The Analytical Overview of the Main Currency Pairs on 2023.02.28

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0547
• Prev. Close: 1.0608
• % chg. over the last day: +0.57%

Comments from US Federal Reserve officials raised concerns in the markets that interest rate cuts in the world’s largest economy remain a distant prospect and that interest rates are likely to rise further. Fed funds futures show traders expect rates to peak at 5.4% by September. The interest rate differential between the US Fed and the ECB will put pressure on the European currency in the medium term.

Trading recommendations

• Support levels: 1.0565,1.0544
• Resistance levels: 1.0626,1.0704,1.0804,1.0906,1.0926,1.0967,1.1017,1.1077

The trend on the EUR/USD currency pair on the hourly time frame is bearish. At the moment, the price is trading at the level of moving averages. The MACD indicator has become positive, but buyer pressure is weak. Under such market conditions, buy trades are best considered from the support level of 1.0565, with the confirmation on the intraday time frames. Sell deals can be considered from the resistance level of 1.0626, but it is better with 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: 1.1948
• Prev. Close: 1.2061
• % chg. over the last day: +0.95%

European Commission President Ursula von der Leyen will travel to the UK today to meet with Prime Minister Rishi Sunak about a new Brexit deal. This could lead to a resumption of trade between Northern Ireland and the United Kingdom, which is positive for the British currency. But traders should not forget about the interest rate differential between the US Fed and the Bank of England. And this differential is not in favor of sterling at the moment.

Trading recommendations

• Support levels: 1.2041,1.1984,1.1929,1.1875
• Resistance levels: 1.2147,1.2200,1.2267,1.2311,1.2416

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 above the moving averages. The MACD indicator has become positive, and within the day, buying prevails. An impulse return of the price below the 1.2041 level is likely to cause the price to fall to the support level of 1.1984. Under such market conditions, it is better to look for buy trades on intraday time frames from the support level of 1.1984. Sell trades are best sought from the resistance level of 1.2041, but with confirmation.

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: 136.42
• Prev. Close: 136.22
• % chg. over the last day: -0.14%

At the second parliamentary hearing in the confirmation process of the new BoJ governor, Kazuo Ueda said that the benefits of the economic stimulus outweigh the side effects. This reinforced the view that the new governor is not looking to abandon a decade of massive easing quickly. Ueda also added that core inflation would have to show major shifts in order to change the course of monetary policy. Asked about various aspects of the joint statement, including a commitment to reach a stable 2% inflation target as soon as possible, Ueda said that nothing needs to be changed at this point. So, the fundamental picture for the USD/JPY currency pair will remain the same.

Trading recommendations

• Support levels: 135.06,133.47,132.95,131.43,129.68,129.98,129.19
• Resistance levels: 136.49,137.48

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. At the moment, the price is forming a narrow flat right before the resistance level. As a rule, such formation occurs before the impulse breakout of the level. The MACD indicator is in the positive zone, but signs of divergence are still observed in several time frames. Under such market conditions, buy trades are best sought from the support level of 135.06 or after an impulse breakout of the 136.49 resistance level. Sell positions can be sought from the 136.49 level as well, but with additional confirmation in the form of a reverse initiative or 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: 1.3609
• Prev. Close: 1.3574
• % chg. over the last day: -0.25%

Most analysts believe that the European Union’s ban on Russian oil imports by sea and the international price cap will have only a minor impact on overall global oil supplies. For the Canadian economy, oil price dynamics play a huge role. Rising oil prices tend to strengthen the Canadian dollar. But excessively high commodity prices can bring back inflationary pressures. Therefore, the Canadian economy benefits from oil prices as they are now. Canada’s GDP data today will show how interest rates affect economic activity.

Trading recommendations

• Support levels: 1.3555,1.3469,1.3390,1.3347,1.3295,1.3212
• Resistance levels: 1.3664,1.3700

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. Yesterday, the price tested the support level of 1.3555, after which the price growth continued. The MACD indicator is in the negative zone, but there is still buying pressure. In such market conditions, it is worth looking for buy deals on the intraday time frames with the expectation of continued growth. Sell deals can be looked for from the resistance level of 1.3664 or 1.3700, but only with confirmation and short targets.

Alternative scenario:

if the price breaks down and consolidates below the support level of 1.3469, the downtrend will likely resume.