The Analytical Overview of the Main Currency Pairs on 2023.01.12

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0729
• Prev. Close: 1.0755
• % chg. over the last day: +0.24%

Important inflation data will be released in the US today. Economists expect the consumer price index to fall from 7.1% to 6.5% year-over-year in December. If the actual data match the forecast, the dollar index could fall even more. But if the data is worse than expected, especially for core inflation, which excludes food and energy prices, the situation could be reversed. In this case, the dollar index would likely show impulse up, while the euro would collapse.

Trading recommendations

• Support levels: 1.0650,1.0597,1.0535,1.0497,1.0480,1.0361,1.0332,1.0284
• Resistance levels: 1.0799,1.0844

The trend on the EUR/USD currency pair on the hourly time frame is still bullish. The price is trading above the moving averages and forming a narrow price balance. Volatility on the eve of the news has declined sharply. The MACD indicator is in the positive zone, but there are signs of divergence, which means that price growth is limited, and a correction should be expected to find good entry points. Under such market conditions, buy trades are better to consider from the support level of 1.0650 or 1.0597 with confirmation on intraday time frames. Sell deals can be considered from the daily resistance level of 1.0799, but better with a confirmation in the form of a reverse initiative or a false breakout.

Alternative scenario:

if the price breaks down through the support level of 1.0535 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2147
• Prev. Close: 1.2147
• % chg. over the last day: 0.00%

The situation on the GBP/USD currency pair remains the same. Economists are betting on the fall of GBP/USD quotes ahead of important US inflation data and UK GDP data on Friday. The economic outlook for the United Kingdom remains gloomy. In this case, the Bank of England has almost no options. Interest rates need to rise further to lower inflation. But an increase in rates will have a negative impact on the economy, which will cause GDP to fall even further. Finding a middle ground in such a situation is extremely difficult.

Trading recommendations

• Support levels: 1.2080,1.2000,1.1928,1.1875,1.1684,1.1476,1.1418
• 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 is bullish. The price is trading in a narrow range above the moving averages. The MACD indicator is positive again, there is some buying pressure inside the day, but volatility has decreased ahead of the inflation data. In such market conditions, it is better to look for buy trades on intraday time frames from the support at 1.2080 or 1.1999, but with confirmation. Sell trades are best looked for from the resistance level of 1.2193 or the stronger level of 1.2238, but also better with confirmation in the form of a false breakout or a change in the structure on the lower time frames.

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: 132.09
• Prev. Close: 132.48
• % chg. over the last day: +0.29%

Former Bank of Japan (BoJ) policy council representative Sayuri Shirai called for a review of the bank’s policy over the past 10 years in light of the changing inflationary picture, which could cause prices to remain high for longer than expected, leading to negative consequences for the economy. The current term of Bank of Japan Governor Haruhiko Kuroda comes to an end in April, and Shirai is widely seen as a candidate for deputy governor. Traders need to understand that any even insignificant shifts of the Bank of Japan in the direction of changing the monetary policy can lead to a significant movement of the Japanese yen.

Trading recommendations

• Support levels: 131.12,130.58,129.65
• Resistance levels: 132.37,133.23,134.45,135.88,137.03,138.00,139.09

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. Now the price is trading below the levels of the moving averages, while the MACD indicator is negative again, but there are the first signs of divergence. The corrective wave is coming to an end. It is best to look for buy trades from the support levels of 131.12 or 130.58, but only with intraday confirmation. Sell deals can be searched for from the resistance level of 132.37 or 133.23 on 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: 1.3424
• Prev. Close: 1.3423
• % chg. over the last day: 0.00%

A 3% rise in oil prices did not help the Canadian currency to strengthen significantly on Wednesday. Investors are taking no chances ahead of US inflation data, which will be crucial to the short-term direction of the USD/CAD. USD/CAD quotes are trading in a tight corridor for now. A decline in inflation in the US against the background of oil price growth may provoke the strengthening of the Canadian currency (decrease of USD/CAD).

Trading recommendations

• Support levels: 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 is bearish. The price is trading in a narrow trading range at the level of moving averages in front of the resistance level of 1.3492. The MACD indicator has become inactive. Under such market conditions, it is best to wait for the price to exit the narrow range. Buy trades should be considered after the breakout of 1.3439, but only with short targets and confirmation. Sell deals are better to look for on intraday time frames from the resistance level of 1.3492 or 1.3513, but with a confirmation in the form of a reverse initiative on the lower time frames.

Alternative scenario:

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