The Analytical Overview of the Main Currency Pairs on 2023.03.30

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0841
• Prev. Close: 1.0841
• % chg. over the last day: 0.0%

The easing of bank fears has caused markets to overestimate the potential for further Federal Reserve policy tightening. The Fed will make interest-rate decisions from meeting to meeting, taking into account current financial conditions, Fed Vice Chairman for Supervision Michael Barr said on the second day of a congressional hearing. At this point, markets are estimating a 39% chance of another 0.25% Fed rate hike in May, with two rate cuts by the end of the year.

Trading recommendations

• Support levels: 1.0770,1.0680,1.0519,1.0482
• Resistance levels: 1.0882,1.0924

Alternative scenario:

The EUR/USD currency pair trend on the hourly time frame is still bullish. The price is trading at the level of moving averages, volatility is decreasing, and buyers’ pressure is extremely weak. The MACD indicator has become inactive. It is better to buy from the support level of 1.0770 or 1.0680. But it is worth buying after confirmation on the intraday time frames in the form of a change in the structure. Sell deals can be considered from the resistance level of 1.0882 in case of a false breakout.

Technical indicators of the currency pair:

Trading recommendations

The EUR/USD currency pair trend on the hourly time frame is still bullish. The price is trading at the level of moving averages, volatility is decreasing, and buyers’ pressure is extremely weak. The MACD indicator has become inactive. It is better to buy from the support level of 1.0770 or 1.0680. But it is worth buying after confirmation on the intraday time frames in the form of a change in the structure. Sell deals can be considered from the resistance level of 1.0882 in case of a false breakout.

Alternative scenario:

if the price breaks down through the support level of 1.0680 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2337
• Prev. Close: 1.2315
• % chg. over the last day: -0.17%

The British pound has been steady against the US dollar this week. Last week’s interest rate hike by the Bank of England (BoE) and consolation statements by Bank of England Governor Andrew Bailey on Tuesday regarding the strength of the UK banking system supported the pound. Money markets now estimate a high probability of another Bank of England rate hike by May and do not foresee a rate cut until at least early 2024 because of persistently high inflation.

Trading recommendations

• Support levels: 1.2266,1.2178,1.2112,1.2009,1.1963,1.1929,1.1843
• Resistance levels: 1.2343,1.2415

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price formed a false breakout zone above the 1.2343 level. The MACD indicator became negative, but sellers’ pressure is weak. Under such conditions, it is best to buy after a pullback to the nearest support level of 1.2266. It is best to look for sell deals on intraday time frames from the resistance level of 1.2343, with confirmation on the lower time frames.

Alternative scenario:

if the price breaks down through the 1.2112 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 130.86
• Prev. Close: 132.86
• % chg. over the last day: +1.52%

Bank of Japan (BOJ) deputy governor Shinichi Uchida said Wednesday that an adjustment in the Central Bank’s bond yield control policy would certainly be an option if economic and price conditions justify a gradual end to stimulus. Uchida said inflation was “extremely important” in assessing whether Japan could sustainably hold the BOJ’s inflation target of 2%. Since current inflation is twice the target level, markets are rife with rumors that the Bank of Japan may refuse control of the YCC when new governor Kazuo Ueda succeeds incumbent Haruhiko Kuroda. The dollar index rose to a one-week high against the yen yesterday in anticipation of Japan’s fiscal year ending on Friday.

Trading recommendations

• Support levels: 131.91,130.49,129.80
• Resistance levels: 133.00,133.75,135.16,136.07,137.91

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish, but there are all the prerequisites for a reversal. At the moment, the price is trading above the moving averages, while the MACD indicator is overbought. It is better to look for buy trades from the support of 131.91, but only with a confirmation in the form of a reverse reaction or a false breakdown. Sell positions may be sought from the resistance level of 133.04 but also with an additional confirmation in the form of a false breakout.

Alternative scenario:

if the price fixes above the 133.75 resistance level, the uptrend will be resumed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3597
• Prev. Close: 1.3560
• % chg. over the last day: -0.27%

The Bank of Canada commented on the banking turmoil in the US and Europe for the first time. The BoC said Wednesday that it is prepared to provide support if the country’s banking system faces severe strain but will offer extraordinary liquidity only in extreme cases in an effort to mitigate financial damage. Deputy Governor of the Bank of Canada Tony Gravel also said in his speech that the Central Bank’s quantitative tightening program will end by the first half of 2025. Gravel also added that if there is another major crisis that the Bank can’t handle with its emergency tools, the Bank may resort to large-scale purchases of government bonds.

Trading recommendations

• Support levels: 1.3554,1.3515
• Resistance levels: 1.3616,1.3645,1.3694,1.3722,1.3786,1.3814,1.3862

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The price is trading below the moving averages. The MACD indicator is oversold, and there are signs of divergence, suggesting that an upward correction should be expected soon. Under such market conditions, it is better to buy from the support level of 1.3554 but with a confirmation in the form of a false breakdown and a structure change on the lower time frames. Sell deals can be looked for from the resistance level of 1.3616, but only with a false break confirmation as well. A false break is important for a reversal, as the seized liquidity should be taken away to the opposite side.

Alternative scenario:

if the price breaks out and consolidates above the resistance level of 1.3723, the uptrend will likely resume.