InvestMacro

The EUR/USD currency pair

• Prev Open: 1.0016
• Prev Close: 1.0072
• % chg. over the last day: +0.56 %

The preliminary results of the US Congressional elections show a significant Republican lead, which means that the US is close to a government split. This may lead to a rise in the dollar index, as the new Congress will want to deal with inflation more quickly and push the US Federal Reserve to raise interest rates even more aggressively. Republicans are willing to accept a recession, but only if it is quick. Therefore, once inflation begins to decline, the US Fed may return to stimulative methods for the economy.

• 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 positive, but there is a divergence, indicating the weakness of the buyers and approaching a corrective movement. 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 Williams Speaks at 10:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.1514
• Prev Close: 1.1544
• % chg. over the last day: +0.26 %

Bank of England Chief Economist Huw Pill said that the sharp decline in the UK labor force is putting upward pressure on inflation and points to further interest rate hikes. The shrinking labor force is one of the reasons Bank of England policymakers point to why they are likely to raise the benchmark lending interest rate above 3%.

• Support levels: 1.1491, 1.1348, 1.1230, 1.1172, 1.1093, 1.0915, 1.0817
• Resistance levels: 1.1643, 1.1698, 1.1816, 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 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: 146.63
• Prev Close: 145.66
• % chg. over the last day: -0.67 %

Japan’s current account surplus hit an eight-year low in fiscal 1 due to a record trade deficit caused by a sharp rise in imports and a sharp fall in the yen. The country’s trade deficit stood at 9.23 trillion yen after imports rose twice as fast as exports. The sharp decline underscores a country’s vulnerability that relies heavily on imports. The government is counting on a rebound in inbound tourism, as the weak yen will make travel to Japan and shopping in the country cheaper for foreign tourists.

• Support levels: 145.50, 144.91, 144.19, 143.00
• Resistance levels: 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 below the moving average levels. The MACD indicator is in the negative zone, and sellers’ pressure temporarily prevails. Under such market conditions, buy trades can be searched for on intraday time frames from the support level of 145.50, but with confirmation in the form of a reverse initiative. Sell deals can be searched from the 146.24 or 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: 1.3493
• Prev Close: 1.3426
• % chg. over the last day: -0.50 %

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 dropped sharply yesterday, which led to weakness in the Canadian currency. Interest rates in the US and Canada are at about the same level, so the imbalance in USD/CAD pricing will mainly come from the dynamics of oil prices and the dollar index.

• Support levels: 1.3486, 1.3400
• Resistance levels: 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 negative now, but there is a divergence, which indicates the weakness of the sellers. The best way to sell is to consider the resistance level of 1.3479, but only after the additional confirmation. Buy trades should be considered on the lower time frames from the support level 1.3297, 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.

• – US Crude Oil Reserves (w/w) at 17:30 (GMT+2).

The EUR/USD currency pair

• Prev Open: 0.9901
• Prev Close: 1.0020
• % chg. over the last day: +1.20 %

Congressional Elections will be held in the US today. Many traders and investors underestimate this event, referring to it as a political one. But it should be noted that this election puts control of Congress and President Joe Biden’s agenda for the remaining two years of his term at stake. Republicans are leading in the polls, and many analysts believe the likely outcome will be a split government, with the Republican Party controlling the House and possibly the Senate in the second half of Biden’s term. If this scenario goes into effect, the US would not be able to provide financial support in an economic downturn. It would also affect the prospects for government spending, which could be reallocated to other needs. This could lead to a sharp rise in the dollar index, a fall in the European currency, and a drop in stock indices.

• Support levels: 0.9946, 0.9838, 0.9794, 0.9755, 0.9702, 0.9601
• Resistance levels: 1.0055, 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 positive, 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 1.0055, but with confirmation as well.

Alternative scenario: if the price breaks down through the support level of 0.9795 and fixes below it, the downtrend will likely resume.

• – Eurozone Retail Sales (m/m) at 12:00 (GMT+2);
• – US Congressional Elections (All Day).

The GBP/USD currency pair

• Prev Open: 1.1308
• Prev Close: 1.1512
• % chg. over the last day: +1.80 %

The British pound sterling has strengthened considerably in recent days, mainly due to the decline of the dollar index. But analysts believe that the British pound now has no fundamental basis for growth. The interest rate differential between the US Federal Reserve and the Bank of England is still widening, and the British economy is already on the verge of recession. Friday’s quarterly GDP data is projected to be negative, meaning two consecutive quarters of contraction, a technical recession. The Bank of England predicts that the UK economy will contract for up to 8 consecutive quarters.

• Support levels: 1.1329, 1.1230, 1.1172, 1.1093, 1.0915, 1.0817
• Resistance levels: 1.1585, 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, and the buyers’ pressure is still present. Under such market conditions, buy trades are better to look for on intraday time frames with short targets. It is possible to consider longs from the support level of 1.1329, but a correction is needed. Sell trades are best looked for from the resistance level of 1.1585 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: 147.17
• Prev Close: 146.62
• % chg. over the last day: -0.38 %

Japan’s Cabinet on Tuesday will approve a supplementary budget for the current fiscal year to spend 29.1 trillion yen ($199 billion) on an economical package designed to ease the pain for households and businesses from rising prices exacerbated by a weaker yen. The government will issue about 22.8 trillion yen in bonds to provide the necessary financing, further pushing back the fiscal recovery despite the fact that its debt is already more than twice the size of its economy. The government estimates that the energy-focused measures will help reduce the country’s core consumer inflation by 1.2%.

