The Analytical Overview of the Main Currency Pairs on 2023.02.01

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0847
• Prev. Close: 1.0861
• % chg. over the last day: +0.13%

The important Eurozone inflation report will also be published today in addition to the US Federal Reserve’s meeting, where a 0.25% rate hike is expected. Analysts expect both usual inflation (from 9.2% to 9.0%) and core inflation (from 5.2% to 5.1%) to fall in annual terms. But if the data is worse than expected, the euro could strengthen sharply as the ECB aggressively raises interest rates in its next meetings. Other economic data showed that Eurozone GDP grew by 0.1% in the last quarter. Despite the growth, the dynamics are downward, and the next quarter is likely to show a contraction.

Trading recommendations

• Support levels: 1.0833,1.0801,1.0781,1.0710,1.0650,1.0597,1.0535
• Resistance levels: 1.0875,1.0913

The trend on the EUR/USD currency pair on the hourly time frame is still bullish. Yesterday the price tested the priority change level but failed to consolidate lower. The MACD indicator became positive, and the buying pressure returned. Under such market conditions, buy trades are best considered from the support level of 1.0833 with confirmation on the 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: 1.2346
• Prev. Close: 1.2317
• % chg. over the last day: -0.24%

Foreign funds invested in UK government bonds at an unprecedented rate in December, one of the strongest signs that the situation in the UK economy is not so dismal. Nonresidents bought 38.3 billion pounds ($47 billion) worth of securities last month, according to figures released by the Bank of England on Tuesday. After three months of selling, the return of regular “gilts” buyers is good news for the government because it will help limit borrowing costs.

Trading recommendations

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

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price has approached the priority change level and is again forming a price range. The MACD indicator is in the negative zone, while the price is trading below the moving averages — this indicates the weakness of the buyers. Under such market conditions, buy trades are better to look for on intraday time frames from the support level of 1.2263, but with a confirmation in the form of a false breakdown. Buy trades can also be looked for with an impulse return above the 1.2344 level. Sell trades are best looked for from the resistance level of 1.2344 but also better with a 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: 130.39
• Prev. Close: 130.09
• % chg. over the last day: -0.23%

Japan’s manufacturing activity index is unchanged compared to the previous month. Since there are no changes to monetary policy in Japan before April 2023, at the moment, the USD/JPY is highly dependent on the dollar index. Therefore, traders in USD/JPY today should focus on the US Fed meeting and especially on Jerome Powell’s press conference. Investors will be looking for clues as to the Fed’s next move – whether the Fed will continue to raise rates further or whether today’s increase will mark the end of the tightening cycle, after which the Central Bank will take a long break.

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 bearish. The price is still traded in the price corridor, which makes it difficult to find good entry points. The MACD indicator has become inactive. Within the day, there is buying pressure. It is best to look for buy trades from the support level of 129.75, but only with confirmation on the lower time frames, as the level has already been tested. 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: 1.3384
• Prev. Close: 1.3304
• % chg. over the last day: -0.60%

According to Fitch Ratings, the Bank of Canada (BOC) is unlikely to raise rates again in 2023, given lower overall inflation. The stronger-than-expected housing market downturn and looming US recession will test Canada’s economic resilience. Canada’s latest GDP data showed the economy growing by 0.1% over the last month. Canada’s economy remains in a deep state of excess demand and is shifting toward contraction. According to economists, Canada needs an extended period of economic growth that is below potential GDP growth to remove stagnation in the economy and put sustained downward pressure on inflation.

Trading recommendations

• Support levels: 1.3303,1.3212
• Resistance levels: 1.3350,1.3428,1.3445,1.3496,1.3520,1.3554,1.3595,1.3632

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The price failed to consolidate above the level of 1.3448. There was a sharp return of the price, with a false breakout zone formed above 1.3428. The MACD indicator is in the negative zone. Within the day, there is seller’s pressure. Under such market conditions, buy trades can be considered after the false breakdown of the support level 1.3303, but with additional confirmation in the form of impulse initiative on the lower time frames. Sell deals should be considered from the resistance level of 1.33508, subject to a reversal.

Alternative scenario:

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