The Analytical Overview of the Main Currency Pairs on 2023.02.24

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0604
• Prev. Close: 1.0593
• % chg. over the last day: -0.10%

Yesterday the Eurozone inflation data for January was released: annual inflation decreased from 9.2% to 8.6%, while core inflation, which excludes food and energy prices, rose slightly, from 5.2% to 5.3% year-on-year. The report turned out to be mixed, as on the one hand, inflationary pressures became lower, while on the other hand, core inflation is still rising. The ECB will stay on the path of rate hikes at least until May, and after that, everything will depend on new data as well as geopolitics.

Trading recommendations

• Support levels: 1.0586,1.0544
• Resistance levels: 1.0635,1.0704,1.0804,1.0906,1.0926,1.0967,1.1017,1.1077

The trend on the EUR/USD currency pair on the hourly time frame is bearish. At the moment, the price is trading below the moving averages but reached the daily support level. The MACD indicator is in the negative zone, but the divergence is still observed in many time frames. In the coming days, traders should expect a corrective upward movement. Under such market conditions, buy trades are best considered from the support level 1.0586, subject to confirmation on intraday time frames. Sell deals can be searched from the resistance level of 1.0635, but it is better with a confirmation in the form of a reverse initiative on the lower time frames or a false breakout.

Alternative scenario:

if the price breaks down through the resistance level of 1.0704 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2045
• Prev. Close: 1.2014
• % chg. over the last day: -0.25%

Catherine Mann of the Bank of England’s Monetary Policy Committee said Thursday that it’s too early to tell whether risks from last year’s inflation surge have peaked and that the Central Bank should keep raising rates. But it should be noted that the US Fed now has more room than the Bank of England to tighten policy, so the British pound may remain under pressure until the Fed presses pause.

Trading recommendations

• Support levels: 1.1970,1.1930
• Resistance levels: 1.2094,1.2148,1.2200,1.2267,1.2311,1.2416

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. At the moment, the price is trading below the moving averages. The MACD indicator is in the negative zone, but there are signs of sellers’ weakness. Under such market conditions, it is better to look for buy trades on intraday time frames from the support level of 1.1970. Sell trades are best sought from the resistance level of 1.2094 but also better with confirmation in the form of initiative on the lower time frames.

Alternative scenario:

if the price breaks out through the 1.2200 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 134.83
• Prev. Close: 134.70
• % chg. over the last day: -0.09%

In Japan, the nationwide consumer price index rose from 4.0% to 4.2% in annual terms. Prices in Japan are rising due to external factors, mainly due to rising costs of goods and services. This effect has been compounded by a significant drop in the value of the yen last year, which has made imported goods much more expensive. This is considered “unhealthy” inflation because it is not caused by an increase in domestic demand fueled by a vibrant economy. For this reason, it is not as easy for the Bank of Japan to switch to tightening monetary policy as other central banks have done.

Trading recommendations

• Support levels: 134.11,133.47,132.95,131.43,129.68,129.98,129.19
• Resistance levels: 135.21,135.88

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. At the moment, the price is trading in the corridor on the level of moving averages. Such market conditions make it difficult to find good entry points. The MACD indicator has become inactive, but signs of divergence are still observed in several time frames. Buy trades are best sought from the support level of 134.11 or 133.47, but only with confirmation on the lower time frames. Sell deals can be searched for from 135.21, but with additional confirmation in the form of a false breakout.

Alternative scenario:

if the price fixes below the 132.95 support level, the downtrend will be resumed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3545
• Prev. Close: 1.3548
• % chg. over the last day: +0.02%

The Canadian dollar is a commodity currency, so it depends not only on the monetary policy of the Bank of Canada but also on the dollar index and oil prices. Crude oil inventories increased by 7.6 million barrels last week, down from 16.3M but above the forecast of 2.9M. Since the beginning of November 2022, there has been a significant increase in oil inventories, which may indicate a decrease in demand for oil. Russia is trying its best to reduce its oil exports to stop the price drop. A lot will depend on next month’s OPEC+ meeting, which also does not benefit from lower oil prices. Any reduction in production could reduce the supply in the market, which would lead to higher prices for petroleum products and a strengthening of the Canadian economy.

Trading recommendations

• Support levels: 1.3469,1.3441,1.3390,1.3347,1.3295,1.3212
• Resistance levels: 1.3555,1.3538,1.3595

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. At the moment, the price is trading in the price range. Indicator MACD has become inactive, and signs of divergence remain. Under such market conditions, it should expect a corrective downward movement. Sell deals can be searched from the resistance level of 1.3555 but with short targets. Buy deals may be considered from the support level of 1.3469, but with additional confirmation on the lower time frames.

Alternative scenario:

if the price breaks down and consolidates below the support level of 1.3390, the downtrend will likely resume.