The Analytical Overview of the Main Currency Pairs on 2023.01.31

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0861
• Prev. Close: 1.0851
• % chg. over the last day: -0.09%

Recession fears have returned to Germany. Preliminary GDP data showed that the economy shrank by 0.2% quarterly after rising by 0.5% in the third quarter. Annual GDP growth for 2022 was also revised downward to 1.8% from 1.9% year-over-year. Some strategists believe the German economy has yet to fully feel the effects of the European Central Bank’s rate hike. Demand for mortgages has already begun to fall. Warmer winter weather and realized and announced government fiscal stimulus packages have prevented the economy from sharp falling, but a technical recession is still a likely scenario.

Trading recommendations

• Support levels: 1.0834,1.0801,1.0781,1.0710,1.0650,1.0597,1.0535
• Resistance levels: 1.0875,1.0913

The trend on the EUR/USD currency pair on the hourly time frame is still bullish. The MACD indicator is in the negative zone, and sellers’ pressure is still there, but there are the first signs of divergence. Under such market conditions, buy trades are best considered from the support level of 1.0833 with confirmation in the form of a false breakdown on intraday time frames. Sell deals can be considered from the resistance level of 1.0875, but better with confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks down through the support level of 1.0801 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2383
• Prev. Close: 1.2349
• % chg. over the last day: -0.27%

The 0.5% rate hike by the Bank of England is already almost priced in, as well as the 0.25% rate hike by the US Federal Reserve. The rate hike was good for the GBP in recent weeks, but economists think the momentum is over. Firstly, the UK economic indicators continue to decline. Second, there are dissenters on the Bank of England’s Monetary Policy Committee, which opens the debate for the next increase, which is likely to be 0.25%, and after that, the Bank of England will probably take a pause.

Trading recommendations

• Support levels: 1.2344,1.2292,1.2263,1.2220,1.2080,1.2000,1.1928,1.1875,1.1684
• Resistance levels: 1.2416,1.2446,1.2519

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is still bullish. The price is still forming a price range. The MACD indicator has become negative, and the sellers’ pressure is increasing. Under such market conditions, it is better to look for buy deals on intraday time frames from the support level of 1.2344, but with a confirmation in the form of a false breakdown. Sell trades are best looked for from the resistance level of 1.2416 but also better with confirmation in the form of a reverse initiative or a false breakout.

Alternative scenario:

if the price breaks down through the 1.2263 support level and fixes above it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 129.64
• Prev. Close: 130.44
• % chg. over the last day: +0.62%

Japan’s unemployment rate remained at 2.5%. Retail sales rose from 2.5% to 3.8% year-over-year. But preliminary data on industrial production showed a decline of 0.1%, with a forecast of 1.1%. Overall, the economy shows no signs of slowing down, suggesting that the Bank of Japan will not change its monetary policy until the end of Mr. Kuroda’s term. Most BoJ observers see current Deputy Governor Masayoshi Amamiya as Kuroda’s likely successor. In the latest Bank of Japan observer poll conducted by Bloomberg, Amamiya was the favorite, with 25 votes out of 37 responses.

Trading recommendations

• Support levels: 129.75,129.05,128.16,127.53,126.19
• Resistance levels: 130.58,131.10,130.61,131.58,132.37,132.95,133.23

From the technical point of view, the medium-term trend on the currency pair USD/JPY is still bearish. The price is trading in a price corridor, which makes it difficult to find good entry points. The MACD indicator has become positive, and there is buying pressure inside the day. It is best to look for buy trades from the support level of 129.75, but only with confirmation on the lower time frames. Sell deals can be searched for from the resistance level of 130.58 in case of a false breakout.

Alternative scenario:

If the price fixes above the resistance level of 131.58, the uptrend will be renewed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3311
• Prev. Close: 1.3386
• % chg. over the last day: +0.56%

The Canadian dollar lost some ground yesterday due to the rising dollar index and falling oil prices. There is uncertainty brewing in the oil sector because of the mismatch between the Russian government policies and the actual activity in the physical oil market. Moscow is not going to stick to the Russian oil price cap set by the West and is trying to negotiate with OPEC+ countries to maintain price stability, read higher oil prices. Much will depend on whether OPEC+ leaves production levels at current levels. The OPEC+ meeting will be held tomorrow.

Trading recommendations

• Support levels: 1.3367,1.3303,1.3212
• Resistance levels: 1.3428,1.3445,1.3496,1.3520,1.3554,1.3595,1.3632

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish, but the price is approaching the priority change level and is trading above the moving averages. The MACD indicator is in the positive zone, and there is buying pressure inside the day. Under such market conditions, buy trades can be considered when the price returns to the support level of 1.3367, but with additional confirmation in the form of an impulse initiative. Sell deals should be considered from the resistance level of 1.3428 in case of a false breakout.

Alternative scenario:

if the price breaks out and consolidates above the resistance level of 1.3448, the uptrend will likely resume.