InvestMacro

The EUR/USD currency pair

• Prev Open: 0.9770
• Prev Close: 0.9784
• % chg. over the last day: +0.14 %

Philadelphia Fed President Patrick Harker said Thursday that the central bank has not yet ended its cycle of raising interest rates amid very high inflation, adding that the Central Bank will likely only pause the tightening process next year. Analysts believe that until the difference between US Federal Reserve and ECB interest rates begins to narrow, it is premature to look for a reversal in the euro.

• Support levels: 0.9767, 0.9752, 0.9701
• Resistance levels: 0.9848, 0.9961, 1.0058, 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 bullish. But the price is trading below the moving averages. Indicator MACD has become negative, and the buyers’ pressure is weakening, but active sellers are not observed. Buy trades should be considered from the support level of 0.9752, but with additional confirmation in the form of reverse initiative. Sells may be considered from the resistance level of 0.9848, but also with confirmation.

Alternative scenario: if the price breaks down through the support level of 0.9666 and fixes below it, the downtrend will likely resume.

• – Eurozone EU Leaders Summit (m/m) at 13:00 (GMT+3);
• – US FOMC Member Williams Speaks (m/m) at 16:10 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1211
• Prev Close: 1.1229
• % chg. over the last day: +0.16 %

Unexpected events took place in the UK. Liz Truss announced her resignation as Prime Minister after just 45 days in office, the shortest term ever. Truss faced calls to leave because of the disastrous effects of her mini-budget. The prime minister’s departure provoked a struggle among conservative lawmakers to find a successor. Because of the uncertainty, investors are now advised to avoid speculating about the British pound.

• Support levels: 1.1186, 1.1093, 1.0915, 1.0817
• Resistance levels: 1.1311, 1.1367, 1.1478, 1.1693, 1.1816, 1.1901

From the technical point of view, the GBP/USD currency pair trend on the hourly time frame is bullish. But the price is trading below the moving averages. The MACD indicator has become negative, indicating a weakness of the buyers. Under such market conditions, buy trades can be considered from the support level of 1.1186, but better after confirmation. It is better to look for sell trades on the intraday time frames, and the nearest resistance level is 1.1311.

Alternative scenario: if the price breaks down of the 1.1094 support level and fixes below it, the downtrend will likely resume.

• – UK Retail Sales (m/m) at 09:00 (GMT+3).

The USD/JPY currency pair

• Prev Open: 149.87
• Prev Close: 150.12
• % chg. over the last day: +0.17 %

On Thursday, the yen broke above the key psychological level of 150 to the dollar for the first time since 1990, despite repeated threats by Japanese policymakers to intervene to eliminate excessive volatility in the currency market. The dollar/yen pair’s break above the key level increases pressure on Tokyo to re-enter the foreign exchange market to curb the national currency’s inevitable decline. Especially given that Japan’s consumer inflation has reached a 31-year high.

• Support levels: 149.47, 147.67, 146.44, 145.93, 144.91, 144.16, 143.00
• Resistance levels: 150.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading above the moving levels. The price is trading above the moving average lines. The MACD indicator is in the positive zone, the buyer’s pressure remains, but the divergence is increasing, which indicates a soon corrective movement. Under such market conditions, buy trades can be searched for on intraday time frames from the support level of 149.47, but with confirmation. Sell deals can be searched from the resistance level of 150.00, but only with additional confirmation in the form of a reverse initiative or a false breakout.

Alternative scenario: If the price fixes below 147.67, the downtrend will likely resume.

• – Japan National Consumer Price Index (m/m) at 02:30 (GMT+3).

The USD/CAD currency pair

• Prev Open: : 1.3759
• Prev Close: 1.3766
• % chg. over the last day: +0.05 %

Economists expect the Bank of Canada to continue its aggressive campaign to raise rates after higher-than-expected inflation data. Bank of Montreal’s chief economist expects 75 basis points (bps) increase next week. The move will raise the overnight rate to 4%. In addition, he predicts a 25 basis point hike in December. The deputy chief economist at CIBC also predicts a 0.75% rate hike.

• Support levels: 1.3677, 1.3619, 1.3583, 1.3535, 1.3454
• Resistance levels: 1.3786, 1.3855, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is trading at the level of moving averages. The MACD indicator has become inactive, forming a wide sideways. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3677 but better after confirmation. For selling, it is better to consider the resistance level of 1.3786, but only after an additional confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3677, the downtrend will likely resume.

