The Analytical Overview of the Main Currency Pairs on 2023.03.20

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0611
• Prev. Close: 1.0665
• % chg. over the last day: +0.51%

Friday’s Eurozone inflation report showed that inflationary pressures remain in the region. The annualized consumer price index fell just 0.1%, from 8.6% to 8.5%. Core inflation (which excludes food and energy prices) remained at the same level as last month’s 5.6%. Austrian central bank governor Robert Holzmann said Saturday that inflation in the Eurozone is harder to manage than expected, and the European Central Bank may have to raise interest rates further, possibly above 4%.

Trading recommendations

• Support levels: 1.0606,1.0572,1.0541,1.0519,1.0482
• Resistance levels: 1.0679,1.0725,1.0804,1.0906

The trend on the EUR/USD currency pair on the hourly time frame is still bullish. The price is trading above the moving averages, and now it is important to pass the premium zone (50-70% of Fibonacci in the last wave) to maintain the uptrend. The MACD indicator is positive, and there is buying pressure inside the day. Buy trades are best considered from the support level of 1.0606 but with confirmation on lower time frames. Sell deals can be considered from the resistance level of 1.0679, provided that there is 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: 1.2107
• Prev. Close: 1.2177
• % chg. over the last day: +0.58%

At first glance, the pound sterling was pretty strong last week. The new budget added confidence to the British currency. But despite the positive outlook, the rest of the economic data still does not show a significant change in fundamentals. Inflation remains in double digits, and GDP growth for the fourth quarter showed a contraction. Also adding to the problems with the banking sector in Europe. New inflation data will be released this week, which, if lower, would allow the Bank of England to raise its interest rate by 0.25% on Thursday, but the latest data indicates only a 50% chance of such a scenario.

Trading recommendations

• Support levels: 1.2158,1.2009,1.1963,1.1929,1.1843
• Resistance levels: 1.2203,1.2267

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The MACD indicator returned to the positive zone, but the buyers’ pressure is weak, with divergence being formed. Buy trades are better to look for after a pullback to the moving averages from the support level of 1.2158. As for the sell deals, it is better to look for them from the resistance level of 1.2203 but with confirmation because the probability of a liquidity test above the level is very high.

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: 133.59
• Prev. Close: 131.98
• % chg. over the last day: -1.22%

Due to problems in the US and European banking sectors, JGB’s 10-year bond yields have fallen well below the 0.50% limit. Last week, total 10-year bond yields fell below 0.20% and are now trading in the 0.2-0.3% range. This situation is helping the Japanese yen to strengthen and is good for the new governor of the Bank of Japan, Kazuo Ueda. Macroeconomic data shows that there is no urgent need to tighten policy now. A sharp drop in the Tokyo consumer price index in February to 3.4% from 4.4% foreshadows that the Bank of Japan will keep monetary policy soft under the new governor.

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 has become inactive. The price is trading below the levels of the moving averages and forming a downward wedge. Under such market conditions, it is best to look for buy trades from the support level of 131.43, but only with a confirmation in the form of a false breakdown. Sell deals can be searched from the resistance level of 133.78, but also with an 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: 1.3732
• % chg. over the last day: +0.07%

Fears of problems in the banking sector have caused both benchmarks to reach their biggest weekly decline in the past week, falling more than 12%. But analysts still expect tight global supply to support oil prices for the foreseeable future. OPEC+ officials attributed the price decline to financial factors rather than a supply-demand imbalance, adding that they expect the market to stabilize. The Canadian dollar is a commodity currency, so it is sensitive to oil price movements. Stabilization of oil prices will help the Canadian dollar strengthen against the US dollar, especially if the US Federal Reserve announces the end of its tightening cycle this week.

Trading recommendations

• Support levels: 1.3677,1.3650,1.3590,1.3515
• Resistance levels: 1.3786,1.3811,1.3862

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. But now, the price is trading at the level of moving averages, and the MACD indicator has become inactive. There is a narrowing of liquidity. In such market conditions, it is worth looking for buy deals when the price reaches some level of resistance or support. Sell deals can be sought from the resistance level of 1.3786, but only with short targets and after confirmation in the form of a false breakdown. But deals are best waiting at support levels of 1.3677 or 1.3650, but also better with confirmation.

Alternative scenario:

if the price breaks down and consolidates below the support level of 1.3664, the downtrend will likely resume.