The Analytical Overview of the Main Currency Pairs on 2023.03.21

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0684
• Prev. Close: 1.0718
• % chg. over the last day: +0.32%

The important monetary policy meeting of the US Federal Reserve will take place tomorrow. Analysts’ opinions differ. Some strategists believe that the US Fed will raise the rate by 0.25% but will announce the end of the tightening cycle. Another part of analysts is inclined to believe that the US Fed will end the tightening cycle as early as tomorrow without a rate hike, as the Fed injected $4.4 trillion into the Bank Term Funding Program (BTFP) at the end of last week. Many analysts see this as hidden “quantitative easing” (QE). In any scenario, this is more dovish than the US Federal Reserve was planning a 0.5% rate hike two weeks ago with continued tightening. Any hints of an end to the tightening cycle would be negative for the dollar and positive for the European currency.

Trading recommendations

• Support levels: 1.0680,1.0519,1.0482
• Resistance levels: 1.0725,1.0804,1.0906

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 in the positive zone; there is buying pressure inside the day, but there is a divergence, indicating further growth weakness. Buy trades are best considered from the support level of 1.0680, but with confirmation within the day. Sell positions can be considered from the resistance level of 1.0725 on the condition of a reverse reaction.

Alternative scenario:

if the price breaks down through the support level of 1.0519 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2201
• Prev. Close: 1.2274
• % chg. over the last day: +0.59%

There will be two important events this week for the British currency. New inflation data will be released on Wednesday, while the Bank of England will hold its monetary policy meeting on Thursday. There is no doubt that inflation data will play a key role in policymakers’ decisions, so traders should carefully evaluate inflation figures. A sharp decline in inflation will leave room for the Bank of England to raise the rate by another 0.25%, which will give confidence to the British currency. But if inflation stays plus or minus at the same level, probably amid the banking crisis, the Bank of England may end its tightening cycle, which would be negative for the sterling.

Trading recommendations

• Support levels: 1.2169,1.2009,1.1963,1.1929,1.1843
• Resistance levels: 1.2267,1.2326

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 positive zone, but on several timeframes, there is a divergence, which means that further price growth is limited, and a correctional wave is expected. It is better to look for buy deals after the pullback to the moving averages or from the support level of 1.2169. It is better to look for sell deals from the resistance level of 1.2267 but with a confirmation in the form of a reverse reaction.

Alternative scenario:

if the price breaks down through the 1.1843 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 131.79
• Prev. Close: 131.30
• % chg. over the last day: -0.37%

The staff reshuffle at the Bank of Japan is beginning. Yesterday, a new executive director, Seiichi Shimizu, and a deputy governor, Shinichi Uchida, were appointed. New governor Kazuo Ueda will join the Bank of Japan next month. On April 8, the term of incumbent governor Haruhiko Kuroda expired. Ueda’s first political meeting is scheduled for April 27-28. But don’t expect dramatic changes from the new governor. The Bank of Japan’s overall inflation estimate has remained unchanged, as the bank expects inflation to fall later this year. And amid the growing banking crisis, there remains a need for continued monetary stimulus.

Trading recommendations

• Support levels: 131.43
• Resistance levels: 133.78,135.11,136.08,137.91,138.15,138.88

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The MACD indicator is in the negative zone with signs of oversold and divergence. In the coming days, traders should expect a corrective upward movement. The price is trading below the levels of the moving averages and forming a downward wedge. Under such market conditions, buy trades are best sought after an impulse breakout of the descending narrowing channel. Sell deals can be sought from the resistance level of 133.78, but also with additional confirmation in the form of a reverse initiative.

Alternative scenario:

if the price fixes above the 136.08 resistance level, the uptrend will be resumed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3722
• Prev. Close: 1.3664
• % chg. over the last day: -0.42%

Inflation data will be released today in Canada. Consumer prices are expected to fall from 5.9% to 5.4% year-over-year, while core inflation (which excludes food and energy prices) will fall from 5% to 4.8%. Such data will be negative for the Canadian dollar, as it boosts confidence that the Bank of Canada will not tighten monetary policy again this year. However, the Canadian dollar may get some support from oil prices, as being a commodity currency, analysts expect oil prices to recover in the coming days.

Trading recommendations

• Support levels: 1.3650,1.3590,1.3515
• Resistance levels: 1.3697,1.3786,1.3811,1.3862

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is now trading at the level of moving averages, and the MACD indicator is in the negative zone with signs of divergence. The level of 1.3650 has formed a double bottom, so there is a high probability of testing liquidity below this level. Under such market conditions, sell deals can be sought from the resistance level of 1.3697, but only with short targets and after confirmation in the form of reverse initiative. Buying is best waiting at the support level of 1.3650, but it is also better with confirmation in the form of a false breakout.

Alternative scenario:

if the price breaks down and consolidates below the support level of 1.3650, the downtrend will likely resume.