InvestMacro

The EUR/USD currency pair

• Prev Open: 1.0202
• Prev Close: 1.0353
• % chg. over the last day: +1.48 %

Dollar weakness on Friday continued Thursday’s move after US Consumer Inflation fell to an annualized 7.7% in October, the lowest since the beginning of the year. This strengthens the argument that the Federal Reserve will reduce the pace of interest rate hikes. But reducing the rate of increase is not “easing,” with the difference in interest rates between the ECB and the US Fed remaining substantial. According to analysts, the technical correction is coming to an end, and the dollar will once again find a new buying interest soon.

• Support levels: 1.0194, 1.0092, 1.0043, 0.9993, 0.9838, 0.9794, 0.9755
• Resistance levels: 1.0363, 1.0411, 1.0504

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages, and the MACD indicator is in the positive zone, but the price has deviated strongly from the averages. For buy deals, it is best to wait for a corrective movement to the support levels of 1.0194 or 1.0092, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0363, but it’s better with confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down through the support level of 0.9993 and fixes below it, the downtrend will likely resume.

• – Eurozone Industrial Production (m/m) at 12:00 (GMT+2);
• – US FOMC Member Brainard Speaks at 18:30 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.1704
• Prev Close: 1.1832
• % chg. over the last day: +1.01 %

UK GDP fell sharply by 0.6% in the third quarter (against expectations of 0.1%). Analysts predict that this is the beginning of a recession for the UK and expect GDP to fall 2% by summer 2023. However, much depends on how the government’s energy support develops during this period. As winter approaches, analysts expect tensions between the manufacturing, construction, and industrial sectors to increase. But much will depend on Thursday’s budget announcement this week. The focus will be on how the chancellor closes the projected budget deficit in 2026/27 and how the government will make its energy support more targeted to make policy less costly.

• Support levels: 1.1684, 1.1476, 1.1418, 1.1231, 1.1172, 1.1093, 1.0915, 1.0817
• Resistance levels: 1.1848, 1.1901

From the technical point of view, the GBP/USD currency pair trend on the hourly time frame is bullish. The price is trading above the moving averages. The MACD indicator is in the positive zone, but the first signs of divergence have appeared. Under such market conditions, it is better to look for buy deals after a slight correction to the support levels of 1.1684 or 1.1476. It is best to look for sell deals from the resistance level of 1.1848, but better with a confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down from the 1.1418 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 140.96
• Prev Close: 138.76
• % chg. over the last day: -1.58 %

The Bank of Japan should revise its inflation target and gradually abandon negative rates and radical yield restriction policies to reduce the rising cost of prolonged monetary policy easing, said Yuri Okina, a key government commissioner and possible future BOJ governor. Mrs. Okina also added that the Bank of Japan should steer a course toward policy normalization over the long term. With Consumer Prices forecast to rise later this week, the Bank of Japan is getting closer to abandoning its soft monetary policy. But the situation will likely remain the same until the end of the year.

• Support levels: 138.78, 137.65, 136.80
• Resistance levels: 138.78, 137.65, 136.80

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price is trading below the moving averages. The MACD indicator is deeply negative, and there are signs of overselling and divergence, which shows the weakness of sellers. Under such market conditions, buy trades can be sought on intraday time frames from the support level of 138.78, but only with a confirmation in the form of a false breakdown. Sell deals can be searched from the resistance level of 140.55, but only with additional confirmation.

Alternative scenario: If the price fixes above 146.06, the uptrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3320
• Prev Close: 1.3252
• % chg. over the last day: -0.51 %

The Canadian dollar is a commodity currency and depends on factors such as the monetary policy of the Bank of Canada, the performance of the dollar index, and the oil price movement. Oil prices rose nearly 1% on Monday, continuing Friday’s gains as China eased some of its strict COVID-19 restrictions, raising hopes for a rebound in economic activity and demand from the world’s largest oil importer. Rising oil prices tend to strengthen the Canadian currency.

• Support levels: 1.3212
• Resistance levels: 1.3369, 1.3508, 1.3608, 1.3682, 1.3776, 1.3855, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The MACD indicator is in the negative zone, but there is a divergence, and the price is in front of the support level. The best way to sell is to consider the resistance level of 1.3369. Still, there is a lot of space before this level, so buy trades are very appropriate and should be considered on the lower time frames from the support level of 1.3212, but with an additional confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks out and consolidates above the resistance level of 1.3607, the uptrend will likely resume.