• Support levels: 146.38, 145.50, 144.91, 144.19, 143.00
• Resistance levels: 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 averages, and a wide-volatility balance is being formed. The MACD indicator is inactive. Under such market conditions, buy trades can be sought on intraday time frames from the support level of 146.38. Sell deals can be searched from the resistance level of 147.34, 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: 1.3533
• Prev Close: 1.3490
• % chg. over the last day: -0.32 %

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. The oil market is very tight right now due to a variety of factors that affect it, from OPEC+ countries cutting production to G7 countries setting a restrictive price in response to Russia’s invasion of Ukraine. On the other hand, the influence of the dollar index, which is strongly confirmed by the US Federal Reserve monetary policy, plus the congressional elections will take place today, which may influence the dynamics. No wonder why the USD/CAD quotes show sharp movements to one side and to the other.

• Support levels: 1.3486, 1.3400
• Resistance levels: 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 price has consolidated below the moving averages and the priority change level. The MACD indicator is negative now, but there is some buying pressure on the lower time frames. The best way to sell is to consider the resistance level of 1.3608, but only after the additional confirmation. Buy trades should be considered on the lower time frames from the support level of 1.3486, 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.

The EUR/USD currency pair

• Prev Open: 0.9748
• Prev Close: 0.9957
• % chg. over the last day: +2.14 %

The US labor market data on Friday showed that Nonfarm payrolls added 261,000 jobs last month against expectations of 197,000, but the overall unemployment rate jumped from 3.5% to 3.7%. The US dollar fell sharply on this statistic as rising unemployment is the last piece of the puzzle for the Fed to put the brakes on aggressive rate hikes. A slowdown in the rate hikes is a negative for the dollar index and a positive for the European currency.

• Support levels: 0.9850, 0.9794, 0.9755, 0.9702, 0.9601
• Resistance levels: 0.9966, 1.0055, 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 failed to break down through the priority change level on Friday. The MACD indicator became positive, and the buying pressure returned. Under such market conditions, buy trades should be considered from the support level of 0.9850 or 0.97994, but with additional confirmation. Sell deals can be considered from the resistance level of 0.9966, but also with confirmation, as the level has already been tested.

Alternative scenario: if the price breaks down through the support level of 0.9755 and fixes below it, the downtrend will likely resume.

• – Eurozone Services PMI (m/m) at 11:00 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 11:30 (GMT+2);
• – US Nonfarm Payrolls (m/m) at 14:30 (GMT+2);
• – US Unemployment Rate (m/m) at 14:30 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.1159
• Prev Close: 1.1372
• % chg. over the last day: +1.91 %

The Bank of England hiked its interest rate sharply by 0.75% last Thursday as it struggles with risks associated with the inflation of more than 10% and also warned of a prolonged recession. The Bank of England predicts that inflation will hit a 40-year high of about 11% in the current quarter and pointed out that Britain has already entered a recession that could potentially last two years – longer than during the 2008-09 financial crisis.

• Support levels: 1.1230, 1.1172, 1.1093, 1.0915, 1.0817
• Resistance levels: 1.1450, 1.1578, 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 and above the priority change level. The MACD indicator has become positive, and buying pressure has returned to the market. Under such market conditions, buy trades can be considered from the support level of 1.1230, but better after confirmation. Sell trades are best to look for on intraday time frames. The nearest resistance level is 1.1450, but also better with confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down of the 1.1172 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 148.21
• Prev Close: 146.65
• % chg. over the last day: -1.06 %

The situation on the currency pair USD/JPY remains the same. The Bank of Japan keeps an ultra-soft monetary policy and does not plan to change it until spring 2023. The US Federal Reserve, in turn, is on an interest rate hike cycle. This divergent policy strengthens the dollar and weakens the Japanese yen, pushing the USD/JPY up. Even if the US Fed cuts the pace of its rate hikes, the interest rate differential will still rise, resulting in further gains, but maybe slower than before.

• Support levels: 146.37, 145.50, 144.91, 144.19, 143.00
• Resistance levels: 147.59, 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 averages, and a wide balance is forming. The MACD indicator has become negative again, but sellers’ pressure is weak. Under such market conditions, buy trades can be looked for on intraday time frames from the support level of 146.37. Sell deals can be looked for from the resistance level of 147.59 or 148.82, but only with additional confirmation since the level has already been tested.

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

The USD/CAD currency pair

• Prev Open: 1.3745
• Prev Close: 1.3479
• % chg. over the last day: -1.97 %

Canadian labor market data on Friday pointed to job growth, raising the possibility that the Bank of Canada will need to make another excessive interest rate hike at its meeting next month. The money markets are now leaning towards the Bank of Canada raising its policy rate by 0.5% on December 7. The Bank of Canada’s discount rate is expected to peak at 4.5% in early 2023.

