The Analytical Overview of the Main Currency Pairs on 2023.03.09

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0549
• Prev. Close: 1.0544
• % chg. over the last day: -0.05%

Industrial production in Germany recovered sharply in January, rising by 3.5%. Activity in the construction sector rose by almost 13%. But despite the positive data, the German industry is still nearly 5% below pre-pandemic levels. Nevertheless, lower wholesale energy prices and the opening of China could give the German industry a tailwind. On the other hand, a shortage of skilled workers, high-interest rates, and high levels of uncertainty could undermine investment activity. This is even though interest rate hikes by the ECB will continue for at least three more meetings.

Trading recommendations

• Support levels: 1.0519,1.0482
• Resistance levels: 1.0564,1.0576,1.0621,1.0656,1.0704,1.0804,1.0906

The trend on the EUR/USD currency pair on the hourly time frame is still bearish. The price is trading below the moving averages. The MACD indicator is negative, but the first signs of sellers’ weakness exist. Under such market conditions, it is worth looking for trades in the continuation of the downtrend. Sell deals can be considered from the resistance level of 1.0564 or 1.0576, provided a reverse reaction exists. Buy trades are best considered from the support level of 1.0519 but with intraday confirmation.

Alternative scenario:

if the price breaks down through the resistance level of 1.0656 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1826
• Prev. Close: 1.1849
• % chg. over the last day: +0.19%

The US dollar strengthens against all major currencies, including the pound. Despite the positive UK economic data (real estate market and retail sales) released this week, the scale of the dollar movement outweighed any upside potential. On Friday, UK GDP data will be released, showing whether the economy will hold on to contracts on the back of high-interest rates and solid inflation.

Trading recommendations

• Support levels: 1.1799,1.1603
• Resistance levels: 1.1929,1.1956,1.1993,1.2086,1.2147

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The situation is similar to the euro. The MACD indicator is negative, with signs of divergence. Under such market conditions, it is best to look for sell deals from the resistance level of 1.1929 but with a confirmation in the form of a false breakout or reverse reaction. Buy trades are best sought from the support level of 1799, but better with confirmation on intraday time frames.

Alternative scenario:

if the price breaks out through the 1.2050 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 137.16
• Prev. Close: 137.35
• % chg. over the last day: +0.14%

The USD/JPY quotes continue to rise steadily. The interest rate differential between the US Federal Reserve and the Bank of Japan is pushing the dollar index up against the Japanese yen. The situation will change only when either of the central banks changes its current policy. Considering that the new Governor of the Bank of Japan has not yet taken office, and it will take him some time to adjust all internal processes to his management style, the US Fed is likely to press pause sooner. But it will not happen before the summer.

Trading recommendations

• Support levels: 136.26,135.25,134.04,133.47,
• Resistance levels: 137.09,138.15,138.88

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The bullish trend continues, but now the price is correcting. This is a good opportunity to join the trend. The MACD indicator is negative, but there is no sellers’ pressure. Under such market conditions, buy trades are best sought from the support level of 136.26, but only with intraday confirmation. Sell deals can be sought from the 137.09 level, but only with short targets and with additional confirmation in the form of a reverse initiative on the lower time frames.

Alternative scenario:

if the price fixes below the 135.25 support level, the downtrend will be resumed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3745
• Prev. Close: 1.3803
• % chg. over the last day: +0.42%

The Bank of Canada left interest rates unchanged for the first time in nine meetings but said it was ready to raise them again if the economy deviates from its forecasted course. This was the first pause among major central banks. The statement about keeping rates unchanged means that officials are confident that their aggressive tightening last year will continue to hamper economic growth and curb inflation. This is at odds with the US Federal Reserve, which has signaled further hikes. And this rate differential will drive USD/CAD quotes higher in the medium term.

Trading recommendations

• Support levels: 1.3775,1.3711,1.3664,1.3645,1.3515
• Resistance levels: 1.3853

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The triangle pattern is classically triggered in the continuation of the trend. The price is trading above the moving averages. The MACD indicator is in the positive zone, but there are signs of divergence. Under such market conditions, buy trades should be sought from the support level of 1.3775 or 1.3711, but only with confirmation in the form of the reaction on the lower time frames. Sell deals may be sought from the resistance level of 1.3853 or after the impulse return of the price below the level of 1.3775.

Alternative scenario:

if the price breaks down and consolidates below the support level of 1.3600, the downtrend will likely resume.