The Analytical Overview of the Main Currency Pairs on 2023.03.14

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0680
• Prev. Close: 1.0726
• % chg. over the last day: +0.43%

Amid the banking crisis in the US and Europe, fund futures traders now believe the Fed is likely to leave rates unchanged at its March 21-22 meeting or raise rates by 25 basis points, a sharp change from last week following Powell’s comments before congressional committees. Goldman Sachs analysts no longer expect the Fed to raise rates at next week’s meeting, this despite the fact that Goldman Sachs has always been hawkish in its forecasts. This is a negative signal for the dollar.

Trading recommendations

• Support levels: 1.0679,1.0620,1.0576,1.0541,1.0519,1.0482
• 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 in the positive zone, but there are signs of divergence. It is better to consider the deals to buy from the support level of 1.0679 or 1.0620 but with the intraday confirmation. It is best to buy from the Fibonacci discount zone (marked with a green rectangle). Sell deals could be considered from the resistance level of 1.0803, subject to a reversal.

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: 1.2080
• Prev. Close: 1.2183
• % chg. over the last day: +0.85%

The labor market data will be released today in the UK and will be taken into account by the Bank of England in its monetary policy planning. How is the labor market related to interest rates? If the labor market is strong, it suggests that the situation in the economy is not yet so critical that it gives room for further rate hikes. If the labor market shows weakness, these are the first signs of an economic slowdown, a harbinger of recession. In that case, the central bank becomes less aggressive or may even suspend the tightening of monetary policy.

Trading recommendations

• Support levels: 1.2143,1.2036,1.1964,1.1929,1.1843,1.1799,1.1603
• Resistance levels: 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 overbought with signs of divergence. It is better to look for buy deals after correction from the support level of 1.2036 or 1.1964, but better from the discount zone (50-70% of Fibonacci). It is better to look for sell deals from the resistance level of 1.2143 but with a confirmation in the form of impulse return beyond the level.

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: 134.55
• Prev. Close: 133.19
• % chg. over the last day: -1.02%

An important inflation report will be released in the US today. The lower inflationary pressure will dramatically increase the odds that the US Federal Reserve will not raise rates next week. This will have a negative effect on the dollar, which will give a temporary advantage to the Japanese yen. However, it should be kept in mind that interest rate differentials are still intact between central banks, so no rapid appreciation should be expected from the yen. On the other hand, if today’s inflation data shows resilience, it will be negative for risky assets, and the dollar might get support again.

Trading recommendations

• Support levels: 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 is bearish. Indicator MACD is negative, but there are signs of sellers’ weakness. Under such market conditions, it is best to look for buy trades from the support level of 132.94, but only with intraday confirmation and short targets. Sell deals can be sought 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: 1.3799
• Prev. Close: 1.3729
• % chg. over the last day: -0.51%

Oil prices fell more than 2% in volatile trading on Monday as the Silicon Valley Bank collapse rattled stock markets and raised fears of a new financial crisis. The Canadian dollar is a commodity currency, so a drop in oil prices is negative for CAD. On the other hand, the banking crisis led to a drop in government bond yields, which was reflected in a drop in the dollar. As the demand for oil recovers in China, the oil prices will rise, which will give the Canadian dollar an advantage over the American dollar.

Trading recommendations

• Support levels: 1.3710,1.3664,1.3645,1.3515
• Resistance levels: 1.3811,1.3862

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, but there are already signs of divergence, indicating that correction will soon be completed. Under such market conditions, it is worth looking for buy trades from the support level of 1.3710 or 1.3664, 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 1.3811, but only with short targets and after the 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.