The EUR/USD currency pair

• Prev Open: 1.0008
• Prev Close: 1.0207
• % chg. over the last day: +1.97 %

The US Consumer Price Index annualized declined from 8.2% to 7.9% (expectations of 8.0%). Core inflation, which excludes food and energy, also declined from 6.6% to 6.3% (6.5% expected). The decline in inflation figures indicates that the peak of inflation is likely to be over, which means the US Fed can reduce the pace of interest rate hikes so as not to put additional pressure on the economy. The probability of a 0.5% rate hike in December rose to 81% (vs. 56% the day before). Against this backdrop, the dollar Index fell sharply against the major basket of currencies. Investors have partially regained interest in risky assets, and this trend may continue at least until the end of the year.

• Support levels: 1.0092, 1.0043, 0.9993, 0.9838, 0.9794, 0.9755, 0.9702, 0.9601
• Resistance levels: 1.0238, 1.0286, 1.0363

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages, and the MACD indicator is in the positive zone, but the price has deviated strongly from the averages. For buy deals, it is best to wait for a corrective movement to the support levels of 1.0043 or 0.9993, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0238, but also better confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down through the support level of 0.9945 and fixes below it, the downtrend will likely resume.

• – Eurozone German Consumer Price Index (m/m) at 09:00 (GMT+2);
• – Eurozone Economic Forecasts (m/m) at 12:00 (GMT+2);
• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.1356
• Prev Close: 1.1712
• % chg. over the last day: +3.13 %

The Bank of England outlined demand-oriented plans for a timely and orderly wind-down of recent securities purchases to ensure financial stability. This is positive for the British currency, especially against the backdrop of a falling dollar Index. Today, the UK will also release its Q3 GDP data as well as industrial production data. Analysts expect the economy to contract and other economic indicators to decline. If the expectations align with the actual data, the GBP might see a sell-off.

• Support levels: 1.1477, 1.1417, 1.1231, 1.1172, 1.1093, 1.0915, 1.0817
• Resistance levels: 1.1760, 1.1848, 1.1901

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 moving averages. The MACD indicator has become positive, but there are signs of overbuying. Under such market conditions, it is better to look for buy deals after a slight correction to the support levels of 1.1477 or 1.1417. It is better to look for sell deals from the resistance level of 1.1760, but it is better with a confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down of the 1.1345 support level and fixes below it, the downtrend will likely resume.

• – UK GDP (q/q) 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: 145.45
• Prev Close: 140.94
• % chg. over the last day: -3.19 %

The Japanese yen strengthened sharply yesterday as the dollar Index fell. Falling inflation in the US raised hopes for a less aggressive rate hike by the Federal Reserve, which led to the dollar selling off and buying riskier assets such as the yen. But even as the pace of interest rate increases slows, the interest rate differential between the US Federal Reserve and the Bank of Japan will continue to widen as the BoJ keeps a loose monetary policy without raising rates. And this difference will still put negative pressure on the Japanese currency in the mid-term perspective.

• Support levels: 140.60, 139.61, 138.78
• Resistance levels: 143.17, 145.16, 146.06, 147.34, 148.82, 150.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price is trading below the moving averages. The MACD indicator is deeply negative, there are signs of overselling, plus the price is near the support level. Under such market conditions, buy trades can be sought on intraday time frames from the support level of 140.60, but only with confirmation in the form of reverse initiative. Sell deals can be searched from the resistance level of 143.17, but only with additional confirmation.

Alternative scenario: If the price fixes above 146.06, the uptrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3526
• Prev Close: 1.3319
• % chg. over the last day: -1.55 %

The Governor of the Bank of Canada indicated in his speech yesterday that the Canadian labor market remains very overheated. The Bank of Canada is now in a very similar situation to the US Fed, with the only exception that Canada’s GDP is still showing growth. Inflation is falling in both Canada and the United States, and interest rates are about the same. The only imbalance is created by oil prices, as the Canadian dollar is a commodity currency.

• Support levels: 1.3297, 1.3212
• Resistance levels: 1.3508, 1.3608, 1.3682, 1.3776, 1.3855, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The MACD indicator is in the negative zone, but there is a divergence, and the price is in front of the support level. The best way to sell is to consider the resistance level of 1.3508. Still, there is a lot of space before this level, so buy trades are very appropriate. They should be considered on the lower time frames from the support level of 1.3297, but with an additional confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks out and consolidates above the resistance level of 1.3607, the uptrend will likely resume.

