The Analytical Overview of the Main Currency Pairs on 2023.03.29

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0796
• Prev. Close: 1.0845
• % chg. over the last day: +0.45%

The euro rose to a five-day high against the US dollar as EU government bond yields rose on Tuesday. Turbulence in the banking sector has altered market expectations for a likely interest rate hike by the Federal Reserve, and a pause is now expected in May. Given persistent inflationary pressures in the Eurozone, the ECB intends to raise interest rates aggressively. This will lead to a narrowing of the rate differential between the Fed and ECB, which will strengthen the euro in the medium term.

Trading recommendations

• Support levels: 1.0770,1.0680,1.0519,1.0482
• Resistance levels: 1.0862,1.0924

Alternative scenario:

The EUR/USD currency pair trend on the hourly time frame is still bullish. The price is trading above the moving averages, but the buyers’ pressure is very weak. The MACD indicator is in the positive zone but has no upward momentum. It is better to buy from the support level of 1.0770 or from 1.0680. It is better to buy after confirmation on the intraday time frames in the form of a structure change. Sell deals can be considered from the resistance level of 1.0862 in case of a false breakout.

Technical indicators of the currency pair:

Trading recommendations

The EUR/USD currency pair trend on the hourly time frame is still bullish. The price is trading above the moving averages, but the buyers’ pressure is very weak. The MACD indicator is in the positive zone but has no upward momentum. It is better to buy from the support level of 1.0770 or from 1.0680. It is better to buy after confirmation on the intraday time frames in the form of a structure change. Sell deals can be considered from the resistance level of 1.0862 in case of a false breakout.

Alternative scenario:

if the price breaks down through the support level of 1.0680 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2278
• Prev. Close: 1.2339
• % chg. over the last day: +0.49%

Andrew Bailey, Governor of the Bank of England, believes that the recent collapse of Silicon Valley Bank, Credit Suisse problems, and the impending banking crisis, in general, will not create problems for Britain’s financial sector. The UK has a lot of economic difficulties right now, so it is crucial that the financial sector remains stable. The latest data showed that food inflation rose again in March to a record 17.5%, causing more misery for consumers. The report indicates that British households now face an extra £837 per year ($1,028) to buy groceries. Official UK data released last week showed that overall consumer price inflation rose to 10.4% in February, the highest since 1977.

Trading recommendations

• Support levels: 1.2178,1.2112,1.2009,1.1963,1.1929,1.1843
• Resistance levels: 1.2343,1.2415

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages, and the MACD indicator is in the positive zone, but there is a divergence. This is not a good time to buy, as all support levels are quite far from the price right now. Under such conditions, it is better to buy after a pullback or after an impulse breakout of the 1.2343 resistance level. It is better to look for sell trades on the intraday time frames from the resistance level of 1.2343, with a confirmation in the form of a false break.

Alternative scenario:

if the price breaks down through the 1.2112 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 131.54
• Prev. Close: 130.89
• % chg. over the last day: -0.49%

Japan’s parliament on Tuesday approved a record budget of 114.38 trillion yen ($870 billion) for the new fiscal year beginning in April to bolster defense capabilities in the face of security threats from neighbors and to support the economy in fighting inflation. The Cabinet also decided to use 2.22 trillion yen ($16.82 billion) of reserve funds for the current fiscal year ending Friday to finance a new package of measures to reduce inflation. Low-income households will receive cash benefits, and the government will subsidize liquefied petroleum gas bills for households in addition to electricity and gas bills. The Bank of Japan expects inflation to slow this year but not reach the 2% target.

Trading recommendations

• Support levels: 130.49,129.80
• Resistance levels: 131.68,133.00,133.75,135.16,136.07,137.91

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price is forming a wide corridor at the moment. The MACD indicator has become positive. It is best to look for buy trades from the support level of 130.48, but only with a confirmation in the form of a reverse reaction or false breakout. Sell deals can be searched from the resistance level of 131.68, but also with an additional confirmation in the form of a false breakout, as the level has already been tested.

Alternative scenario:

if the price fixes above the 133.75 resistance level, the uptrend will be resumed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3660
• Prev. Close: 1.3596
• % chg. over the last day: -0.47%

The OPEC+ coalition shows no sign of adjusting oil production ahead of next week’s meeting, sticking to its planned course even amid turbulence in financial markets. Expectations of a return to $100 a barrel of oil, which were widespread in the industry at the beginning of the year, have cooled in recent weeks. Nevertheless, major traders, including Trafigura Group Pte Ltd. and Gunvor Group Ltd., are still predicting a rally in the second half of 2023. The Canadian dollar is a commodity currency, so a rise in oil prices is positive for Canada. Also, analysts still expect a recovery in demand from China, especially ahead of summer, so with the dollar index losing support from the US Federal Reserve, the Canadian dollar may take over the initiative from the dollar in the medium term.

Trading recommendations

• Support levels: 1.3590,1.3515
• Resistance levels: 1.3645,1.3695,1.3722,1.3786,1.3814,1.3862

From the point of view of technical analysis, the trend on the USD/CAD currency pair is still bullish. The price has consolidated below the moving averages and below the priority change level. The MACD indicator is oversold, and there are signs of divergence, which suggests that an upward correction should be expected in the near future. Under such market conditions, it is better to buy from the support level of 1.3590 but with a confirmation in the form of a false breakdown or change of the structure on the lower time frames. Sell positions can be sought from the resistance level of 1.3645, but only with a confirmation in the form of a false breakout. A false break is important in the case of a reversal, as the captured liquidity must be taken away to the opposite side.

Alternative scenario:

if the price breaks out and consolidates above the resistance level of 1.3800, the uptrend will likely resume.