The Analytical Overview of the Main Currency Pairs on 2023.04.06

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0945
• Prev. Close: 1.0906
• % chg. over the last day: -0.35%

The US dollar strengthened yesterday as investors are once again counting on the American currency as a safe haven asset. A series of weak economic data heightened fears that interest rate hikes by the Federal Reserve could lead to a recession in the US economy. The ADP National Employment report showed that US private employers hired far fewer workers than expected in March, adding to signs of a cooling labor market after Tuesday’s weak jobs data. Now the focus will be on the monthly nonfarm payroll data, which will be released Friday.

Trading recommendations

• Support levels: 1.0881,1.0839,1.0770,1.0680,1.0519,1.0482
• Resistance levels: 1.0924,1.0988,1.1032

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price formed a false breakout area above the resistance level of 1.0924. The MACD indicator became negative, and the price dropped below the moving averages. All these signs point to the beginning of a corrective movement. Buy trades are best considered from the support level of 1.0881 or 1.0839, but only with a confirmation in the form of a false breakdown. Sell deals can be considered from the resistance level of 1.0924, but only on the condition of a reverse reaction.

Alternative scenario:

if the price breaks down through the support level of 1.0770 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2500
• Prev. Close: 1.2460
• % chg. over the last day: -0.32%

With growing fears of a deteriorating economic outlook following the recent turmoil in the banking sector, market expectations have shifted in favor of the US Central Bank suspending interest rate hikes. According to CME Group’s Fedwatch tool, traders’ bets on the Fed pause in May are at 60.5%. This is a negative factor for the dollar index. The British pound, in turn, has strengthened in recent days on the back of the dollar’s weakness. But the Bank of England also has no room for maneuvering, and the maximum that the investors can count on is one more rate hike from the Bank of England by 0.25%. But the probability of such a scenario is less than 50%. Moreover, the difference in the interest rates is not in favor of the pound, and the British economy has plenty of problems. Therefore, there are no fundamental factors for the further rise of the British currency.

Trading recommendations

• Support levels: 1.2422,1.2359,1.2320,1.2267,1.2178,1.2112,1.2009,1.1963
• Resistance levels: 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 became negative, and there is an implicit selling pressure inside the day. The price is correcting. Under such market conditions, it is best to consider buying after a pullback to the nearest support level of 1.2422 but with confirmation in the form of a reverse reaction. Sell trades are best to look for on intraday time frames, but with confirmation in the form of a downward structure on the lower time frames.

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: 131.69
• Prev. Close: 131.32
• % chg. over the last day: -0.28%

A private sector survey in Japan showed that activity in the service sector expanded at the fastest pace in nine years in March. This indicates that Japan’s economy is recovering after COVID-19, offsetting the still weak industrial sector. Japan will also end existing COVID-19 border controls for foreign visitors in May in order to launch a voluntary testing program at airports. This will increase the tourist flow, further increasing business activity.

Trading recommendations

• Support levels: 130.91,131.29,130.29,127.80
• Resistance levels: 131.43,131.91,132.35,133.83,133.16,135.11,136.07,137.91

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. A price fixation below the level of 130.91 will change the trend in this time frame. The MACD indicator points to the divergence, which indicates the possible completion of the correction. Under such market conditions, buy trades should be sought from the support level of 130.91. Sell positions can be sought from the resistance level of 131.91 or 132.35, but only with additional confirmation and short targets.

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: 1.3438
• Prev. Close: 1.3456
• % chg. over the last day: +0.14%

Commodities analysts believe OPEC+’s surprise move last weekend to cut oil production will severely reduce supply for the summer travel season, which is likely to push oil prices up to $100 a barrel, and the key takeaway here is that Saudi Arabia wants to see oil prices at $95 a barrel or higher. For the Canadian dollar, that would be a strengthening factor since the Canadian is a commodity currency. But there is another side. If oil prices jump to $90-100 a barrel, it will undoubtedly cause a new wave of inflation. And central banks have already raised interest rates heavily. So for the global economy, rising oil prices are extremely unprofitable right now.

Trading recommendations

• Support levels: 1.3400,1.3456
• Resistance levels: 1.3495,1.3535,1.3564,1.3616,1.3644,1.3694,1.3722,1.3786

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The price forms the pattern “flag,” which is a figure of trend continuation but not a reversal. The MACD indicator has become positive, but no buyer pressure is observed. Under such market conditions, it is best to buy from the support level of 1.3456 but with confirmation on the lower time frames. Sell deals can be sought from the resistance level of 1.3495 or 1.3535, but only with confirmation in the form of reverse initiative.

Alternative scenario:

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