The Analytical Overview of the Main Currency Pairs on 2023.01.27

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0912
• Prev. Close: 1.0890
• % chg. over the last day: -0.20%

ECB representatives Makhlouf, Nagel and Vasle made more or less the same statements yesterday, agreeing on the need for further rate hikes and warning that the fight against inflation is not over yet. European Central Bank President Christine Lagarde also repeatedly used the phrase “stay the course” in her last speech. Markets have already priced in the next two rate hikes from the ECB. But what will happen next? Uncertainty about ECB action after March is increasing. For now, analysts predict lower price pressure and further rate hikes, with a 0.25% rate hike in May and June.

Trading recommendations

• Support levels: 1.0855,1.0834,1.0801,1.0781,1.0710,1.0650,1.0597,1.0535
• Resistance levels: 1.0881,1.0926

The trend on the EUR/USD currency pair on the hourly time frame is still bullish. Yesterday the price tested liquidity above 1.0926 and then returned to the range, canceling the buy levels. This is a sign of a reversal. The MACD indicator became negative. During the day, the pressure of sellers appeared. Under such market conditions, buy trades are best considered from the support level of 1.0834 with confirmation in the form of a false breakdown on intraday time frames. Sell deals can be considered from the resistance level of 1.0881, but better with confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks down through the support level of 1.0801 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2395
• Prev. Close: 1.2410
• % chg. over the last day: +0.12%

The British pound is trading in a price range ahead of the Bank of England’s (BoE) interest rate decision next week. The UK Central Bank is expected to raise the prime rate by 50 basis points (71% probability) from 3.50% to 4.00%. UK Chancellor Jeremy Hunt pointed out yesterday that inflation in the country is expected to fall soon because of the “tough decisions” in the new budget.

Trading recommendations

• Support levels: 1.2292,1.2263,1.2220,1.2080,1.2000,1.1928,1.1875,1.1684
• Resistance levels: 1.2413,1.2446,1.2519

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is still bullish. Yesterday the price tested the liquidity above the resistance level of 1.2413, but there is still no confirmation of the reversal. The MACD indicator is in the positive zone, but buying pressure is decreasing, with liquidity narrowing into a triangle pattern. This often happens before an impulse movement. Under such market conditions, buy trades are better to look for on intraday time frames from the support level of 1.2292, but with confirmation. Sell trades are better to look for from the resistance level of 1.2413 but also better with a confirmation in the form of a reverse initiative because a false breakout has already occurred.

Alternative scenario:

if the price breaks down through the 1.2263 support level and fixes above it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 129.60
• Prev. Close: 130.22
• % chg. over the last day: +0.47%

Tokyo’s core consumer price index increased from 3.9% to 4.3% in annual terms. This is the highest inflation rate in the last 41 years. This indicator is considered a leading indicator of inflation across the country. According to analysts, this rise in inflation is likely to force the Bank of Japan (BOJ) to phase out its massive stimulus program.

Trading recommendations

• Support levels: 129.04,128.16,127.53,126.19
• Resistance levels: 130.09,130.58,131.10,130.61,131.58,132.37,132.95,133.23

From the technical point of view, the medium-term trend on the currency pair USD/JPY is still bearish. Yesterday, the price tested liquidity above the resistance level of 130.58 and canceled the last buy level. This indicates a possible decline in price today. The MACD indicator has become inactive. It is best to look for buy deals from the support level of 129.04, but only with confirmation on the lower time frames. Sell deals can be searched for from the resistance level of 130.09, provided that there is a reverse reaction.

Alternative scenario:

If the price fixes above the resistance level of 131.58, the uptrend will be renewed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3386
• Prev. Close: 1.3321
• % chg. over the last day: -0.48%

The Canadian dollar continues to strengthen amid rising oil prices and weakness in the dollar index. On February 1, there will be the OPEC+ meeting, where the cartel is likely to confirm the current levels of oil production, which might provoke further growth of the “black gold” quotes. On the one hand, it is positive for strengthening the Canadian currency. But on the other hand, the excessive growth of oil prices may trigger a new round of inflationary pressure, even though the interest rates are already high. Therefore, the growth of oil prices is not good for the global economy for now.

Trading recommendations

• Support levels: 1.3303,1.3212
• Resistance levels: 1.3345,1.3413,1.3445,1.3496,1.3520,1.3554,1.3595,1.3632

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. Yesterday, the price was fixed below the level of 1.3344. The MACD indicator became negative, but there is a divergence. Returning the price above the level of 1.3344 may provoke a sharp rise in quotes. Under such market conditions, buy trades may be considered when the price returns to the price range of 1.3343-1.3428, but with additional confirmation in the form of reverse initiative. Sell deals should be considered from the resistance level of 1.3345, but only with confirmation.

Alternative scenario:

if the price breaks out and consolidates above the resistance level of 1.3513, the uptrend will likely resume.