The Analytical Overview of the Main Currency Pairs on 2023.03.22

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0722
• Prev. Close: 1.0766
• % chg. over the last day: +0.41%

Yesterday’s rally in shares of First Republic Bank signaled an easing of fears about a further downturn in the banking sector. This happened just a day before the US Federal Reserve’s meeting on monetary policy and interest rate issues. So the best-case scenario today would be a 0.25% rate hike. But much more important will be what the head of the US Fed will say at the press conference. If Powell’s speech is dovish and hints at an end to the cycle soon, it will cause the dollar index to fall and risky assets, such as the euro and the pound, to rise. But if Powell hints that the Fed will continue to tighten policy at subsequent meetings, it could cause a new panic rush, which will force investors to buy dollars again.

Trading recommendations

• Support levels: 1.0725,1.0680,1.0519,1.0482
• Resistance levels: 1.0804,1.0906

The trend on the EUR/USD currency pair on the hourly time frame is still bullish. The price is trading above the moving averages. The MACD indicator is in the positive zone; there is buying pressure inside the day, but there is a divergence, indicating further growth weakness. Buy trades are best considered from the support level of 1.0725, but with confirmation inside the day. Sell deals can be considered from the resistance level of 1.0804, subject to a reverse reaction.

Alternative scenario:

if the price breaks down through the support level of 1.0519 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2276
• Prev. Close: 1.2217
• % chg. over the last day: -0.48%

Inflation data will be released today in the UK, and tomorrow the Bank of England will hold its monetary policy meeting. And undoubtedly, consumer price data will influence politicians’ decisions. Analysts are predicting a decline in inflation from 10.1% to 9.9% on an annual basis. For the Bank of England, that’s not likely to be enough, so with those numbers, the Bank of England will raise its interest rate by 0.25% on Thursday. But if the data on consumer prices show a stronger drop today, that might change the bankers’ view, and the Bank of England might refuse to raise the rate, especially if the US Fed indicates the end of the tightening cycle at its meeting this evening.

Trading recommendations

• Support levels: 1.2169,1.2009,1.1963,1.1929,1.1843
• Resistance levels: 1.2267,1.2326

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The MACD indicator has become inactive. At the same time, on several time frames, there is a divergence, which suggests that further price growth is limited. It is better to look for buy deals after the pullback to the moving averages or from the support level of 1.2169. Sell trades are better to look for from the resistance level of 1.2267 but with a confirmation in the form of a reversal.

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: 131.30
• Prev. Close: 132.43
• % chg. over the last day: +0.86%

Fears over the US banking crisis seem to be easing, and the Fed is expected to continue its tough fight against inflation. If the Fed continues to tighten today, the dollar index could gain support again, pushing the USD/JPY up. But a more dovish attitude from the Federal Reserve would support the dollar’s decline. But traders should not forget that the interest rate differential between the Bank of Japan and the US Federal Reserve is still not decreasing, so the Japanese Yen has no fundamental factors for strengthening at the moment.

Trading recommendations

• Support levels: 131.43
• Resistance levels: 133.78,135.11,136.08,137.91,138.15,138.88

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. But the MACD indicator has become positive, and the price is trading above the moving averages. Moreover, yesterday, the price broke through the descending wedge. In the coming days, traders should expect a corrective upward movement. Under such market conditions, it is better to look for buy trades from the support level of 131.43. Sell deals can be searched from the resistance level of 133.78, but also with additional confirmation in the form of a reverse initiative.

Alternative scenario:

if the price fixes above the 136.08 resistance level, the uptrend will be resumed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3665
• Prev. Close: 1.3708
• % chg. over the last day: +0.31%

Canada’s consumer price index declined from 5.9% to 5.2% year-over-year. Core inflation (excluding food and energy prices) also showed signs of slowing, from 5% to 4.7%. This reinforces the likelihood that the Bank of Canada will not return to raising interest rates. Last month, the Bank of Canada became the first major central bank to suspend its aggressive monetary policy, keeping its key interest rate at 4.5% as inflation fell after eight successive rate hikes. The turmoil in the banking sector has led to speculation that more central banks will refrain from raising rates further.

Trading recommendations

• Support levels: 1.3690,1.3650,1.3515
• Resistance levels: 1.3786,1.3811,1.3862

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price failed to consolidate below the level of change of priority. The MACD indicator is positive again, and the buyers have returned. Under such market conditions, it is best to look for purchases from the support level of 1.3690, but better with confirmation in the form of a false breakdown. Sell positions can be sought from the resistance level of 1.3786, but only with short targets and after confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks down and consolidates below the support level of 1.3650, the downtrend will likely resume.