InvestMacro

The EUR/USD currency pair

• Prev Open: 0.9737
• Prev Close: 0.9814
• % chg. over the last day: +1.48 %

Four European Central Bank officials on Thursday supported another significant interest rate hike, with arguments in favor of a 75 basis point interest rate hike in October. Inflation data showed yesterday that German consumer prices reached their highest level in decades. On an annualized basis, the inflation rate reached 10%, up from 7.4% in the previous month. In Spain, on the other hand, the numbers were more positive. Spain’s annual inflation rate declined from 10.5% to 9.0%. Inflation data will be released today in France, Italy, and the Eurozone. Analysts expect consumer prices in Europe to rise from 9.1% to 9.7% on an annualized basis.

• Support levels: 0.9666, 0.9601
• Resistance levels: 0.9808, 0.9865, 0.9949, 1.0111, 1.0162, 1.0230

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish, but the price has approached the priority change level. The MACD indicator is in the positive area, and the buyers’ pressure remains. It is better to look for sell deals from the resistance level of 0.9808 or 0.9865. Buy trades can be considered from the support level of 0.9666 or 0.9601, but only with confirmation.

Alternative scenario: if the price breaks out through the resistance level of 0.9808 and fixes above it, the uptrend will likely resume.

• – Eurozone German Retail Sales (m/m) at 09:00 (GMT+3);
• – Eurozone French CPI (m/m) at 09:45 (GMT+3);
• – Eurozone German Unemployment Rate (m/m) at 10:55 (GMT+3);
• – Eurozone Italian CPI (m/m) at 12:00 (GMT+3);
• – Eurozone CPI (m/m) at 12:00 (GMT+3);
• – Eurozone Unemployment Rate (m/m) at 12:00 (GMT+3);
• – US PCE Price index (m/m) at 15:30 (GMT+3);
• – US FOMC Member Brainard Speaks at 16:00 (GMT+3);
• – US Chicago PMI (m/m) at 16:45 (GMT+3);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+3);
• – US FOMC Member Bowman Speaks at 18:00 (GMT+3);
• – US FOMC Member Williams Speaks at 23:15 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.0876
• Prev Close: 1.1109
• % chg. over the last day: +2.14 %

The British pound rose for the third day after the Bank of England bought bonds. The Bank of England spent the second-day buying bonds to stabilize financial markets. The Bank of England bought 1.415 billion pounds ($1.55 billion) of British government bonds with maturities of more than 20 years on Thursday, the second day of a multibillion-dollar program aimed at stabilizing the market. But analysts are confident that the rise in sterling due to the Bank of England’s actions is not sustainable.

• Support levels: 1.0918, 1.0711, 1.03
• Resistance levels: 1.1210, 1.1449, 1.1626, 1.1693, 1.1816, 1.1901

From the technical point of view, the trend on the GBP/USD currency pair on the hour time frame is bearish. At the moment, the pound is strengthening due to the actions of the Bank of England. The MACD indicator remains positive, indicating a predominance of buyers. In such market conditions, sell deals are better to look for on the intraday time frames. The nearest resistance level is 1.1210, the level of the priority change. Buy trades can be considered from the support level of 1.0918 or 1.0711, but only with confirmation and short targets.

Alternative scenario: if the price breaks out of the 1.1210 resistance level and fixes above it, the uptrend will likely resume.

• – UK GDP (q/q) at 09:00 (GMT+3).

The USD/JPY currency pair

• Prev Open: 144.02
• Prev Close: 144.41
• % chg. over the last day: +0.27 %

Finance Minister Shun’ichi Suzuki said Thursday that Japan’s recent currency intervention was to correct market distortions caused by speculative currency movements. He also clarified that the Ministry of Finance is ready to intervene again if necessary. Thus, there is no point in expecting a significant movement in the currency pair USD/JPY, as the price has two opposing forces. Where on the one hand, the difference in policy between the US Federal Reserve and the Bank of Japan is pushing quotes up, and on the other hand, the Ministry of Finance of Japan is defending the depreciation of the yen.