• Support levels: 1.3486, 1.3400
• Resistance levels: 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 has changed to bearish again. The price confidently broke through and consolidated below the moving averages and the priority change level. The MACD indicator is negative now, and there is the seller’s pressure on the lower time frames. The best way to sell is to consider the resistance level of 1.3608, but only after the additional confirmation. Buy trades should be considered on the lower time frames from the support level 1.3486, 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.

The EUR/USD currency pair

• Prev Open: 0.9813
• Prev Close: 0.9748
• % chg. over the last day: -0.67 %

The seasonally adjusted unemployment rate in the Eurozone was 6.6% in September 2022, down from 6.7% in August. Europe’s labor market thus remains resilient, allowing the ECB to be more flexible in its interest rate hike cycle. Typically, when the labor market starts to decline and unemployment rises, the ECB immediately changes its monetary policy to a less hawkish one. But as long as the labor market is strong, the ECB has free hands.

• Support levels: 0.9755, 0.9702, 0.9601
• Resistance levels: 0.9823, 0.9871, 1.0055, 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 below the moving levels but above the priority change level of 0.9755. The MACD indicator is in the negative zone, but sellers’ pressure is weak due to divergence. Under such market conditions, buy trades should be considered from the support level of 0.9755, but with additional confirmation, as the level has already been tested. Sell deals can be considered from the resistance level of 0.9823 or 0.9871, but with confirmation.

Alternative scenario: if the price breaks down through the support level of 0.9755 and fixes below it, the downtrend will likely resume.

• – Eurozone Services PMI (m/m) at 11:00 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 11:30 (GMT+2);
• – US Nonfarm Payrolls (m/m) at 14:30 (GMT+2);
• – US Unemployment Rate (m/m) at 14:30 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.1387
• Prev Close: 1.1158
• % chg. over the last day: -2.05 %

The Bank of England expectedly raised its rate by 75 BPS to 3.00%. This is the seventh rate hike this year and the highest cost of borrowing since November 2008. The Bank of England continues to struggle with critically high inflation (CPI 10.1% YoY). Due to the difference in rates between USD (4.00%) and GBP (3.00%), dollar assets remain more attractive to investors, and therefore we should not expect a global GBP/USD reversal upwards just yet. The British pound fell sharply against the US dollar after the UK Central Bank said it expects the recession to last through 2023 and the first half of 2024.

• Support levels: 1.1172, 1.1093, 1.0915, 1.0817
• Resistance levels: 1.1336, 1.1450, 1.1578, 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 below the moving averages but above the priority change level. The MACD indicator is negative, but sellers’ pressure is weak. Under such market conditions, buy trades can be considered from the support level of 1.1172, but it is better after confirmation because the level has already been tested. Sell trades are best to look for on intraday time frames, the nearest resistance level is 1.1336, but also better with confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down of the 1.1172 support level and fixes below it, the downtrend will likely resume.

• – UK Construction PMI (m/m) at 11:30 (GMT+2).

The USD/JPY currency pair

• Prev Open: 147.78
• Prev Close: 148.18
• % chg. over the last day: +0.27 %

Yesterday, Japan’s Finance Minister Suzuki said that in the near future, the government does not plan to intervene in the currency market. Thus, the situation on the USD/JPY currency pair remains the same. The difference between the interest rates of the Bank of Japan and the US Federal Reserve System keeps increasing. This situation will have a negative effect on the Japanese currency.

• Support levels: 147.41, 146.37, 145.50, 144.91, 144.19, 143.00
• Resistance levels: 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 averages, the balance is forming. The MACD indicator has become inactive again, but buyer pressure remains. Under such market conditions, buy trades can be looked for on intraday time frames from the support level of 147.41 or 146.37. Sell deals can be looked for from the resistance level of 148.82, but only with additional confirmation since the level has already been tested.

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

• – Japan Services PMI (m/m) at 02:30 (GMT+2).

The USD/CAD currency pair

• Prev Open: 1.3707
• Prev Close: 1.3747
• % chg. over the last day: +0.29 %

Canada’s total number of construction permits fell by 17.5% in September, the largest recorded monthly decline. For the first time since September 2019, all survey components showed a monthly decline, with both the residential and non-residential sectors. This is a sign that the real estate market is heading for a recession. If today’s unemployment data also points to problems, the Bank of Canada will revise its monetary policy toward a more dovish tone.

• Support levels: 1.3657, 1.3586, 1.3515, 1.3454
• Resistance levels: 1.3776, 1.3855, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish. The price confidently broke through and consolidated above the moving averages and the priority change level. The MACD indicator is negative now, there is seller’s pressure on the lower time frames. Buy trades should be considered on the lower time frames from the support level of 1.3657 or 1.3586. For sell deals, it is best to consider the resistance level of 1.3776, but only after the additional confirmation.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3586, the downtrend will likely resume.

• – Canada Unemployment Rate (m/m) at 14:30 (GMT+2);
• – Canada Ivey PMI (m/m) at 16:00 (GMT+2).