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

The EUR/USD currency pair

• Prev Open: 0.9850
• Prev Close: 0.9771
• % chg. over the last day: -0.81 %

The annual inflation rate in the Eurozone increased to 9.9% in September 2022, up from 9.1% in August. Core inflation, which excludes food and energy prices, rose to 4.8% from 4.3%. According to a report released by Eurostat, inflation remains high in almost all categories. Amid this jump in consumer prices, ECB representative Vasle indicated yesterday that the central bank should raise interest rates by 75 basis points at its next two meetings.

• Support levels: 0.9752, 0.9701
• Resistance levels: 0.9848, 0.9961, 1.0058, 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 bullish. But the price is trading below the moving averages. Indicator MACD has become negative, and the buyers’ pressure is weakening, but active sellers are not observed too. Buy trades should be considered from the support level of 0.9752, but with additional confirmation in the form of reverse initiative. Sell deals may be considered from the resistance level of 0.9848, but also with confirmation.

Alternative scenario: if the price breaks down through the support level of 0.9666 and fixes below it, the downtrend will likely resume.

• – Germany Producer Price Index (m/m) at 09:00 (GMT+3);
• – Eurozone EU Leaders Summit (m/m) at 13:00 (GMT+3);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
• – US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+3);
• – US Existing Home Sales (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1306
• Prev Close: 1.1213
• % chg. over the last day: -0.83 %

The UK Consumer Price Index rose from 9.9% to 10.1% year-over-year, slightly above expectations of 10%. Annual core inflation increased from 6.3% to 6.5%. Now that there is some clarity on the new mini-budget, benefits, and taxes, and the inflation rate is known, the next step is up to the Bank of England. Analysts are predicting a significant rate hike (0.75-1%) at the next meeting on November 3. Investors expect the pound to remain under pressure amid rising inflation and recession in the UK.

• Support levels: 1.1186, 1.1093, 1.0915, 1.0817
• Resistance levels: 1.1311, 1.1367, 1.1478, 1.1693, 1.1816, 1.1901

From the technical point of view, the GBP/USD currency pair trend on the hourly time frame is bullish. But the price is trading below the moving averages. The MACD indicator has become negative, indicating a weakness of the buyers. Under such market conditions, buy trades can be considered from the support level of 1.1186, but better after confirmation. It is better to look for sell trades on the intraday time frames, and the nearest resistance level is 1.1311.

Alternative scenario: if the price breaks down of the 1.1094 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 149.23
• Prev Close: 149.90
• % chg. over the last day: +0.45 %

Traders expect the Japanese Finance Ministry and the Central Bank to enter the market again as the currency pair is approaching the key psychological barrier at 150. Analysts believe that if the price passes the 150 level, it will accelerate the quotes’ growth. Yesterday, Prime Minister of Japan Fumio Kishida said that the government could not tolerate the sudden one-sided and excessive movements in the currency market. The possibility of a new intervention is increasing, but previous attempts to stop the growth were unsuccessful. Perhaps investors are in for a surprise monetary policy “reversal” from the Bank of Japan. Still, so far, such a scenario seems unlikely, as Bank of Japan leaders on Wednesday stressed the need to maintain the ultra-soft monetary policy in order to protect the economy from possible risks. Credit Suisse analysts are confident that the yen could weaken well above the 150 level if Japan’s central bank maintains its monetary policy at its October 27-28 meeting.

• Support levels: 149.48, 147.67, 146.44, 145.93, 144.91, 144.16, 143.00
• Resistance levels: 150.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading above the moving levels. The price is trading above the moving average levels. The MACD indicator is in the positive zone, the buyer’s pressure remains, but the divergence is increasing, which indicates a soon corrective movement. Under such market conditions, buy trades can be searched for on intraday time frames from the support level of 149.48, but with confirmation. Sell deals can be searched from the resistance level of 150.00, but only with additional confirmation in the form of a reverse initiative or a false breakout.

Alternative scenario: If the price fixes below 147.67, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3738
• Prev Close: 1.3763
• % chg. over the last day: +0.18 %

Canada’s annual inflation for the month of September was 6.9% year-over-year (August: 7.0%), indicating a third consecutive decline in overall inflation. Core inflation, which excludes energy and food prices, was up from 5.8% to 6.0% year-over-year. Analysts believe the jump in core inflation reinforces the likelihood that the Bank of Canada will raise interest rates another 75 basis points next week and remain on an aggressive path for a while longer.

• Support levels: 1.3732, 1.3619, 1.3583, 1.3535, 1.3454
• Resistance levels: 1.3795, 1.3855, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is trading at the level of moving averages. The MACD indicator has become inactive, forming a wide sideways. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3732, but after confirmation, as the level has already been tested. For sell deals, it is best to consider the resistance level of 1.3855, but only after additional confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3677, the downtrend will likely resume.