The EUR/USD currency pair

• Prev Open: 1.0074
• Prev Close: 1.0011
• % chg. over the last day: -0.63 %

New inflation data will be released in the US today. Analysts forecast annual inflation to fall from 8.2% to 7.9%, while core inflation will fall from 6.6% to 6.5%. If the data is within that range, the dollar index could see a sharp decline, as inflation has already peaked, and the US Federal Reserve will slow the pace of interest rate hikes. But if the data is worse than expected and the inflation numbers (especially core inflation) show further growth, the dollar index, on the contrary, may receive support, which will cause the euro to fall.

• Support levels: 1.0012, 0.9946, 0.9838, 0.9794, 0.9755, 0.9702, 0.9601
• Resistance levels: 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 still bullish. The price is trading above the moving averages. The MACD indicator is inactive, but there is a divergence, indicating the weakness of the buyers. Under such market conditions, buy trades should be considered from the support level of 0.9946 or 0.9838, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0111, but also with confirmation.

Alternative scenario: if the price breaks down through the support level of 0.9838 and fixes below it, the downtrend will likely resume.

• – FOMC Member Waller Speaks at 09:00 (GMT+2);
• – US Consumer Price Index (m/m) at 15:30 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US FOMC Member Mester Speaks at 19:30 (GMT+2);
• – US FOMC Member George Speaks at 20:30 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.1538
• Prev Close: 1.1356
• % chg. over the last day: -1.60 %

Tomorrow, the UK will publish its Q3 GDP data. The UK economy is projected to contract by 0.5% in Q3. Higher energy prices and uncertainty in the economy are the main reasons for poor investment performance and a drop in industrial production. But analysts believe that new Prime Minister Rishi Sunak can restore investor confidence and improve some economic indicators by the end of the fourth quarter and avoid a deep recession. Lower-than-expected GDP figures could cause the pound to weaken further, making it harder for the Bank of England to operate. Conversely, stronger GDP numbers, and especially production, could mean that there is room for the economy to continue to hold higher rates by the Bank of England.

• Support levels: 1.1348, 1.1230, 1.1172, 1.1093, 1.0915, 1.0817
• Resistance levels: 1.1512, 1.1643, 1.1698, 1.1816, 1.1901

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 moving averages. The MACD indicator is positive, but a divergence has appeared, which indicates that further growth is limited. Under such market conditions, buy trades are better to look for on intraday time frames with short targets. Long trades can be considered from the support level of 1.1491 or 1.1348. Sell trades are best sought from the resistance level of 1.1643 but better with confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down of the 1.1231 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 145.66
• Prev Close: 146.39
• % chg. over the last day: +0.50 %

Goldman Sach (GS) analysts have revised their forecasts upward for the dollar’s exchange rate against the Japanese yen, predicting a more sustained US price cycle than initially anticipated. The GS bank now expects the US dollar to be worth 155 yen in three months (previously 150), 155 in six months (135), and 140 in 12 months (125). The yen is particularly sensitive to changes in US interest rates, as the Japanese authorities firmly adhere to their ultra-soft monetary policy.

• Support levels: 145.82, 144.91, 144.19, 143.00
• Resistance levels: 147.34, 146.24, 147.34, 148.82, 150.00, 151.05

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price is trading at the level of the moving levels. The MACD indicator has become positive, and the buyers’ pressure is increasing. Under such market conditions, buy trades can be sought on the intraday time frames from the support level of 145.82, but with confirmation in the form of reverse initiative. Sell deals can be searched from the 147.34 resistance level, but only with additional confirmation.

Alternative scenario: If the price fixes above 150.00, the uptrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3425
• Prev Close: 1.3525
• % chg. over the last day: +0.75 %

The Canadian dollar is a commodity currency, so it is highly dependent not only on the monetary policy of the Bank of Canada but also on the dollar index and oil prices. Oil prices continued to fall yesterday as US crude inventories rose more than expected, and an increase in COVID-19 cases in China, the biggest importer, negatively impacted demand. Bank of Canada Governor Tiff Macklem will speak today about the Canadian labor market.

• Support levels: 1.3479, 1.3400
• Resistance levels: 1.3544, 1.3608, 1.3682, 1.3776, 1.3855, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. But the MACD indicator has become positive, and the price is already trading above the moving averages, indicating weakness of the sellers. The best way to sell is to consider the resistance level of 1.3607, but only after the additional confirmation. Buy trades should be considered on the lower time frames from the support level of 1.3479, but with additional confirmation.

Alternative scenario: if the price breaks out and consolidates above the resistance level of 1.3682, the uptrend will likely resume.

• – Canada BoC Gov Macklem Speaks at 18:50 (GMT+2).