The Analytical Overview of the Main Currency Pairs on 2023.03.24

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0858
• Prev. Close: 1.0827
• % chg. over the last day: -0.28%

According to an economic model based on unemployment and consumer price inflation, the Fed’s policy remains moderately tight after Wednesday’s rate hike. Fed Funds rate futures now suggest mixed expectations for the next FOMC meeting on May 3. They imply the likelihood of either a pause in the rate hike or an increase of another 0.25%. At the same time, ECB spokesman Holtzman said yesterday that the ECB has more to do in May regarding interest rates. Therefore, the interest rate differential between the US Fed and the ECB might be reduced in May, which would further strengthen the euro.

Trading recommendations

• Support levels: 1.0800,1.0725,1.0680,1.0519,1.0482
• Resistance levels: 1.0882,1.0926

Alternative scenario:

The EUR/USD currency pair trend on the hourly time frame is still bullish. Yesterday the price rebounded from the resistance level of 1.0926, and now it is trading at the level of moving averages. The MACD indicator has turned negative, and there is seller pressure inside the day. The best time to buy is after the correction wave. It is best to buy from the support level 1.0800 or 1.0725, but with confirmation inside the day. Sell deals can be considered from the resistance level of 1.0882 or from 1.0926 on the condition of a false breakdown since the level has already been tested.

Technical indicators of the currency pair:

Trading recommendations

The EUR/USD currency pair trend on the hourly time frame is still bullish. Yesterday the price rebounded from the resistance level of 1.0926, and now it is trading at the level of moving averages. The MACD indicator has turned negative, and there is seller pressure inside the day. The best time to buy is after the correction wave. It is best to buy from the support level 1.0800 or 1.0725, but with confirmation inside the day. Sell deals can be considered from the resistance level of 1.0882 or from 1.0926 on the condition of a false breakdown since the level has already been tested.

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: 1.2267
• Prev. Close: 1.2288
• % chg. over the last day: +0.17%

The Bank of England raised its interest rate by 25 basis points on Thursday to 4.25%, in line with expectations, and said further tightening would be required if there was evidence of more sustained price pressure. The Bank of England believes fiscal support for the economy will add 0.3% to GDP, mostly through subsidies, while inflation will fall sharply in the near term. Right now, UK inflation is above 10%, while the interest rate is 4.25%, which is more than half that. Certain economic models show that consumer prices begin to fall rapidly when the difference between inflation and the interest rate is no more than 1%. The US Fed has already reached such a point, but the Bank of England has not made such progress. And amid weak economic data, the British pound may soon lose its momentum.

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 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 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 false breakout, as the level has already been tested.

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: 131.32
• Prev. Close: 130.81
• % chg. over the last day: -0.39%

Japan’s nationwide core CPI decreased from 4.2% to 3.1% year-on-year. The decline in inflation was mainly due to the impact of government subsidies on lower utility bills. Bank of Japan Governor Haruhiko Kuroda has repeatedly said that inflation will slow below the bank’s 2% target later this year as the impact of past increases in fuel and commodity prices dissipates. But some BOJ policymakers have noted the possibility that inflation could exceed initial expectations as price increases and wage growth show signs of expanding. Markets are rife with rumors that the Bank of Japan will phase out or end its bond yield control policy under new governor Kazuo Ueda, who will replace incumbent Haruhiko Kuroda. Earlier this month, in annual talks with labor unions, leading Japanese companies agreed to the largest wage increases in a quarter-century, a sign that the country may be abandoning its deflationary model.

Trading recommendations

• Support levels: 130.43,129.80
• Resistance levels: 131.68,132.99,133.78,135.11,136.08,137.91,138.15,138.88

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, the price trades below the moving averages, and the divergence is formed. The price again forms a wedge pattern, and liquidity is narrowing. As a rule, such patterns occur before an impulse movement. Under such market conditions, it is best to look for buy trades from the support level of 130.43 or 129.80, but only with a confirmation in the form of a reverse reaction. Sell deals can be searched for from the resistance level of 131.68, but also with an additional confirmation in the form of a false breakout.

Alternative scenario:

if the price fixes above the 133.77 resistance level, the uptrend will be resumed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3731
• Prev. Close: 1.3708
• % chg. over the last day: -0.17%

The Canadian dollar lost momentum yesterday. One-third of the world’s supply is currently at risk due to sanctions imposed on Russia over its invasion of Ukraine. OPEC+ producing countries now realize that the fear of a supply shortage for the oil market is greater than the fear of oversaturation. It is for this reason that OPEC+ does not see the need to reduce oil production to increase prices because the supply/demand balance is now skewed toward lower supply and increasing demand ahead of summer. Rising oil prices will strengthen the Canadian dollar, but an excessive rise in black gold prices could bring back global inflationary pressures.

Trading recommendations

• Support levels: 1.3650,1.3590,1.3515
• 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 still bullish. The price is not yet able to consolidate below the priority change level. The MACD indicator is positive again. The buyers have returned inside the day. Under such market conditions, it is best to look for buy deals from the support level 1.3668, but it is better with confirmation on the lower time frames. Sell positions can be sought from the resistance level of 1.3736, 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 1.3650, the downtrend will likely resume.