effects of rising prices and energy bills. Truss has promised a “bold plan” for tax cuts and an energy crisis.

• Support levels: 1.1500, 1.1400
• Resistance levels: 1.1669, 1.1816, 1.1901, 1.1994, 1.2035, 1.2167

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. At the moment, the price is trading above the moving average levels, and the MACD indicator has become positive. Yesterday the price updated its annual low and fell below 1.15, but by the end of the day, it managed to close above the level. Now the area below 1.15 can be considered as a false breakdown area. At this moment, it is better to look for sell trades on the intraday time frames, the nearest resistance level is 1.1669. Buy trades can be considered from the support level of 1.1500.

Alternative scenario: if the price breaks out through the 1.1670 resistance level and fixes above, the uptrend will likely resume.

• – UK Construction PMI (m/m) at 11:30 (GMT+3).

The USD/JPY currency pair

• Prev Open: 140.12
• Prev Close: 140.56
• % chg. over the last day: +0.31 %

The situation on the USD/JPY currency pair remains the same. Currently, the Bank of Japan is pursuing an ultra-soft monetary policy and is keeping interest rates below 0, while the US Federal Reserve is in a rate hike cycle. If the Japanese government does not interfere with monetary policy, USD/JPY quotes will continue to rise due to a widening interest rate differential.

• Support levels: 139.61, 138.78, 137.65, 136.80, 135.20
• Resistance levels: 141.00, 142.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading above the average lines, and the buyers’ pressure is still there. The MACD indicator remains positive, but there are signs of divergence, which means that a technical correction will take place soon. Under such market conditions, buy trades can be sought from the support level of 139.60, but with additional confirmation. Sell deals can be considered on the intraday time frames from the psychological level of 141.00, but only with additional confirmation, as fundamentally, USD/JPY quotes are inclined to grow.

Alternative scenario: If the price fixes below 138.78, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3128
• Prev Close: 1.3141
• % chg. over the last day: +0.09 %

Canada had a bank holiday yesterday. From a fundamental point of view, the Central Bank of Canada and the US Fed are keeping interest rates at the same level. The fact that the US Fed plans to raise interest rates by 0.5-0.75 basis points plays in favor of the dollar, while the Bank of Canada is considering a 0.25-0.5 BPS hike this week. But let’s not forget that the Canadian dollar is a commodity currency and also depends on the oil price dynamics. Following yesterday’s meeting of OPEC+ countries, the major oil-producing countries agreed to cut production by 100 thousand barrels per day starting from October. This may give a temporary bullish momentum, which in turn will provide fundamental support to the Canadian dollar.

• Support levels: 1.3077, 1.3020, 1.2989, 1.2958, 1.2936, 1.2900
• Resistance levels: 1.3220

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is now trading above the moving averages. Now the price is trading at the level of moving averages, the MACD indicator has become negative, and there is a slight sellers’ pressure. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3077 or 1.3020, but only with confirmation. For sell deals, it is better to consider the resistance level of 1.3220, but only after a false breakout, as the level has already been tested, and a lot of liquidity has been formed above the level.

Alternative scenario: if the price breaks down and consolidates below the 1.3020 support level, the downtrend will likely resume.