The Analytical Overview of the Main Currency Pairs on 2023.01.06

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0602
• Prev. Close: 1.0521
• % chg. over the last day: -0.77%

Today, the US will publish an important Nonfarm Payroll report. Analysts forecast that the data will show a number of 200,000 jobs, and the unemployment rate will remain unchanged. Such data may return strength to the dollar index, as a robust labor market gives the US Federal Reserve more room to act, including bringing the interest rate to the desired level in 2 meetings instead of 3. Conversely, a deterioration in labor market data, on the other hand, would indicate that the US Fed would act more softly, which is negative for the dollar.

Trading recommendations

• Support levels: 1.0514,1.0528,1.0483,1.0361,1.0332,1.0284
• Resistance levels: 1.0574,1.0589,1.0650,1.0695

The trend on the EUR/USD currency pair on the hourly time frame is still bullish. The price is trading below the moving averages but above the change of priority, which is a support level of 1.0514. The MACD indicator is in the negative zone but indicates a divergence, which limits the potential for further decline. Under such market conditions, buy trades are best considered from the support level of 1.0514 on intraday time frames. Sell deals can be considered from the resistance level of 1.0574 or 1.0589, but better with confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks down through the support level of 1.0514 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2053
• Prev. Close: 1.1910
• % chg. over the last day: -1.20%

The US Federal Reserve said this week that it does not expect a rate cut this year. Considering the fact that the Bank of England has very limited room for maneuver because the economy is already in recession, the interest rate differential between the Bank of England and the US Fed will have a negative impact on the GBP/USD quotes in the medium term. But it should be noted that the market is pricing in future scenarios. The US Fed is halting rate hikes this year, and this pause may play into the hands of the British currency.

Trading recommendations

• Support levels: 1.1893,1.1684,1.1476,1.1418
• Resistance levels: 1.1944,1.2000,1.2100,1.2166,1.2218,1.2308,1.2431,1.2519

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price is trading below the moving averages. The MACD indicator is in the negative zone, but there is divergence in higher time frames. Under such market conditions, it is better to look for buy deals on intraday time frames from the support level of 1.1893, but with confirmation. It is better to look for sell trades from the resistance level of 1.2000, but it is also better with a confirmation in the form of a false breakout.

Alternative scenario:

if the price breaks out through the 1.2100 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 132.55
• Prev. Close: 133.41
• % chg. over the last day: +0.65%

The Bank of Japan (BoJ) continued unscheduled bond purchases for the fourth straight day as Governor Kuroda confirmed that the Central Bank would continue monetary policy easing to achieve its sustainable price target. The prevailing view among investors is that the BoJ will raise its yield cap even higher or get rid of it altogether if inflation continues to rise in Japan. This situation does not play in favor of the Japanese yen.

Trading recommendations

• Support levels: 133,45,132.92,132.05,130.58,129.65
• Resistance levels: 134.45,135.88,137.03,138.00,139.09

From the technical point of view, the medium-term trend on the currency pair USD/JPY has changed to bullish. The price is now trading above the moving averages, while the MACD indicator has become positive, indicating buying pressure inside the day. But the divergence indicates that the upside potential is already limited. Buy trades are best considered after a slight correction to support levels of 133.45 or 132.92, but only with confirmation. Sell deals can be looked for from the level of resistance 134.45, provided that there is a reverse reaction or a false breakout, as the level has already been tested.

Alternative scenario:

If the price fixes below the support level of 132.92, the downtrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3477
• Prev. Close: 1.3568
• % chg. over the last day: +0.67%

The fall in oil prices stopped on Thursday, but it was not enough to give optimism to the Canadian dollar as the dollar index rose significantly ahead of the Nonfarm report. Investors are returning to the dollar, with the expectation that the US labor market remains solid, and this will allow the US Federal Reserve to be more decisive in future meetings.

Trading recommendations

• Support levels: 1.3561,1.3513,1.3439,1.3386,1.3360,1.3281,1.3212
• Resistance levels: 1.3604,1.3640,1.3700,1.3776,1.3855

From the point of view of technical analysis, the trend on the USD/CAD currency pair is still bullish. The price is trading above the moving averages again. The MACD indicator has returned to positive territory, and buying prevails during the day. Buy trades should be considered from the support at 1.3561 or 1.3513, but with confirmation. Sell deals are better to look for on the intraday time frames from the resistance level of 1.3604, but with confirmation in the form of a reverse initiative on the lower timeframes or a false breakout.

Alternative scenario:

if the price breaks down and consolidates below the support level of 1.3513, the downtrend will likely resume.