The Analytical Overview of the Main Currency Pairs on 2023.03.23

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0768
• Prev. Close: 1.0857
• % chg. over the last day: +0.82%

On Wednesday, the US Federal Reserve raised its interest rate by 0.25% to 5% and maintained its forecast for another increase this year. Asset reduction in Treasury securities will continue (quantitative tightening – QT). Meanwhile, Fed Chairman Jerome Powell firmly rejected market rumors of a rate cut later this year, even as the banking sector tightens lending, but assured that everything is under the Fed’s control. The dollar index collapsed sharply after the meeting, pushing risk assets higher. Which means the markets did not believe Powell’s words.

Trading recommendations

• Support levels: 1.0800,1.0725,1.0680,1.0519,1.0482
• Resistance levels: 1.0926

Alternative scenario:

The EUR/USD currency pair trend on the hour timeframe is still bullish. The price is trading above the moving averages. The MACD indicator is in the positive zone and overbought. There is buying pressure inside the day, but there is already a divergence on several timeframes. Buy trades are best considered after a small correction, as the price has deviated strongly. It is best to buy from the support level of 1.0800 but with intraday confirmation. Sell deals can be considered from the resistance level of 1.0926, provided there is a reverse reaction and a change in the structure on the lower time frames.

Technical indicators of the currency pair:

Trading recommendations

The EUR/USD currency pair trend on the hour timeframe is still bullish. The price is trading above the moving averages. The MACD indicator is in the positive zone and overbought. There is buying pressure inside the day, but there is already a divergence on several timeframes. Buy trades are best considered after a small correction, as the price has deviated strongly. It is best to buy from the support level of 1.0800 but with intraday confirmation. Sell deals can be considered from the resistance level of 1.0926, provided there is a reverse reaction and a change in the structure on the lower time frames.

Alternative scenario:

if the price breaks down through the support level of 1.0679 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2218
• Prev. Close: 1.2267
• % chg. over the last day: +0.40%

The Bank of England will hold its monetary policy meeting today. Yesterday’s inflation data was disappointing. Inflationary pressures have increased again. The consumer price index unexpectedly rose from 10.1% to 10.4% year-on-year. Core inflation (which excludes food and energy prices) also increased from 5.8% to 6.2%. Such data will undoubtedly require the Bank of England to be more hawkish. Therefore, analysts expect a 0.25% rate hike today, with a possible another hike at the next meeting.

Trading recommendations

• Support levels: 1.2179,1.2009,1.1963,1.1929,1.1843
• Resistance levels: 1.2326,1.2415

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The MACD indicator is positive again. At the same time, on several time frames, there is a divergence, which means 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 1.2179. It is better to look for sell deals from the resistance level of 1.2326 but with a confirmation in the form of a reversal.

Alternative scenario:

if the price breaks down through the 1.2009 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 132.42
• Prev. Close: 131.36
• % chg. over the last day: -0.81%

The US Federal Reserve Bank raised its interest rate to 5%. At the same time, the Bank of Japan’s rate is negative by 0.1%. The interest rate differential has increased, which is a fundamental factor for the USD/JPY growth. At the moment, there are no economic factors for the JPY to strengthen, as the Bank of Japan is going to continue its soft monetary policy even under the new governor. As soon as the interest rate differential between the banks starts to narrow, only then will the USD/JPY quotes can shift into a medium-term downtrend. Therefore, the current strengthening of the Japanese yen should not be regarded as a change of trend.

Trading recommendations

• Support levels: 130.56,129.80
• Resistance levels: 131.88,132.99,133.78,135.11,136.08,137.91,138.15,138.88

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The MACD indicator is in the negative zone, and the price is trading below the moving averages. At the same time, the price has formed a double bottom, which is more likely to lead to another breakdown to grab liquidity. Under such market conditions, buy trades are best sought from the 130.56 or 129.80 support levels, but only with a confirmation in the form of a false breakdown. Sell deals can be sought from the resistance level of 131.88, but also with additional confirmation in the form of a reverse initiative.

Alternative scenario:

if the price fixes above the 137.78 resistance level, the uptrend will be resumed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3711
• Prev. Close: 1.3721
• % chg. over the last day: +0.07%

Oil prices rose about 2% to a one-week high on Wednesday as the dollar fell to a six-week low after the Federal Reserve indicated it was expecting a small rate hike, hinting the central bank was on the verge of a pause. The Canadian dollar, being a commodity currency, was able to strengthen against this backdrop. The Organization of Petroleum Exporting Countries and its allies, known as OPEC+, are likely to stick to their agreement to cut production by 2 million BPD by the end of the year, despite crude oil prices falling in recent weeks. This means that producing countries expect oil prices to rebound in the near future.

Trading recommendations

• Support levels: 1.3650,1.3590,1.3515
• Resistance levels: 1.3704,1.3786,1.3811,1.3862

From the point of view of technical analysis, the trend on the USD/CAD currency pair is still bullish. The price is not yet able to consolidate below the change of priority. The MACD indicator has become negative again, and there is seller pressure inside the day. Under such market conditions, it is better to look for buy positions from the support level of 1.3650, but better with a confirmation in the form of a false breakdown. Fixation of the price below 1.3650 will change the structure in this timeframe. Sell deals can be sought from the resistance level of 1.3704, 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.