The Analytical Overview of the Main Currency Pairs on 2023.03.06

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0593
• Prev. Close: 1.0633
• % chg. over the last day: +0.38%

There will be many important economic events this week. Before Friday’s jobs report, Fed Chairman Jerome Powell will appear before Congress to present the Central Bank’s semi-annual monetary policy report. He will testify before the Senate on Tuesday and the House of Representatives on Wednesday. His comments will be scrutinized, whether a larger rate hike is being considered this month after recent data pointing to continued inflation in the US (PCE and PPI indices). If there is no hint of a tightening, it will be good news for the European currency amid the ECB’s hawkish mood for the coming two meetings.

Trading recommendations

• Support levels: 1.0610,1.0582,1.0544
• Resistance levels: 1.0656,1.0704,1.0804,1.0906,1.0926,1.0967

The trend on the EUR/USD currency pair on the hourly time frame is bearish but close to change. The price is trading above the moving averages. The MACD indicator has become positive, and buyers prevail inside the day. Under such market conditions, buy trades are best considered from the support level of 1.0610. Sell deals can be considered from the resistance level of 1.0656, with confirmation in the form of a reversal in the intraday time frames.

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: 1.1942
• Prev. Close: 1.2042
• % chg. over the last day: +0.83%

The British pound found some support on Friday thanks to PMI data from the UK service sector and renewed risk appetite after better-than-expected Chinese PMI data. This week will be the release of UK GDP data for the last month. The economy is expected to grow by 0.1% or remain flat with no growth. But if the actual data is worse than expected, recession fears will resume, which is likely to hinder the sterling’s growth.

Trading recommendations

• Support levels: 1.1991,1.1954,1.1929,1.1875
• Resistance levels: 1.2051,1.2086,1.2147,1.2200,1.2267,1.2311,1.2416

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. Within the day, purchases prevail. Under such market conditions, it is better to look for sell deals from the resistance level of 1.2051 but with a confirmation in the form of a false breakout. Buy trades are best sought from the support level of 1.1991 but better with confirmation on intraday time frames.

Alternative scenario:

if the price breaks out through the 1.2147 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 136.75
• Prev. Close: 135.81
• % chg. over the last day: -0.69%

Fundamentally, the USD/JPY currency pair situation has not changed much. The Bank of Japan holds the interest rate at minus 0.10% and maintains control of the yield curve (YCC), targeting a range of +/- 0.50% for Japanese government bonds (JGBs) for up to 10 years. This week is the BoJ monetary policy meeting, which will be Governor Haruhiko Kuroda’s last office. Analysts believe that Kuroda and his entourage will not do anything drastic in terms of monetary policy, so no changes are expected before April.

Trading recommendations

• Support levels: 135.59,135.04,134.04,133.47,132.95,131.43,129.68
• Resistance levels: 136.55,137.07,137.48

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price corrected to the support level of 135.59, where the buyers’ reaction followed. The MACD indicator is in the negative zone, but sellers’ pressure has disappeared. Under such market conditions, buy trades are best sought from the support level of 135.59, but only with intraday confirmation. Sell deals can be sought from the 136.55 resistance level, but with additional confirmation in the form of a reverse initiative on the lower time frames.

Alternative scenario:

if the price fixes below the 135.04 support level, the downtrend will be resumed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3593
• Prev. Close: 1.3596
• % chg. over the last day: +0.02%

After the interest rate hike of 425 basis points, the Bank of Canada said it would pause. The latest GDP data was disappointing, and inflation slowed more than expected, although the labor market remains robust. All 22 banks surveyed by Bloomberg expect the Bank of Canada (BoC) to leave interest rates unchanged this week. What does this mean for the Canadian dollar? The BoC pause means less risk and a decline in CAD. At the March meeting, markets will also be watching to see if the Bank of Canada will continue to leave the door open for further tightening if necessary. Analysts expect the USD/CAD pair to fall below 1.3000 by the end of the year.

Trading recommendations

• Support levels: 1.3582,1.3513,1.3471,1.3441,1.3390,1.3347,1.3295,1.3212
• Resistance levels: 1.3664,1.3700

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price trades at the level of the moving averages and forms a wide-volatile corridor, making it difficult to find good entry points. The MACD indicator has become inactive, and supply and demand are balanced. Under such market conditions, buy trades are worth looking for from the support level of 1.3582, but only with confirmation in the form of reaction on the lower time frames. Sell deals can be searched from the resistance level of 1.3664 or 1.3700, but only with a confirmation in the form of a false breakout and short targets. The false break is very important in the reversal because there is liquidity grabbing behind the level.

Alternative scenario:

if the price breaks down and consolidates below the support level of 1.3513, the downtrend will likely resume.