• Support levels: 143.00, 140.60, 139.61, 138.78, 137.65, 136.80, 135.20
• Resistance levels: 144.77, 145.35

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish despite last week’s intervention. The MACD indicator has become inactive, and there is slight selling pressure. The price has formed the “Head and Shoulders” pattern, which indicates a possible downward movement. Under such market conditions, buy trades can be searched for on intraday timeframes from the support level of 143, but with confirmation. Sell deals can be searched from the resistance level of 144.77, but only with additional confirmation.

Alternative scenario: If the price fixes below 140.60, the downtrend will likely resume.

• – Japan Industrial Production (m/m) at 02:30 (GMT+3);
• – Japan Unemployment Rate (m/m) at 02:50 (GMT+3);
• – Japan Retail Sales (m/m) at 02:50 (GMT+3);
• – Japan Consumer Confidence (m/m) at 08:00 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.3602
• Prev Close: 1.3681
• % chg. over the last day: +0.58 %

Canada’s real Gross Domestic Product (GDP) rose by 0.1% in July. Thus, the Canadian economy is experiencing an inflation shock more steadily than the US economy. Inflation in Canada is already showing signs of slowing, allowing the Bank of Canada to be less aggressive in raising interest rates further.

• Support levels: 1.3611, 1.3545, 1.3453, 1.3297, 1.3212, 1.3053, 1.2990, 1.2958
• Resistance levels: 1.3755, 1.3858, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The MACD indicator has become inactive. The price is trading at the level of the moving averages and forming a balance. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3611 or 1.3545. For sell deals, it is best to consider the resistance level of 1.3755, but only after additional confirmation, as the level has already been tested.

Alternative scenario: if the price breaks down and consolidates below the 1.3545 support level, the downtrend will likely resume.

The EUR/USD currency pair

• Prev Open: 0.9595
• Prev Close: 0.9734
• % chg. over the last day: +1.48 %

The euro broke a five-day losing streak. ECB spokesman Holzmann said yesterday that a 50 basis point interest rate hike is the minimum to be considered at the October meeting. The ECB is ready to raise the rate above the neutral level of 2%. The ECB’s Rehn yesterday indicated that the bank needs a significant interest rate hike in October by 75 or 50 basis points. Another ECB spokesman Kazimir pointed out that next year will be much more difficult than this, and high inflation is likely to persist for a long time.

• Support levels: 0.9641, 0.9601
• Resistance levels: 0.9808, 0.9865, 0.9949, 1.0111, 1.0162, 1.0230

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. But yesterday, the price formed a false breakdown zone. The MACD indicator became positive, and there is pressure from buyers. It is better to look for sell deals from the resistance level of 0.9808 or 0.9865. Buy trades can be considered from the level of 0.9641 or 0.9601, but only with confirmation.

Alternative scenario: if the price breaks out through the resistance level of 0.9808 and fixes above it, the uptrend will likely resume.

• – Eurozone Spanish CPI (q/q) at 10:00 (GMT+3);
• – Eurozone German CPI (q/q) at 15:00 (GMT+3);
• – US GDP (q/q) at 15:30 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US FOMC Member Bullard Speaks at 16:30 (GMT+3);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+3);
• – US FOMC Member Mester Speaks at 20:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.0725
• Prev Close: 1.0882
• % chg. over the last day: +1.46 %

The sharp rise in long-term UK government bond yields prompted the Bank of England to intervene, easing investor fears. The Bank of England plans to buy as many government bonds as necessary to stabilize markets. The Central Bank explained that if yields rise higher, it could lead to an unjustified tightening of funding conditions and reduce the flow of credit into the real economy. In other words, higher government bond yields could cause a credit crunch, making it harder and more expensive for households and businesses to borrow money. The bank said in a statement, “the Bank of England’s Financial Policy Committee recognized the market risks, recommended an intervention, and proposed a plan to buy bonds as a matter of urgency.” At the same time, the Bank of England will postpone the start of its quantitative tightening program (QT).

