The Analytical Overview of the Main Currency Pairs on 2023.02.10

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0708
• Prev. Close: 1.0737
• % chg. over the last day: +0.27%

Germany’s inflation rate increased from 8.6% to 8.7% (forecast 8.9%) annually. Despite the fact that the data was better than forecasted, the rising inflation is not a pleasant factor in itself, especially for the largest economy in the region. Although the outlook for the eurozone has improved in recent months, many Wall Street analysts still believe a shallow recession will materialize later this year. Weak economic data in the coming weeks may limit the euro’s potential to grow in the short term.

Trading recommendations

• Support levels: 1.0710,1.0650,1.0597
• Resistance levels: 1.0838,1.0906,1.0926,1.0967,1.1017,1.1077

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is still forming a corridor. But the false breakdown zone below 1.0710 works as support and does not allow the price to go lower. The MACD indicator has become inactive, and volatility has decreased. Under such market conditions, buy trades are best considered from the support level of 1.0710, but with confirmation since the level has already been tested. Sell deals can be considered from the resistance level of 1.0838, but better with confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks down through the resistance level of 1.0967 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2057
• Prev. Close: 1.2117
• % chg. over the last day: +0.50%

The British pound has been showing growth in recent days and looks more confident than the euro. Last month’s minutes of the Bank of England’s Monetary Policy Committee (MPC) meeting showed that some policymakers are still set for another rate hike in March as they warn of rising risks to UK inflation. Meanwhile, the Bank of England expects inflation to start falling rapidly from mid-2023 and reach about 4% by the end of the year. Today, the UK will publish GDP data for the quarter as well as data on industrial production levels. A strong reading may give sterling confidence against the dollar and other currencies.

Trading recommendations

• Support levels: 1.2073,1.2000,1.1930
• Resistance levels: 1.2202,1.2147,1.2202,1.2311,1.2416

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. Yesterday the price reached the “premium” area but did not reach the resistance level. Statistically, about 70% of reversals occur in this zone. At the moment, the price is trading at the level of the moving averages. The MACD indicator has become inactive. Under such market conditions, it is better to look for buy deals on intraday time frames from the support level of 1.2073 or 1.2000, but with confirmation in the form of an impulse initiative. Sell trades are best sought after a pullback from the resistance level of 1.2202 but are also better with confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks out through the 1.2416 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 131.40
• Prev. Close: 131.51
• % chg. over the last day: +0.08%

Bank of Japan Governor Haruhiko Kuroda said yesterday that the benefits of the soft monetary policy outweigh any other side effects on the economy, failing to boost wages over the past decade. Kuroda believes that the soft monetary policy should continue after the change in the governor of the Bank of Japan. But that will be up to the new governor, who will be chosen this month and appointed in April 2023. The Producer Price Index, which measures inflation between plants and factories, has declined from 10.5% to 9.5% year-over-year, the first sign of declining inflation.

Trading recommendations

• Support levels: 131.09,130.34,129.68,129.98,129.19,129.04,128.16
• Resistance levels: 131.58,132.95,133.23

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. Yesterday the price tested the support level of 130.34 in the “discount” zone. The MACD indicator is in the positive area, and there is slight buying pressure. It is better to look for buy deals from the support level of 131.09, but only with confirmation on the lower time frames. Sell positions can be searched from the resistance level of 131.59, but it is also better with confirmation in the form of reverse initiative.

Alternative scenario:

If the price fixes below the support level of 128.16, the downtrend will be renewed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3439
• Prev. Close: 1.3454
• % chg. over the last day: +0.11%

At the Bank of Canada’s latest interest rate meeting, it became clear that the Bank of Canada may have held the last rate hike of the year. Overall inflation was down from a June peak of 6.2%, and December inflation was 5.4%. The short-term interest rate markets see interest rates unchanged for the rest of the year. Canada’s labor market data will be released today. The employment change is expected to show an increase of 15,000 jobs from the previous figure of 104,000. Unemployment is also projected to rise to 5.1%, and average hourly earnings to fall to 5.2%. If the labor market data is negative, the Canadian dollar may lose some ground, especially if oil prices are also down.

Trading recommendations

• Support levels: 1.3421,1.3333,1.3295,1.3212
• Resistance levels: 1.3472,1.3496,1.3520,1.3554,1.3595

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is forming a wide-volatile sideways. The MACD indicator is positive again, but there are signs of divergence. Sell positions should be considered from the resistance level 1.3472, but on the condition of a false breakout, as the level has already been tested. Buy trades can be considered from the support level of 1.3421 but with additional confirmation in the form of an impulse initiative.

Alternative scenario:

if the price breaks down and consolidates below the support level of 1.3263, the downtrend will likely resume.