The Analytical Overview of the Main Currency Pairs on 2023.04.21

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0952
• Prev. Close: 1.0970
• % chg. over the last day: +0.16%

The March minutes of the ECB monetary policy meeting indicated a divergence in policymakers’ views. A 50 basis point rate hike is still under consideration for next month, but the split among policymakers is in favor of a 25 basis point compromise. But it should be noted that these minutes were prepared before the banking turmoil and the ECB’s rejection of forward guidance. Given the bank and market turmoil, a new set of macroeconomic forecasts for inflation, a 50 bps rate hike scenario is the most likely at the moment.

Trading recommendations

• Support levels: 1.0934,1.0894,1.0830,1.0803,1.0770,1.0680
• Resistance levels: 1.0999,1.1041,1.1185

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading at the level of moving averages, a narrow flat is forming, and the price is right in the center of this corridor, which makes it difficult to find good entry points. The MACD indicator has become inactive. Under such market conditions, buy trades are better to be considered from the support level of 1.0934, but with additional confirmation, as the level has already been tested. Sell deals can be considered from the resistance level of 1.0999, but also only with a confirmation in the form of a false breakout.

Alternative scenario:

if the price breaks down through the support level of 1.0894 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2438
• Prev. Close: 1.2422
• % chg. over the last day: -0.13%

The US Federal Reserve is holding the interest rate at 5% and will raise the cost of borrowing by another 0.25% at the next meeting. The Bank of England, in turn, is holding the rate at 4.25% and plans to hold another increase also by 0.25%. The interest rate differential will remain at the same level, so there is no factor for the British currency to strengthen against the dollar right now.

Trading recommendations

• Support levels: 1.2414,1.2391,1.2343,1.2320,1.2267,1.2178,1.2112
• Resistance levels: 1.2472,1.2519,1.2643

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is still bullish. The price is forming a wide-volatile flat. The MACD indicator has become inactive, and the price is trading at the level of the moving averages. Buying is best considered from the support level of 1.2391 but with confirmation. Going below 1.2391 is undesirable for buyers. Sell trades are best to look for on intraday time frames from the resistance level of 1.2472 but with a confirmation in the form of a false breakout.

Alternative scenario:

if the price breaks down through the 1.2343 support level and fixes below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 134.68
• Prev. Close: 134.24
• % chg. over the last day: -0.33%

Japan’s nationwide core consumer price index remained at 3.1%. The report showed that although government energy subsidies have helped reduce inflation from a more than 40-year peak of 4.2%, rising costs for most goods and services continue to keep inflation well above the Bank of Japan’s 2% target. The BOJ also forecasts a pick-up in inflation by mid-2023, as the effects of the government subsidies are baked into the economy. This will likely prompt the bank to change its yield curve control policy later this year. But most economists believe the Bank of Japan is unlikely to take any action at its April 27-28 meeting.

Trading recommendations

• Support levels: 133.12,132.02,131.82,130.62
• Resistance levels: 134.48,135.11,136.07,137.91

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading below the moving averages and correcting to the buying zone. The MACD indicator is in the negative zone; there is seller pressure inside the day. Under such market conditions, it is best to look for buy deals from the support level of 133.12, but with confirmation. The best option to open the sell positions would be the resistance level of 134.48 but with confirmation in the form of a change in the structure on the lower time frames.

Alternative scenario:

if the price fixes below the 132.00 support level, the downtrend will be resumed with a high probability.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3456
• Prev. Close: 1.3476
• % chg. over the last day: +0.15%

Bank of Canada Governor Tiff Macklem said nothing new in his speech yesterday before the Senate Standing Committee on Banking, Commerce, and the Economy. The Bank of Canada will do all it can to get inflation back to the 2% level. The BoC predicts inflation will fall to 3% annualized as soon as this summer. But the risk of a global recession remains. If global banking stress recurs, Canada could face a more severe global recession and much lower commodity prices. Macklem also added that the Bank’s Board of Governors believes that the discount rate should remain in restrictive territory longer. At the moment, the Canadian dollar is declining as oil prices are falling.

Trading recommendations

• Support levels: 1.3448,1.3409,1.3341,1.3267
• Resistance levels: 1.3515,1.3563,1.3616,1.3644

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish. The price is trading above the moving averages and is confidently breaking through the resistance levels. The MACD indicator is in the positive zone, and the buyer’s pressure remains, but there are the first signs of divergence, which increases the probability of a corrective movement. Buy trades are better to look for after a small pullback from the 1.3448 support level but with confirmation. Sell deals are better to be done from the resistance level of 13515, but only with a confirmation in the form of a false breakout.

Alternative scenario:

if the price breaks out and consolidates below the support level of 1.3342, the downtrend will likely resume.