• Support levels: 1.0709, 1.0578, 1.03
• Resistance levels: 1.1021, 1.1210, 1.1449, 1.1626, 1.1693, 1.1816, 1.1901

From the technical point of view, the trend on the GBP/USD currency pair on the hour time frame is bearish. The price is trading above the moving averages, and the balance is starting to form. The MACD indicator has become positive, indicating some buying pressure. Under such market conditions, it is best to look for sell trades on intraday time frames, the nearest resistance level is 1.1021. Buy trades can be considered from the support level of 1.0709, but only with confirmation and short targets.

Alternative scenario: if the price breaks out of the 1.1210 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

• Prev Open: 144.76
• Prev Close: 144.10
• % chg. over the last day: -0.45 %

The Bank of Japan kept interest rates unchanged, controlled the yield curve, and pointed to the need to maintain a strong easing policy. The pandemic program was extended for 3-6 months, depending on how loans were made. The difficulty for the BoJ is that the dollar index has fundamental support from the US Federal Reserve by aggressively raising interest rates. As a result, the diametrically opposite policies of the US and Japanese Central Banks contribute to the growth of USD/JPY quotes.

• Support levels: 143.00, 140.60, 139.61, 138.78, 137.65, 136.80, 135.20
• Resistance levels: 145.35

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish despite last week’s intervention. The MACD indicator has become negative, and there is slight selling pressure. Under such market conditions, buy trades can be sought on intraday time frames from a support level of 143, but with confirmation. Sell deals can be considered from the resistance level of 145.35, but only with additional confirmation.

Alternative scenario: If the price fixes below 140.60, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3721
• Prev Close: 1.3604
• % chg. over the last day: -0.86 %

The Canadian dollar is a commodity currency, so it is highly dependent on the dynamics of the dollar index and oil prices. The dollar index declined yesterday, while oil prices rose on an unexpected drop in oil and fuel inventories in the United States. As a result, the Canadian dollar strengthened sharply yesterday. The Bank of Canada is holding rates at the same level as the US Fed, so the Canadian dollar will be the first currency to strengthen once the dollar is not rising.

• Support levels: 1.3611, 1.3545, 1.3453, 1.3297, 1.3212, 1.3053, 1.2990, 1.2958
• Resistance levels: 1.3755, 1.3858, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The MACD indicator became negative, and the price fell below the moving averages. This indicates some selling pressure and a possible correction. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3611 or 1.3545. For sell deals, it is better to consider the resistance level of 1.3755, but only after the additional confirmation.

Alternative scenario: if the price breaks down and consolidates below the 1.3297 support level, the downtrend will likely resume.

• – Canada GDP (m/m) at 15:30 (GMT+3).

The EUR/USD currency pair

• Prev Open: 0.9608
• Prev Close: 0.9592
• % chg. over the last day: -0.17 %

Hedge fund strategists remain bearish on the European currency until the end of the year. The funds’ minimum target is now 0.95, with a high probability of seeing a price of 0.90. This forecast comes from the energy price shocks facing the Eurozone and their negative impact on the industrial sector. The argument is that trade will shift to countries that are better protected from rising energy prices, further weakening the euro. Economic indicators for the eurozone point strongly to a recession as winter approaches, especially in Germany. Another ECB official, Luis de Guindos, said yesterday that the ECB will continue to raise rates in the coming months.

• Support levels: 0.9550
• Resistance levels: 0.9808, 0.9865, 0.9949, 1.0111, 1.0162, 1.0230.

From the technical point of view, the trend on the EUR/USD currency pair on the hour time frame is bearish. The price is trading below the moving averages, and sellers’ pressure is still high. The MACD indicator is negative, but divergence can be seen in several timeframes. It is best to look for sell trades from the resistance level of 0.9808 or 0.9865. Buy trades can be considered from the round level of 0.9550, but only with confirmation in the form of a false breakdown.

Alternative scenario: if the price breaks out through the resistance level of 0.9808 and fixes above it, the uptrend will likely resume.

