InvestMacro

The EUR/USD currency pair

• Prev Open: 0.9694
• Prev Close: 0.9704
• % chg. over the last day: +0.10 %

Recent strong US Labor Market reports have dashed market participants’ hopes that Fed policymakers may slow down the rate hikes before the end of the year. HSBC is selling the euro against the US dollar, expecting a retest of the 2022 lows, as the recent rally is seen as a reduction in investor sentiment due to premature hopes of a Federal Reserve reversal. HSBC has been advocating a drop in the euro for more than a year and believes the euro will fall even further in the coming months.

• Support levels: 0.9667, 0.9601
• Resistance levels: 0.9743, 0.9856, 0.9962, 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 MACD indicator became inactive, and the price is forming a balance. Buy trades should be considered from the support level of 0.9667, but with additional confirmation in the form of reverse initiative. Sell deals can be considered from the resistance level of 0.9743, 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.

• – Eurozone Industrial Production (m/m) at 12:00 (GMT+3);
• – US Producer Price Index (m/m) at 15:30 (GMT+3);
• – Eurozone ECB President Lagarde Speaks (m/m) at 16:30 (GMT+3);
• – US FOMC Meeting Minutes at 21:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1055
• Prev Close: 1.0963
• % chg. over the last day: -0.84 %

The pound fell to a new two-week low after Bank of England Governor Andrew Bailey confirmed that the central bank would end its emergency bond-buying program on Friday and told pension fund managers to complete rebalancing their positions within that time frame. The Bank of England also signaled to bankers that it might extend its bond-buying program beyond Friday’s deadline if market conditions require it. The movements in the UK bond market are confusing investors. Analysts believe that the situation may worsen. As a result, such uncertainty scares investors, who sell the British pound and move to safe-haven assets.

• Support levels: 1.0956, 1.0915, 1.0816, 1.0711, 1.03
• Resistance levels: 1.1130, 1.1248, 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. The MACD indicator is in the negative zone, but there is a divergence, indicating the sellers’ weakness. Under such market conditions, buy trades can be considered from the support level of 1.0956 or 1.0915. Sell trades are best to look for on intraday time frames, and the nearest resistance level is 1.1130, but better with confirmation.

Alternative scenario: if the price breaks down of the 1.0915 support level and fixes below it, the downtrend will likely resume.

• – UK GDP (m/m) at 09:00 (GMT+3);
• – UK Industrial Production (m/m) at 09:00 (GMT+3);
• – UK Manufacturing Production (m/m) at 09:00 (GMT+3);
• – UK FPC Meeting Minutes (Tentative);
• – UK FPC Statement (Tentative).

The USD/JPY currency pair

• Prev Open: 145.71
• Prev Close: 145.85
• % chg. over the last day: +0.10 %

The Japanese yen has again renewed its 24-year low against the US dollar. Japan’s top currency diplomat spoke on potential currency intervention Tuesday, saying the authorities had always been ready to take necessary measures against excessive currency volatility. At a regular briefing Wednesday, the chief cabinet secretary said that officials remain ready to take appropriate steps to counter excessive currency volatility. But analysts say it is not worth waiting for a second intervention, as it is costly and has only a temporary effect. To stop the trend, either the Bank of Japan needs to start shifting from a softer monetary policy to a more neutral one, or the US Federal Reserve needs to change its approach and reduce its aggressive attitude towards interest rate hikes.

• Support levels: 145.92, 144.91, 144.16, 143.00, 140.60, 139.61, 138.78, 137.65
• Resistance levels: 147.00, 148.00

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, but divergence has appeared. Under such market conditions, buy trades can be sought on the intraday time frames from the support level of 145.92, but with confirmation. Sell deals can be searched from the resistance level of 147.00 or 148.00, but only with additional confirmation in the form of a reverse initiative.

Alternative scenario: If the price fixes below 143.00, the downtrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3774
• Prev Close: 1.3794
• % chg. over the last day: +0.15 %

The Canadian dollar is a commodity currency and depends 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 the number of Covid cases in China reached the highest level since August, which will lead to lower demand. Fundamentals are predicting higher oil prices due to significant OPEC production cuts, but any disruption in risky assets could continue to negatively impact oil prices.

• Support levels: 1.3675, 1.3619, 1.3583, 1.3535, 1.3454
• 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 price is trading above the moving lines. The MACD indicator is positive, but there is a divergence. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3752, but with confirmation. For selling, it is better to consider the resistance level of 1.3858, but only after the additional confirmation

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3583, the downtrend will likely resume.

