The Analytical Overview of the Main Currency Pairs on 2023.04.12

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0858
• Prev. Close: 1.0912
• % chg. over the last day: +0.49%

The US inflation data will be released today, followed by the minutes of the Fed’s March monetary policy meeting at the end of the day. Analysts expect the annualized consumer price level to fall from 6.0% to 5.2%, focusing on core inflation, excluding food and energy prices. Core inflation is forecast to rise by 0.4%. At the end of the trading day, the minutes of the March Fed meeting will be published. These two reports will provide clues as to the US Federal Reserve’s future policy. A rise in core inflation, along with hawkish FOMC minutes, could add confidence to the dollar as it raises the likelihood of another 0.25% interest rate hike at the May 3 meeting. Conversely, lower inflation pressures, along with a non-hawkish FOMC protocol, could cause a sell-off in the dollar.

Trading recommendations

• Support levels: 1.0894,1.0863,1.0839,1.0803,1.0770,1.0680,1.0519,1.0482
• Resistance levels: 1.0937,1.0924,1.0988,1.1032

The trend on the EUR/USD currency pair on the hourly time frame is still bullish. The price resumed growth and is trading above the moving averages again. The MACD indicator has become positive, and there is a slight buying pressure inside the day. Buy trades are best considered from the support level of 1.0894 or 1.0839, but only with confirmation on the lower time frames. Sell positions can be considered from the resistance level of 1.0937, but only on the condition of a false breakout and 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: 1.2377
• Prev. Close: 1.2424
• % chg. over the last day: +0.37%

The British pound strengthened yesterday on the back of a decline in the dollar index. The US NFP report released last Friday showed that the US labor market is in good shape, and the unemployment rate has fallen to a multi-year low. The latest outlook for CME federal funds futures now shows that markets expect another 25 basis point (80% probability) rate hike at the May FOMC meeting before the hike cycle is suspended. The Bank of England also intends to raise the rate again by 25bp, so the medium-term picture for GBP/USD will remain the same in the coming weeks.

Trading recommendations

• Support levels: 1.2408,1.2384,1.2320,1.2267,1.2178,1.2112,1.2009,1.1963
• Resistance levels: 1.2455,1.2410,1.2519

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price returned above the moving averages, and the MACD indicator became positive, but buying pressure is weak. Under such market conditions, buying is best considered from the support level of 1.2408 or 1.2384, but with confirmation in the form of a reverse initiative. Sell trades are best looked for on intraday time frames from the resistance level of 1.2455, but with confirmation in the form of a false breakout and a change of structure on the lower time frames.

Alternative scenario:

if the price breaks down through the 1.2320 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 133.59
• Prev. Close: 133.68
• % chg. over the last day: +0.07%

Rumors about the policy changes of the Bank of Japan have reappeared in Japan. The head of Japan’s leading banking group MUFG indicated yesterday that the Bank of Japan might reconsider or even give up targeting long-term interest rates by the end of September if conditions are favorable. Deutsche Bank analysts expect Bank of Japan Governor Ueda to give up control of government bond yields (YCC) in 2 weeks. If that happens, the Japanese yen could strengthen sharply due to a shift in monetary policy towards normalization.

Trading recommendations

• Support levels: 132.85,132.48,131.82,130.62
• Resistance levels: 133.74,135.11,136.07,137.91

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is now testing the liquidity zone above the resistance levels. An impulsive return of the price may cause a deep correction. Sell positions can be looked for from the resistance level of 133.55 if the price impulsively consolidates below it. It is not the best situation to buy now, as the price has deviated strongly from the moving averages, and the MACD indicator indicates a divergence.

Alternative scenario:

if the price fixes below the 131.82 support level, the downtrend will be resumed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3509
• Prev. Close: 1.3462
• % chg. over the last day: -0.35%

The Bank of Canada will hold monetary policy and interest rate meetings today. The Bank of Canada is expected to leave interest rates unchanged. Inflation in the country is falling, and other economic indicators suggest that the economy is picking up. But the main focus will be on a press conference where BoC Governor Tiff Macklem will point to the central bank’s future plans. The medium-term outlook for the Canadian dollar is bullish since even if BoC starts to cut rates at the end of the year, oil prices may keep the Canadian from falling.

Trading recommendations

• Support levels: 1.3406,1.3501,1.3456,1.3400
• Resistance levels: 1.3515,1.3563,1.3616,1.3644,1.3694,1.3722

From the point of view of technical analysis, the trend on the USD/CAD currency pair is still bearish. The price is trading below the moving averages again. The MACD indicator became negative. Given that there are no significant support levels, the price may test liquidity below 1.3406. Sell deals could be sought from the resistance level of 1.3515, 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 1.3536, the uptrend will likely resume.