• – Eurozone ECB President Lagarde Speaks at 10:15 (GMT+3);
• – US Pending Home Sales (m/m) at 17:00 (GMT+3);
• – US FOMC Member Bullard Speaks at 17:10 (GMT+3);
• – US Fed Chair Powell Speaks at 17:15 (GMT+3);
• – US FOMC Member Bowman Speaks at 18:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.0678
• Prev Close: 1.0728
• % chg. over the last day: -0.47 %

The UK government is confident in its economic strategy, UK Treasury Secretary Kwasi Kwarteng said Tuesday. Kwarteng also added that they will have a credible plan to reduce debt to GDP. On Nov. 23, the finance ministry will present a “Medium-Term Financial Plan” along with updated growth and borrowing forecasts. At the moment, the British pound is declining because of the rise in the dollar index and because of the new tax cut plan, which will greatly increase the amount of borrowing. Investors have concerns that the UK tax cut is financially unsustainable and could trigger an already rapid rise in inflation, which would eventually require a tighter monetary policy. Now the next step is up to the Bank of England, which promised on Monday not to hesitate to increase the interest rate in order to return inflation to the target level of 2% in the medium term. Analysts thus expect a 125-150 basis point rate hike at the next meeting.

• Support levels: 1.0578, 1.03
• Resistance levels: 1.1021, 1.1210, 1.1449, 1.1626, 1.1693, 1.1816, 1.1901

From the technical point of view, the trend on the GBP/USD currency pair on the hour time frame is bearish. The price is currently trading below the moving averages, and sellers’ pressure remains. The MACD indicator is negative, with no signs of a reversal. Sell trades are best to look for on intraday time frames, the nearest resistance level is 1.1021. Buy trades can be considered from the support level of 1.0578, but only with confirmation and short targets.

Alternative scenario: if the price breaks out of the 1.1210 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

• Prev Open: 144.57
• Prev Close: 144.81
• % chg. over the last day: +0.17 %

The Japanese Yen lost about 75% of the gains made after the currency intervention last week. The price is again approaching the 145 level, which the Ministry of Finance has promised to defend, indicating even more intervention. But analysts believe that the Japanese Ministry of Finance will not intervene again in such a short time. So far, the yen is weakening gradually without volatility bursts, and the Bank of Japan announced an unscheduled bond buying operation, which is a negative sign for the yen.

• Support levels: 143.00, 140.60, 139.61, 138.78, 137.65, 136.80, 135.20
• Resistance levels: 145.35

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish despite the intervention. The MACD indicator is positive, the price is trading above the moving averages. Under such market conditions, buy trades can be sought on intraday time frames from the support level of 143, but with confirmation. Sell deals can be sought from the resistance level of 145.35, but only with additional confirmation.

Alternative scenario: If the price fixes below 140.60, the downtrend will likely resume.

• – Japan Monetary Policy Meeting Minutes (m/m) at 02:50 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.3733
• Prev Close: 1.3723
• % chg. over the last day: -0.07 %

The head of the Central Bank of Canada said yesterday that the central bank should continue to raise interest rates to fight inflation. Although analysts believe that the decline in inflation in Canada over the last quarter may convince Bank of Canada officials to be less aggressive. It is for this reason that the Canadian dollar is losing ground against the US dollar, as the Federal Reserve is not going to stop. The USD/CAD is also strongly influenced by the dynamics of oil prices. The decrease in oil prices also puts downward pressure on the Canadian dollar.

• Support levels: 1.3614, 1.3662, 1.3545, 1.3453, 1.3297, 1.3212, 1.3053, 1.2990, 1.2958
• Resistance levels: 1.3858, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The MACD indicator is in the positive zone, there is buying pressure, but the divergence is increasing. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3614. For sell deals, it is best to consider the resistance level of 1.3858 or 1.3968, but only after the additional confirmation.

Alternative scenario: if the price breaks down and consolidates below the 1.3297 support level, the downtrend will likely resume.

• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3).