The EUR/USD currency pair

• Prev Open: 0.9720
• Prev Close: 0.9832
• % chg. over the last day: +1.15 %

Joachim Nagel, the ECB representative and president of Deutsche Bundesbank, said in his speech that inflation in the Eurozone is peaking, and in 2023 the inflation rate will probably decline gradually. However, a lot will depend on energy prices, and if oil and gas prices go back up, it could trigger a new wave of inflation in the Eurozone. Nagel also added that further rate hikes should be expected at the next ECB policy meetings.

• Support levels: 0.9752, 0.9701.
• Resistance levels: 0.9856, 0.9961, 1.0058, 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 bullish. The price is trading above the moving averages. The MACD indicator is positive again, and the pressure on buyers remains. Buy trades should be considered from the support level of 0.9752, but with additional confirmation in the form of reverse initiative. Sell deals may be considered from the resistance level of 0.9856, but only with confirmation.

Alternative scenario: if the price breaks down through the support level of 0.9666 and fixes below it, the downtrend will likely resume.

• – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
• – US Industrial Production (m/m) at 16:15 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1229
• Prev Close: 1.1347
• % chg. over the last day: -1.41 %

The British pound rebounded moderately yesterday after the repeal of the tax measures. New British Chancellor Jeremy Hunt canceled most of the unfunded tax cuts in the new mini-budget. The failed mini-budget of Hunt’s predecessor, Kwasi Kwarteng, shook the market and caused the pound to fall to an all-time low against the US dollar. The Treasury Department issued a statement explaining that the rejection of the tax measures would raise £32 billion. The head of research, Quilter Cheviot, argues that the move restored confidence in the British government. In addition, the mini-budget change should allow the Bank of England (BoE) to raise interest rates without being too aggressive.

• Support levels: 1.1307, 1.1186, 1.1093, 1.0915, 1.0817
• Resistance levels: 1.1381, 1.1478, 1.1693, 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 in the positive zone, but there is a divergence, which indicates the weakness of the buyers. Under such market conditions, buy trades can be considered from the support level of 1.1307, but better after confirmation. Sell trades are better to look for on the intraday time frames, and the nearest resistance levels are 1.1381 and 1.1478.

Alternative scenario: if the price breaks down of the 1.1094 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 148.57
• Prev Close: 149.02
• % chg. over the last day: +0.30 %

The Japanese yen fell to a 32-year low against the US dollar. The Bank of Japan (BoJ) reiterated its efforts to ease monetary policy, and Governor Haruhiko Kuroda promised to keep interest rates ultra-low to support the fragile economy. The divergent policy between the US Fed and the Bank of Japan “pushes” USD/JPY quotes up. Still, investors should not rule out new currency interventions by the Ministry of Finance of Japan, as discontent among the population is growing due to the depreciation of the national exchange rate. Japan’s Chief Cabinet Secretary Matsuno said he would take appropriate measures to deal with excessive currency movements.

• Support levels: 147.67, 146.21, 145.93, 144.91, 144.16, 143.00, 140.60, 139.61
• Resistance levels: 149.02, 150.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading above the moving levels. The MACD indicator is in the positive zone, and the buyers’ pressure remains. Under such market conditions, buy trades can be searched for on intraday time frames from the support level of 147.67, but with confirmation. Sell deals can be searched from the resistance level of 149.02 or 150.00, but only with additional confirmation in the form of a reverse initiative.

Alternative scenario: If the price fixes below 145.95, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3870
• Prev Close: 1.3714
• % chg. over the last day: -1.14 %

Consumer confidence in Canada has fallen to a record low, raising the possibility of a recession. The index hit 44.4 last week, a level it has only surpassed twice at the height of the Covid-19 pandemic in 2020 and during the global financial crisis in 2008. The worsening sentiment calls into question the ability of Canadian consumer spending to continue to drive the country’s economic growth. Many economists have already begun forecasting a moderate contraction next year with the likelihood of an even bigger downturn. 77% of Canadian firms expect inflation above 3% over the next two years.

• Support levels: 1.3677, 1.3619, 1.3583, 1.3535, 1.3454
• Resistance levels: 1.3795, 1.3858, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. But the price is trading below the moving lines. The MACD indicator is negative, but there is a divergence. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3677, but after confirmation in the form of an impulse initiative. For sell deals, it is better to consider the resistance level of 1.3795, but only after an additional confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3677, the downtrend will likely resume.