The Analytical Overview of the Main Currency Pairs on 2023.03.13

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0576
• Prev. Close: 1.0638
• % chg. over the last day: +0.58%

The latest inflation data from Germany showed a figure of 8.7%, which underlines the persistent inflationary pressure. Since Germany is the largest economy in the Eurozone, the inflation data serves as an indicator for the whole region, reinforcing the hawkish sentiment of the European Central Bank (ECB). The US Labor Department reported Friday that Nonfarm payrolls rose by 311,000, well above the consensus forecast of 205,000 but below the revised 507,000 in January. While the core figure was above forecasts, key survey elements indicated a slight weakening in the labor market. This gave confidence to the European currency, as a “cooling off” of the labor market is a sign that the rate hike cycle is already close.

Trading recommendations

• Support levels: 1.0704,1.0654,1.0620,1.0541,1.0519,1.0482
• Resistance levels: 1.0804,1.0906

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price broke through the priority change level and consolidated higher. The MACD indicator is positive, with no signs of reversal. Under such market conditions, it is worth looking for buy trades, but the price is somewhat overbought now, so it is appropriate to wait for a correction. Sell deals can be considered from the resistance level of 1.0803, provided a reverse reaction exists. It is better to consider the deals to buy from the support level of 1.0654 or 1.0620, but with the confirmation inside the day. The minimum pullback in the current wave should be at least 38.1% Fibonacci.

Alternative scenario:

if the price breaks down through the support level of 1.0541 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1919
• Prev. Close: 1.2033
• % chg. over the last day: +0.95%

UK GDP grew by 0.3% over the last month, beating forecasts of 0.1%. Industrial production declined by 0.3%, and manufacturing also declined by 0.4%. Overall, the economy is not contracting yet, but everything is moving toward it. Analysts believe that the fundamental picture for the UK has gone from “very bad” to “bad.” The government’s 2023 budget will be released this week, which will give clues as to the government’s future actions and projections.

Trading recommendations

• Support levels: 1.2078,1.1963,1.1929,1.1843,1.1799,1.1603
• Resistance levels: 1.2147,1.2267

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price has consolidated above the priority change level and is trading above the moving averages. The MACD indicator is already overbought with signs of divergence. It is better to look for buy deals after the correction from the support level of 1.2078, but it is better to look for deals from the discount zone (50-70% of Fibonacci) from the 1.1963 level. It is better to look for sell deals from the resistance level of 1.2147 but with a confirmation in the form of a false breakout and short targets.

Alternative scenario:

if the price breaks down through the 1.1843 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 136.12
• Prev. Close: 135.30
• % chg. over the last day: -0.60%

Following the news of the bankruptcy of the SVB financial group (SIVB), investors reduced the probability of a 50 basis point Fed rate hike in March to 40% from around 80%. The threat that something systemic may be brewing in the banking system, forcing many regional banks out of business, will not be well received by the US government. Especially if a massive withdrawal of deposits begins on Monday amid the panic, and the likely response could be intense political pressure on Federal Reserve Chairman Jerome Powell to stop raising rates. If the Fed hits the stop button, the Japanese yen and other risky assets like the euro and the pound might get support amid a sell-off in the dollar.

Trading recommendations

• Support levels: 134.04,132.94
• Resistance levels: 135.46,136.08,137.91,138.15,138.88

From the technical point of view, the medium-term trend on the currency pair USD/JPY has changed to a bearish one. The USD/JPY quotes may correct within the higher timeframes. The MACD indicator is negative, but there are signs of oversold. Under such market conditions, it is best to look for buy trades from the support level of 134.05, but only with intraday confirmation and short targets. Sell deals can be searched from the resistance level of 135.46 in the premium zone (50-70% Fibonacci), but only with additional confirmation in the form of a reverse initiative on the lower time frames.

Alternative scenario:

if the price fixes above the 137.00 resistance level, the uptrend will be resumed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3819
• Prev. Close: 1.3822
• % chg. over the last day: +0.02%

The labor market is not following the Bank of Canada’s plan for the economy. The Canadian economy beat expectations last month, adding 21,800 jobs in February, which may force the central bank to consider another rate hike, even though the Bank of Canada is already on pause. The unemployment rate remained steady at 5.0% in February, while economists had predicted it would rise to 5.1%. Money markets see about a 65% chance that the Bank of Canada will raise interest rates this year.

Trading recommendations

• Support levels: 1.3805,1.3777,1.3711,1.3664,1.3645,1.3515
• Resistance levels: 1.3853

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. But the price is correcting and is now trading below the moving averages. The MACD indicator has become negative, and there is seller pressure within the day. Under such market conditions, buy trades should be sought from the support level of 1.3663, but only with confirmation in the form of a reaction on the lower time frames. Sell deals can be searched from the resistance level of 1.3772 or 1.3811, but only with short targets and after confirmation in the form of a false breakout.

Alternative scenario:

if the price breaks down and consolidates below the support level of 1.3634, the downtrend will likely resume.