The Analytical Overview of the Main Currency Pairs on 2023.03.15

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0727
• Prev. Close: 1.0728
• % chg. over the last day: +0.01%

Inflationary pressures are easing in the United States. The latest data showed that year-over-year consumer prices fell from 6.4% to 6.0%. Core inflation (which excludes food and energy prices) declined from 5.6% to 5.5%. The next step is up to the US Fed Banks’ opinions on the Fed’s next move are divided: some think the Fed will cut rates as early as March. Others believe that the rate will be raised by 0.25% on March 21-22. The market has calmed down a bit and is looking forward to a 25 bps rate hike (69% chance) than staying unchanged (31%) and another 25 bps up in May. But banks have been predicting rate cuts since the summer.

Trading recommendations

• Support levels: 1.0679,1.0620,1.0576,1.0541,1.0519,1.0482
• Resistance levels: 1.0804,1.0906

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is trading above the moving averages and forming a “wedge” pattern, which is considered a reversal pattern. The MACD indicator is in the positive zone, but there are signs of divergence. It is better to buy from the support level of 1.0679 or 1.0620 but with intraday confirmation. It is best to buy from the Fibonacci discount zone (marked with a green rectangle). Sell deals can be considered from the resistance level of 1.0803 if there is a reversal or after an impulse movement from the “narrowing wedge.”

Alternative scenario:

if the price breaks down through the support level of 1.0541 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2186
• Prev. Close: 1.2152
• % chg. over the last day: -0.28%

Wage growth in the UK slowed in the last quarter. The unemployment rate remained unchanged at 3.7% — the data point to a robust labor market. The Bank of England is expected to raise the cost of borrowing another quarter percentage point to 4.25% on March 23. However, investors sharply cut their bets on such a move after the collapse of US Silicon Valley Bank. Interest rate futures show that investors estimate the likelihood that the Bank of England will suspend a rate hike next week at about 40%

Trading recommendations

• Support levels: 1.2143,1.2036,1.1964,1.1929,1.1843,1.1799,1.1603
• Resistance levels: 1.2267

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price is flat and trades at the level of the moving averages. The MACD indicator is overbought with signs of divergence. It is better to look for buy deals after the correction from the support level of 1.2036 or 1.1964, but better from the discount zone (50-70% of Fibonacci). It is better to look for sell deals from the resistance level of 1.2143 but with a confirmation in the form of an impulse return beyond the level.

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: 133.19
• Prev. Close: 134.24
• % chg. over the last day: +0.79%

Japanese government bonds were sold off on Tuesday, causing yields to fall due to an inverse relationship (inverse correlation) between a bond’s price and its yield. The Japanese bank index fell by 16% over the past three trading days. The drop in yields is consistent with other major economies that have seen an exodus of risky assets such as stocks. Investors are seeking safety in government-backed securities such as bonds. Don’t forget the interest rate differential, which is not in favor of the Japanese yen.

Trading recommendations

• Support levels: 133.69,132.94
• Resistance levels: 135.46,136.08,137.91,138.15,138.88

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The MACD indicator has become positive, but there are signs of the buyer’s weakness. The price has corrected to the premium zone (50-70% Fibonacci). Under such market conditions, buy trades are best sought from the support level of 133.69, but only with intraday confirmation and short targets. Sell deals can be sought from the resistance level of 135.46 in the premium zone, but only with additional confirmation in the form of a reverse initiative on the lower time frames.

Alternative scenario:

if the price fixes above the 137.00 resistance level, the uptrend will be resumed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3726
• Prev. Close: 1.3683
• % chg. over the last day: -0.31%

The Canadian dollar was able to strengthen in the last two days, mainly due to the decline in the dollar index. The Bank of Canada (BoC) has reiterated its view that the current monetary policy stance is restrictive enough to contain inflation. Thus, the fundamental picture is in favor of strengthening the Canadian dollar against the US dollar. Only oil prices can prevent it. Oil prices fell more than 4% yesterday to a three-month low after the US inflation report, and the recent bankruptcies in the US raised fears of a new financial crisis, which may reduce the future oil demand.

Trading recommendations

• Support levels: 1.3664,1.3590,1.3515
• Resistance levels: 1.3752,1.3811,1.3862

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price has corrected to the premium zone. The MACD indicator is in the negative zone, but signs of divergence already indicate that correction will soon be completed. Under such market conditions, buy trades are worth looking for from the support level of 1.3664, but only with confirmation in the form of the reaction on the lower time frames. Sell deals can be searched from the resistance level of 1.3752, but only with short targets and after confirmation in the form of a false breakout.

Alternative scenario:

if the price breaks down and consolidates below the support level of 1.3634, the downtrend will likely resume.