The Analytical Overview of the Main Currency Pairs on 2023.01.09

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0516
• Prev. Close: 1.0644
• % chg. over the last day: +1.22%

Falling energy prices in the Eurozone (especially natural gas prices) helped weaken the overall inflation rate. On an annualized basis, the Eurozone’s overall inflation rate fell from 10.1% to 9.2%. Core inflation (which excludes food and energy prices) also fell from 5.1% to 5.0% year over year. But the detailed report indicates that price pressures in non-energy sectors are rising, especially for food. This indicates that inflation is still strong.

Trading recommendations

• Support levels: 1.0650,1.0589,1.0535,1.0497,1.0480,1.0361,1.0332,1.0284
• Resistance levels: 1.0695

The trend on the EUR/USD currency pair on the hourly time frame is still bullish. The price is trading above the moving averages. The MACD indicator is in the positive zone, but there are signs of overbought, so it is worth waiting for a correction to find good entry points. Under such market conditions, buy trades are best considered from the support level 1.0650 or 1.0589 with confirmation on intraday timeframes. Sell deals can be considered from the resistance level of 1.0695 but better with confirmation in the form of a reverse initiative or a false breakout

Alternative scenario:

if the price breaks down through the support level of 1.0497 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1906
• Prev. Close: 1.2091
• % chg. over the last day: +1.55%

The non-farm report showed that the US economy added 223,000 jobs, higher than the expected 200,000. The unemployment rate fell to 3.5% from 3.7%, while average hourly earnings fell to 4.6% from a revised 4.8% decline. As the US labor market remains resilient, the Fed can expect to raise rates longer to keep inflation in check. But the dollar Index unexpectedly fell on a strong US labor market report, and this could be a “false” move, as a strong labor market, along with further rate hikes, is the foundation for a stronger dollar. Analysts still expect January and February to be strong months for the dollar and weak for the GBP.

Trading recommendations

• Support levels: 1.2100,1.2000,1.1928,1.1875,1.1684,1.1476,1.1418
• Resistance levels: 1.2193,1.2308,1.2431,1.2519

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame has changed to bullish. The price has broken through the priority change level and is trading above the moving averages. The MACD indicator is in the positive zone, and the pressure of buyers remains. Under such market conditions, it is better to look for buy trades on intraday time frames from the support level of 1.2100, but with confirmation. Sell trades are best sought from the resistance level of 1.2193 but also better with a confirmation in the form of a false breakout.

Alternative scenario:

if the price breaks down through the 1.1875 support level and fixes above it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 133.40
• Prev. Close: 132.08
• % chg. over the last day: -0.99%

Japanese Prime Minister Fumio Kishida said Sunday that his government and the Central Bank should discuss their relationship in guiding economic policy after he picks a new governor for the Bank of Japan (BOJ) in April. This raises the possibility that the government may reconsider its plan to work with the Central Bank and would lay the groundwork for an exit from the BOJ’s ultra-free monetary policy. Japan’s core consumer prices are at 3.7%, and analysts expect inflation to remain above the 2% target in the coming months, making a policy shift after the BOJ governor is re-elected even more likely.

Trading recommendations

• Support levels: 131.12,130.58,129.65
• Resistance levels: 132.89,133.29,134.45,135.88,137.03,138.00,139.09

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is now trading below the moving averages, while the MACD indicator has become negative, indicating the sellers’ pressure inside the day. The decline now looks like a corrective wave before a new momentum. Buy trades are best considered from 131.12 or 130.58 support levels, but only with intraday confirmation. Sell deals can be searched for from the level of resistance of 132.89 under the condition of a reverse reaction or false breakout.

Alternative scenario:

If the price fixes below the support level of 130.58, the downtrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3565
• Prev. Close: 1.3443
• % chg. over the last day: -0.91%

The latest labor market data showed that Canada’s unemployment rate fell from 5.1% to 5.0%, with 627,000 more jobs in Canada now than before the pandemic. Most of the job growth came in the 4th quarter of 2022. But it should be noted that the country’s manufacturing levels are declining. Job growth with rising wages and falling production is an inflationary path for the economy. Therefore, the Bank of Canada will continue raising interest rates to “cool down” the labor market. A 0.25% rate hike is expected at the Bank of Canada’s next meeting.

Trading recommendations

• Support levels: 1.3386,1.3362,1.3212
• Resistance levels: 1.3492,1.3513,1.3561,1.3594,1.3632,1.3700

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bearish. The price has again consolidated below the moving averages and below the key support level. The MACD indicator became negative, but it indicates a divergence when the price reached the support level. Buy trades should be considered from the support level of 1.3386, but only with short targets, as entry is against the main priority. Sell deals are best looked for on intraday time frames from the resistance level of 1.3513 or 1.3561, but with confirmation in the form of a reverse initiative on the lower timeframes or a false breakout.

Alternative scenario:

if the price breaks out and consolidates above the resistance level of 1.3632, the uptrend will likely resume.