The Analytical Overview of the Main Currency Pairs on 2023.04.13

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0908
• Prev. Close: 1.0990
• % chg. over the last day: +0.75%

The minutes of the Fed’s March meeting showed that Fed policymakers were close to halting rate hikes last month as the banking crisis erupted. Still, high inflation and strong economic growth reversed their decision in favor of continuing monetary tightening. The Fed has kept its base rate forecast unchanged since December, predicting a final rate of 5.1% in 2023, which implies at least one more increase to bring monetary policy into restrictive territory.

Trading recommendations

• Support levels: 1.0937,1.0894,1.0830,1.0803,1.0770,1.0680,1.0519,1.0482
• Resistance levels: 1.0988,1.1032

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price has updated the monthly maximum, with no signs of a reversal. The MACD indicator shows that there is buying pressure. Buy trades are best considered after a correction to the support levels of 1.0937 and 1.0894, but only with confirmation on the lower time frames. Sell positions can be considered from the resistance level of 1.0988, but the main goal of the price now is to reach the resistance level of 1.1032.

Alternative scenario:

if the price breaks down through the support level of 1.0830 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2423
• Prev. Close: 1.2483
• % chg. over the last day: +0.48%

Lots of macro statistics will be released today in the UK. The main report will be the GDP data for March. Analysts expect the economy to grow by 0.1%, but surprises are possible. The trade balance and important industrial and manufacturing production data will be published with the GDP report. A decline in these economic indicators may trigger a sell-off in the GBP and vice versa.

Trading recommendations

• Support levels: 1.2428,1.2398,1.2320,1.2267,1.2178,1.2112,1.2009,1.1963
• Resistance levels: 1.2519

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages, the MACD indicator is positive, and buying pressure remains. Under such market conditions, it is best to consider buying from the support level of 1.2428 or 1.2398, but with confirmation in the form of a reverse initiative. Sell trades are best looked for on intraday time frames from the resistance level of 1.2519, but with confirmation in the form of a false breakout and a change of structure on the lower time frames.

Alternative scenario:

if the price breaks down through the 1.2360 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 133.61
• Prev. Close: 133.13
• % chg. over the last day: -0.36%

The currency markets are currently estimating a 30% probability that USD/JPY will trade at 120 price levels at the end of the year or even earlier (the current level is 133). According to analysts, markets are underestimating the risk that the Bank of Japan will cut its yield curve control policy. The forward market is still pricing 10-year JGB yields at 0.50-0.55% over the next six months, and they are expected to trade much higher. The Japanese yen would strengthen significantly if the Bank of Japan stops targeting the 10-year JGB maturity.

Trading recommendations

• Support levels: 132.85,132.48,131.82,130.62
• Resistance levels: 133.74,135.11,136.07,137.91

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. But the current market conditions indicate a high probability of a correction. Yesterday the price made a false breakout of the week’s high, after which it impulsively returned behind the level and changed the structure on the lower time frames. Sell deals can be sought from the resistance level of 133.55 or 133.75. It is not the best situation for buying right now. Buy deals should be considered either after an impulse breakout above 133.75 or after the completion of the correction in the discount Fibo area (green rectangle) in combination with the support level.

Alternative scenario:

if the price fixes below the 131.82 support level, the downtrend will be resumed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3463
• Prev. Close: 1.3441
• % chg. over the last day: -0.16%

As expected, the Bank of Canada kept the interest rate at 4.5%. The central bank improved its outlook and said the latest data “strengthens” confidence that inflationary pressures will ease while keeping room for additional hikes if the economy unexpectedly goes up. Policymakers are prepared to wait for more data before making further changes to their monetary policy. BoC head Macklem and his officials said tighter credit conditions, exacerbated by recent volatility in the global banking sector, are now expected to constrain growth in the US and Europe.

Trading recommendations

• Support levels: 1.3406,1.3501,1.3456,1.3400
• Resistance levels: 1.3488,1.3515,1.3563,1.3616,1.3644,1.3694,1.3722

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 became negative, there are the first signs of divergence, but it is too early to speak about a reversal. Considering that there are no significant support levels here, the price may test liquidity below 1.3406. Sell deals can be sought from the resistance level of 1.3488, but only with a confirmation in the form of a reverse initiative. Buy trades are best sought after a false breakdown of 1.3406 with a change in structure on the lower time frames.

Alternative scenario:

if the price breaks out and consolidates above the resistance level of 1.3536, the uptrend will likely resume.