The Analytical Overview of the Main Currency Pairs on 2023.04.20

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0971
• Prev. Close: 1.0955
• % chg. over the last day: -0.14%

Inflation in the Eurozone remained unchanged compared to the previous month. The Consumer Price Index was 6.9% on an annualized basis, while the Core Inflation Indicator remained at 5.7%. Such data increases the likelihood of a further 0.5% rate hike at the next ECB meeting. Reducing the interest rate differential between the ECB and the US Federal Reserve will act as a growth factor for the euro.

Trading recommendations

• Support levels: 1.0934,1.0894,1.0830,1.0803,1.0770,1.0680
• Resistance levels: 1.0999,1.1041,1.1185

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading at the level of moving averages, and a narrow volatility corridor is forming. The MACD indicator has become inactive. Under such market conditions, buy trades are best considered from the support level of 1.0934, but with confirmation. Sell positions may be considered from the resistance level of 1.0999, but also only with a confirmation in the form of a false breakout.

Alternative scenario:

if the price breaks down through the support level of 1.0894 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2425
• Prev. Close: 1.2439
• % chg. over the last day: +0.11%

The UK consumer price level has declined, but inflation remains above 10% for the seventh month in a row. On an annualized basis, the inflation rate fell from 10.4% to 10.1%. The core indicator (which excludes food and energy prices) remained at 6.2%. At the same time, the Producer Price Index (PPI), which shows the rate of inflation between plants and factories, and is a leading indicator of consumer prices, rose by 0.2% over the last month. Thus, inflationary pressures remain high, which increases the likelihood of further rate hikes by the Bank of England. It is a factor in strengthening the British currency.

Trading recommendations

• Support levels: 1.2414,1.2391,1.2343,1.2320,1.2267,1.2178,1.2112
• Resistance levels: 1.2472,1.2519,1.2643

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is still bullish. The prices are forming a wide-volatility flat. The MACD indicator has become inactive, and prices are trading at the level of the moving averages. Buying is best considered from the support level of 1.2414 but with confirmation. Falling below 1.2391 is undesirable for buyers. It is best to look for sell trades on intraday time frames from the resistance level of 1.2472 but with a confirmation in the form of a false breakout.

Alternative scenario:

if the price breaks down through the 1.2343 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 134.09
• Prev. Close: 134.70
• % chg. over the last day: +0.45%

The BoJ will not change its monetary policy at next week’s monetary policy meeting. Also, the BoJ will not change its bond yield controls in April. Thus, the BoJ’s policy remains unchanged. Given the increasing interest rate differential between the BoJ and the Fed, there are no factors for the JPY to strengthen. Short- and medium-term forecasts point to a long-run growth of USD/JPY quotes.

Trading recommendations

• Support levels: 134.04,133.12,132.02,131.82,130.62
• Resistance levels: 135.11,136.07,137.91

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading in a narrow range. The MACD indicator is in the positive zone, but there are signs of divergence, which indicates the weakness of the buyers. A correction wave is very likely, given that the price has reached the resistance level. Under such market conditions, it is best to look for buy deals from the 134.04 support level, but with confirmation. The best option to enter to sell would be a false breakout of the 135.11 resistance level and confirmation in the form of a change in the price structure on the lower time frames.

Alternative scenario:

if the price fixes below the 132.00 support level, the downtrend will be resumed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3385
• Prev. Close: 1.3358
• % chg. over the last day: +0.20%

The Canadian dollar is a commodity currency, so it depends not only on the monetary policy of the Bank of Canada but also on oil prices. The US WTI crude oil has lost 4% since the beginning of this week because of concerns about the recession and rising rates. Falling oil on the back of a rising dollar index and Treasury bond yields have led to a decline in the Canadian currency. There are signs of a significant weakening in global fuel demand along with a drop in the manufacturing sector business activity. As a rule, oil prices rise in the run-up to summer on the back of increased travel demand, but this is not happening at the moment.

Trading recommendations

• Support levels: 1.3409,1.3341,1.3267
• Resistance levels: 1.3488,1.3515,1.3563,1.3616,1.3644

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish. The price is trading above the moving averages and has consolidated above the priority change level. The MACD indicator is in the positive zone, and the buyers’ pressure remains. It is best to look for buy deals after a slight pullback from the support level of 1.3341, but only with confirmation on the lower time frames. It is best to look for sell positions from the resistance level of 1.3488 or 13515, but only with confirmation in the form of a false breakout.

Alternative scenario:

if the price breaks out and consolidates below the support level of 1.3342, the downtrend will likely resume.