The Analytical Overview of the Main Currency Pairs on 2023.04.19

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0922
• Prev. Close: 1.0973
• % chg. over the last day: +0.47%

The President of the Federal Reserve Bank of Atlanta, Raphael Bostic, stated that he is in favor of another interest rate hike and then keeping it above 5% for a while in order to curb inflation. Fed officials are expected to raise rates by 25 basis points from the current 5.00% to 5.25% at a meeting on 2-3 May. Eurozone’s inflation data will be released today. The focus will be on the core value. If core inflation in the Eurozone shows signs of rising again, this will increase the likelihood of a 0.5% rate hike at the next ECB meeting. A reduction in the interest rate differential between the ECB and the US Fed is likely to lead to a strengthening of the Euro in the medium term.

Trading recommendations

• Support levels: 1.0942,1.0894,1.0830,1.0803,1.0770,1.0680
• 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 above the moving averages again, but the buying pressure is weak. The MACD indicator is in the positive zone, but another price decline is possible before the reversal. Buy trades are best considered from the support level of 1.0942 but with confirmation. Sell positions can 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: 1.2371
• Prev. Close: 1.2423
• % chg. over the last day: +0.42%

UK labor market data came out mixed with a weakness bias. The average pay index came out better than forecasts, but jobless claims rose by 28.2k against expectations of a 2.5k decline. The unemployment rate rose from 3.7% to 3.8%. The inflation report will also be released today to help forecast the Bank of England’s next moves. Overall inflation is expected to fall below 10% in annual terms. Lower inflationary pressures may give confidence to the British currency in the short term.

Trading recommendations

• Support levels: 1.2411,1.2380,1.2343,1.2320,1.2267,1.2178,1.2112
• Resistance levels: 1.2469,1.2519,1.2643

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is still bullish. The price has failed to consolidate below the priority change level. The MACD indicator has returned to positive territory, and the price is trading at the level of the moving averages. Buying is best considered after a false breakdown of 1.2411 or from 1.2380, but with confirmation. Sell trades are best sought on intraday time frames from the resistance level of 1.2469 but with confirmation in the form of a reverse initiative.

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: 134.43
• Prev. Close: 134.09
• % chg. over the last day: +0.25%

Japan will continue on course to meet the Central Bank’s inflation target of 2% by continuing to ease monetary policy, even though it may take time, BoJ Governor Kazuo Ueda said on Tuesday, outlining his stance on maintaining soft conditions. Ueda stressed the need for Japanese firms to invest more in human capital, saying economic growth should bear the fruits of higher wages and support inflation. As part of its policy of yield control and quantitative easing, the Central Bank is still buying huge amounts of JGBs as well as risky assets such as exchange-traded funds and real estate investment trusts. This is a negative factor for the Japanese yen.

Trading recommendations

• Support levels: 134.74,134.04,133.12,132.02,131.82,130.62
• 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 has become inactive. It is best to use the moving averages to join the trend but with confirmation in the form of an initiative. The 134.03 support level could be considered. A price move below the 133.74 level would open the door for a deeper correction. The best option for a sell entry would be a false breakout of the resistance level of 135.11 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: 1.3389
• Prev. Close: 1.3387
• % chg. over the last day: -0.01%

The latest inflation data for Canada showed that inflationary pressures are declining. The consumer price index fell from 5.2% to 4.3% year-on-year last month, the lowest reading since August 2021. Core inflation (excluding food and energy prices) also fell from 4.7% to 4.3% y/y. The Bank of Canada expects consumer prices to slow to 3% around mid-year and return to the 2% target by the end of 2024. Thus, the Bank of Canada’s decision to suspend its tightening campaign was made very precisely. But Bank of Canada Governor Tiff Macklem indicated yesterday that the BOC has not ruled out another rate hike.

Trading recommendations

• Support levels: 1.3341,1.3267
• Resistance levels: 1.3427,1.3488,1.3515,1.3563,1.3616,1.3644

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The price is forming a wide range. The MACD indicator is in the positive zone, but the buying pressure is weakening. Completion of the corrective wave is best expected in the premium zone (highlighted on the chart). Sell deals are best sought from the resistance level of 1.3427, but only with confirmation in the form of a reverse initiative. Buy trades are best sought from the support level of 1.3341, but only with confirmation on the lower time frames and short targets.

Alternative scenario:

if the price breaks out and consolidates above the resistance level of 1.3427, the uptrend will likely resume.