The EUR/USD currency pair

• Prev Open: 0.9727
• Prev Close: 0.9697
• % chg. over the last day: -0.31 %

The US dollar strengthened sharply on Monday after Russia launched a series of missile attacks on critical infrastructure in Ukraine and on ordinary residential areas, including the capital Kyiv. Analysts believe the US dollar could make a move to new yearly highs as inflation data to be released this week will likely point to a rise in core inflation, confirming the prospect of another massive rate hike at the next meeting. According to the rate monitoring tool, 81% of traders expect the Fed to raise rates by 75 basis points at the next meeting. Thus, the fundamental picture now favors a rise in the dollar. On the other hand, if this week’s inflation data shows a slowdown in consumer price growth, the markets may see a sharp strengthening of risky currencies such as the euro and the pound.

• Support levels: 0.9667, 0.9601.
• Resistance levels: 0.9856, 0.9962, 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 MACD is in the negative zone, but there is a divergence, indicating the weakness of the sellers. Buy trades should be considered from the support level of 0.9667, but with additional confirmation in the form of reverse initiative. Sell deals can 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.

• – US FOMC member Mester Speaks at 19:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1082
• Prev Close: 1.1054
• % chg. over the last day: -0.25 %

On September 28, amid an unprecedented revaluation of British assets, the Bank of England announced a temporary and targeted intervention to restore the functioning of the long-term government bond market and reduce risks associated with the spread of credit conditions for British households and businesses. To avoid dysfunction in major funding markets, these operations aim to allow investment funds to address risks associated with their resilience to volatility in the long-term securities market. The Bank of England plans to complete these operations and stop all bond purchases on Friday, October 14. Thus, after October 14, the British pound will lose some of its government support.

• Support levels: 1.0915, 1.0816, 1.0711, 1.03
• Resistance levels: 1.1181, 1.1248, 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 MACD indicator is in the negative zone, but there is a divergence, which indicates the weakness of the sellers. Under such market conditions, buy trades can be considered from the support level of 1.0915, but only with confirmation. Sell trades are best to look for on intraday time frames, the nearest resistance level is 1.1181, but also better with confirmation.

Alternative scenario: if the price breaks down of the 1.0915 support level and fixes below it, the downtrend will likely resume.

• – UK Average Earnings Index (m/m) at 09:00 (GMT+3);
• – UK Claimant Count Change (m/m) at 09:00 (GMT+3);
• – UK Unemployment Rate (m/m) at 09:00 (GMT+3);
• – UK BoE Gov Bailey Speaks at 21:35 (GMT+3).

The USD/JPY currency pair

• Prev Open: 145.26
• Prev Close: 145.73
• % chg. over the last day: +0.32 %

Japan’s current account surplus shrank to its lowest level in August, with rising energy import prices outpacing rising export prices and depleting national wealth, Treasury Department data showed Tuesday. The deteriorating trade balance has caused the surplus to shrink for four consecutive fiscal years. While the cost of imports is rising as the yen weakens, the accompanying rise in exports, which are becoming cheaper for foreign buyers, has not been as significant because firms are moving production overseas. Policymakers are also increasingly concerned that the weak yen is driving up import bills and household living costs because of the heavy reliance on fuel and food imports.

• Support levels: 145.40, 144.91, 144.16, 143.00, 140.60, 139.61, 138.78, 137.65
• Resistance levels: 145.90

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The MACD indicator has become positive. The price is trading above the moving levels again. Under such market conditions, buy trades can be searched for on the intraday time frames from the support level of 144.91, but with confirmation. Sell deals can be searched from the resistance level of 145.90, but only with an additional confirmation in the form of a false breakout.

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

The USD/CAD currency pair

• Prev Open: 1.3517
• Prev Close: 1.3780
• % chg. over the last day: +0.38 %

The Canadian dollar is a commodity currency and depends not only on the monetary policy of the Bank of Canada but also on the dollar Index and oil prices. Oil prices were down yesterday as fears of recession outweigh the prospect of tight supply. But fundamentally, oil prices are now trending higher due to OPEC+ production cuts, so once the US Fed’s hawkish background begins to change to a more dovish one, the Canadian dollar will be the first currency to begin to strengthen.

• Support levels: 1.3675, 1.3619, 1.3583, 1.3535, 1.3454
• Resistance levels: 1.3755, 1.3858, 1.3968

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish again. The price is trading above the moving lines again and is breaking through all the resistance lines. The MACD indicator has become positive, but there is a divergence. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3675, but with confirmation. For sell deals, it is better to consider the resistance level of 1.3858, but only after the additional confirmation.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3583, the downtrend will likely resume.

