The Analytical Overview of the Main Currency Pairs on 2023.04.04

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0839
• Prev. Close: 1.0902
• % chg. over the last day: +0.58%

OPEC countries voluntarily decided to reduce oil production by 1.16 million barrels per day. The reaction to oil prices was immediate – the quotes opened with a more than 5% price gap. Until Sunday, many analysts were inclined to cut the Fed funds rate by the end of the year. But this OPEC decision could turn everything upside down. Analysts are trying to predict what the Federal Reserve will do in terms of raising rates to counter the new inflationary pressures that will almost inevitably come back due to rising black gold prices.

Trading recommendations

• Support levels: 1.0839,1.0770,1.0680,1.0519,1.0482
• Resistance levels: 1.0924,1.1017

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages again. The MACD indicator is in the positive zone, with no signs of reversal. Buy trades are best considered from the support level of 1.0839, but only with confirmation. It is worth buying after confirmation on the intraday time frames in the form of a buyers’ initiative. Sell positions can be considered from the resistance level of 1.0924, but only on the condition of a false breakout, as the level has been tested several times, and a lot of liquidity has gathered above it.

Alternative scenario:

if the price breaks down through the support level of 1.0711 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2326
• Prev. Close: 1.2417
• % chg. over the last day: +0.74%

The British Pound sharply strengthened yesterday amid rising prices of the British benchmark Brent Crude Oil. But other economic indicators were weak. The business activity index in the manufacturing sector returned to contraction territory. Manufacturing output fell for the eighth time in the past nine months. Production was cut in response to weak market demand and a decline in new export orders. But there is some positive news: nearly 60% of manufacturers forecast an increase in production volumes next year.

Trading recommendations

• Support levels: 1.2359,1.2320,1.2267,1.2178,1.2112,1.2009,1.1963,1.1929
• Resistance levels: 1.2422,1.2519

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, and there is buying pressure inside the day. At the same time, the price is trading above the moving averages. Under such market conditions, it is best to buy after a pullback to the nearest support level of 1.2359 or 1.2320 but with a confirmation in the form of a reverse reaction. Sell trades are best to look for on intraday time frames from the resistance level of 1.2422, but with a confirmation in the form of a false breakout.

Alternative scenario:

if the price breaks down through the 1.2267 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 133.33
• Prev. Close: 132.40
• % chg. over the last day: -0.70%

From the fundamental analysis point of view, the situation has not changed for the JPY. The Bank of Japan is still holding the interest rate at 0.1% and keeps control of the yield curve of the 10-year Japanese government bonds (YCC). At the same time, the US Fed rate is at 5%, and there is a 60% chance that the US Fed will increase the cost of borrowing by another 0.25% at the May meeting. Until the interest rate differential between the US Fed and the BoJ starts to narrow, or until the BoJ relinquishes control of the YCC yield curve, the Japanese yen has no medium-term factor in strengthening.

Trading recommendations

• Support levels: 131.90,130.91,127.80
• Resistance levels: 133.83,133.16,135.11,136.07,137.91

From the technical point of view, the medium-term trend on the currency pair USD/JPY has changed to bullish. But yesterday, the price changed the structure, breaking through the support level after a false breakout. Under such market conditions, traders should expect a decline in price to the support level of 131.91. It is better to look for buy trades from the support level of 131.91 or lower, but only with confirmation on the lower time frames. Sell deals can be sought from the resistance level of 133.16 and with additional confirmation.

Alternative scenario:

if the price fixes below the 130.91 support level, the downtrend will be resumed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3491
• Prev. Close: 1.3434
• % chg. over the last day: -0.42%

Due to voluntary cuts in oil production by OPEC countries, oil prices showed their biggest one-day increase in a year. WTI and Brent rose by 6.3% yesterday. At the same time, the analysts forecast further growth in quotes, up to $90-100 per barrel. This is positive for the Canadian dollar, as the Canadian is a commodity currency. On the other hand, excessive growth of oil prices will undoubtedly cause a new wave of inflationary pressure that will lead to a revision of Central Banks’ monetary policy. But the tightening of the policy is also a factor in strengthening the national currency.

Trading recommendations

• Support levels: 1.3400
• Resistance levels: 1.3475,1.3535,1.3564,1.3616,1.3644,1.3694,1.3722,1.3786

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The price is trading below the moving averages and confidently breaks through the support levels. But the MACD indicator is oversold, and there are signs of divergence, which suggests that an upward correction should be expected in the near future, but traders have to wait for a change in the structure. Under such market conditions, it is better to buy from the support level of 1.3400 but with a confirmation in the form of a change in the structure on the lower time frames. Sell deals can be sought from the resistance level of 1.3475, but only with confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks out and consolidates above the resistance level of 1.3564, the uptrend will likely resume.