The Analytical Overview of the Main Currency Pairs on 2023.02.07

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0781
• Prev. Close: 1.0725
• % chg. over the last day: -0.52%

The dollar jumped to a four-week high against the euro on Monday. Unexpectedly strong US jobs data last week raised the possibility that the US Federal Reserve will continue to raise interest rates to fight inflation. This news is still being “digested” by market participants. But it should be noted that despite the hawkish statements of the US Fed representatives, the ECB also continues to raise rates aggressively and plans to make another 0.5% increase in March. Therefore, traders should not count on a prolonged EUR/USD downtrend.

Trading recommendations

• Support levels: 1.0710,1.0650,1.0597
• Resistance levels: 1.0781,1.0838,1.0906,1.0926,1.0967,1.1017,1.1077

The trend on the EUR/USD currency pair on the hourly time frame has changed to bearish. The price is trading below the moving averages. The MACD indicator is deeply negative, but there are the first signs of divergence. Under such market conditions, waiting for a small pullback is best, as the price has deviated strongly from the moving averages. Buy trades are best considered from the support level of 1.0710, but confirmation in the form of a reverse reaction on the lower time frames is needed. Sell deals can be considered from the resistance level of 1.0838, but it is also better with confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks down through the resistance level of 1.0967 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2029
• Prev. Close: 1.2020
• % chg. over the last day: -0.07%

The British pound has been showing weakness lately. Economic data has not been strong enough to strengthen the pound compared to its peers, while ongoing strikes and the threat of more strikes in the coming weeks undermine sentiment. A recent International Monetary Fund (IMF) update indicated that the UK economy would contract by 0.6% this year, almost one percentage point below their previous estimate.

Trading recommendations

• Support levels: 1.2035,1.2000,1.1930
• Resistance levels: 1.2147,1.2182,1.2228,1.2311,1.2416

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame has changed to bearish. The price is trading below the moving averages. The MACD indicator is in the negative zone, but there are the first signals of divergence. Under such market conditions, it is better to look for buy trades on intraday time frames from the support level of 1.2035, but with confirmation in the form of reverse initiative. It is best to look for sell deals after a slight pullback, as the price has strongly deviated from the moving averages. The best resistance levels are 1.2147 and 1.2228, but it is also better with a confirmation in the form of the reverse initiative.

Alternative scenario:

if the price breaks out through the 1.2416 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 132.39
• Prev. Close: 132.63
• % chg. over the last day: +0.18%

The Nikkei newspaper, citing anonymous sources in the government and the ruling party, reported yesterday that Masayoshi Amamiya, deputy governor of the Bank of Japan, is running for the post of the next governor. According to Saxo strategists, Amamiya is considered the most “dovish” among the contenders. Market participants believe that Amamiya will continue Governor Kuroda’s soft stimulus policy. The Japanese yen rapidly declined against the dollar on the back of this news.

Trading recommendations

• Support levels: 131.11,130.34,129.98,129.19,129.04,128.16
• Resistance levels: 132.95,133.23

From the technical point of view, the medium-term trend on the currency pair USD/JPY has changed to bullish. The price strongly deviated from the moving averages. The MACD indicator is in the positive zone with signs of overbuying and divergence, which limits the further growth of quotes. It is better to look for buy deals after a slight correction to the support levels in the “discount” zone - 130.34 or 129.19, but only with a confirmation on the lower time frames. At least, it is necessary to wait for the correction to the level of 131.11. Sell deals can be sought after an impulse return below the psychological level of 132.00, which will form a false breakout area above the level.

Alternative scenario:

If the price fixes below the support level of 128.16, the downtrend will be renewed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3309
• Prev. Close: 1.3445
• % chg. over the last day: +1.02%

Yesterday’s business activity data from Ivey showed a high jump from August 2022. Despite the rise in business activity, this might be the first sign of trouble ahead for Canada’s Central Bank. Increased business activity could lead to increased demand and spending by consumers, which could have an indirect effect on inflation. The Canadian dollar also remains under pressure due to uncertainty in the oil market. The outlook for the Canadian dollar in 2023 will largely depend on commodity prices, how the US dollar behaves, and whether central banks manage to avoid a major recession.

Trading recommendations

• Support levels: 1.3333,1.3281,1.3212
• Resistance levels: 1.3434,1.3472,1.3496,1.3520,1.3554,1.3595

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish. But the price reached the daily resistance level of 1.3472 and slightly corrected to the moving averages, breaking through the trend line. The MACD indicator is in the positive zone, but there are first signs of weakness. Sell deals should be considered from the resistance level of 1.3434 in case of a reversal in the intraday time frames. Buy trades can be considered from the 1.3333 support level, but with additional confirmation in the form of an impulse initiative.

Alternative scenario:

if the price breaks down and consolidates below the support level of 1.3263, the downtrend will likely resume.