The EUR/USD currency pair

• Prev Open: 0.9871
• Prev Close: 0.9790
• % chg. over the last day: -0.82 %

The report on the ECB’s September 7, 8 monetary policy meeting released yesterday showed that many Governing Council representatives approved a 75 basis point rate hike. The report also indicated that in the medium term, a 50 basis point hike would be part of a sustainable path towards more neutral rate levels, and such a dynamic would be enough to alleviate inflationary pressures and not “drop” the economy deep into recession. But all inflation forecasts for 2023 and 2024 have been revised upward.

• Support levels: 0.9782, 0.9748, 0.9666
• Resistance levels: 0.9856, 0.9962, 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 MACD indicator became negative, the price is trading below the moving averages, and the sellers’ pressure is increasing again. Buy trades should be considered from the support level of 0.9782. 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.

• – US FOMC Member Waller Speaks (m/m) at 00:00 (GMT+3);
• – US FOMC Member Mester Speaks (m/m) at 01:30 (GMT+3);
• – German Industrial Production (m/m) at 09:00 (GMT+3);
• – US Nonfarm Payrolls (m/m) at 15:30 (GMT+3);
• – US Unemployment Rate (m/m) at 15:30 (GMT+3);
• – US FOMC Member Williams Speaks (m/m) at 17:00 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1324
• Prev Close: 1.1158
• % chg. over the last day: -1.49 %

The UK construction companies reported a moderate increase in business activity in September, marking a return to growth after two months of declining output. Nevertheless, subdued demand persists, as evidenced by the weakest new orders since the economic recovery began in June 2020. Confidence in business prospects fell to its lowest level in two years in September, reflecting fears of higher interest rates and a downturn in the UK economy as a whole. On a more positive note, the supply deficit narrowed in September, and delivery delays were the least common since February 2020.

• Support levels: 1.1121, 1.0915, 1.0816, 1.0711, 1.03
• Resistance levels: 1.1248, 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 MACD indicator became negative, the price is trading below the moving averages, and the sellers’ pressure is increasing again. Under such market conditions, buy trades can be considered from the support level of 1.1121, but only with confirmation. Sell trades are best to look for on intraday time frames. The nearest resistance level is 1.1248, but also better with confirmation.

Alternative scenario: if the price breaks down from the 1.0915 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

• Prev Open: 144.58
• Prev Close: 145.13
• % chg. over the last day: +0.38 %

The USD/JPY quotes are slowly increasing again. Analysts are confident that it is not worth expecting another currency intervention from the Japanese government, as it is costly and has a temporary effect. Secondly, the Bank of Japan does not have enough funds to stop the yen’s fall. Japan has $1.3 trillion in reserves, but only about $135.5 billion is in the form of deposits. The rest is held in US Treasury bills. To stop the yen from falling, the Bank of Japan needs to shift the narrative from a soft monetary policy to a neutral one. However, since the Bank of Japan has no plans to change anything in its policy until the end of the year, and the US Federal Reserve continues to aggressively raise rates, USD/JPY quotes will be inclined to rise.

• Support levels: 144.16, 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. The MACD indicator has become positive, and the price trades above the moving levels again. Under such market conditions, buy trades can be searched for on the intraday time frames from the support level of 144.16, but with confirmation. Sell deals can be searched from the resistance level of 145.35, but only with an additional confirmation in the form of a false breakout, since the level has already been tested.

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

The USD/CAD currency pair

• Prev Open: 1.3615
• Prev Close: 1.3746
• % chg. over the last day: +0.96 %

Despite falling consumer prices in Canada, Bank of Canada Governor Tiff Macklem said he is firmly on a path to raise interest rates because policymakers are concerned about heightened domestic price pressures and rising inflationary expectations. Canada’s two-year bond yield reached its highest level since 2007, rising more than five basis points to 3.98%. Traders increased the odds of a 50 basis point rate hike at the next policy decision on October 26. Analysts are predicting that the Bank of Canada will stop at 4% in its rate hike cycle. The rate is currently at 3.25%.

• Support levels: 1.3675, 1.3619, 1.3583, 1.3535, 1.3454
• 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 bearish. But the price is trading above the moving lines again. The MACD indicator has become positive, and the buyer’s pressure is increasing. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3675 or 1.3619, but with confirmation. For sell deals, it is better to consider the resistance level of 1.3756, but only after the additional confirmation.

Alternative scenario: if the price breaks out through and consolidates above the resistance level of 1.3756, the uptrend will likely resume.

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