The Analytical Overview of the Main Currency Pairs on 2022.03.03

The EUR/USD currency pair

• Prev Open: 1.1120
• Prev Close: 1.1119
• % chg. over the last day: -0.01%

The European currency continues to decline amid the ongoing war in Ukraine. Yesterday, Federal Reserve Chairman Jerome Powell officially announced for the first time that the regulator would raise rates at the March 16 meeting. The rate hike will be 25 basis points. When asked how the situation in Ukraine and sanctions against Russia would affect the US economy, he said that it was too early to draw conclusions. Eurozone inflation hit a record 5.8% last month, beating expectations and strengthening policymakers’ warnings of stagflation.

• Support levels: 1.1107, 1.1032
• Resistance levels: 1.1211, 1.1273, 1.1392, 1.1459

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. The MACD indicator is in the negative area, but there are signs of divergence to the buying side. Under such market conditions, it is best to look for sell trades on intraday time frames from the resistance level of 1.1211. Buy trades should be considered from the support level of 1.1107, but only with short targets.

Alternative scenario: if the price breaks out through the 1.1274 resistance level and fixes above, the mid-term uptrend will likely resume.

• – German Services PMI (m/m) at 10:55 (GMT+2);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+2);
• – Eurozone Producer Price Index (m/m) at 12:00 (GMT+2);
• – Eurozone Unemployment Rate (m/m) at 12:00 (GMT+2);
• – Eurozone ECB Monetary Policy Statement (m/m) at 14:45 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US Fed Chair Jerome Powell Testifies at 17:00 (GMT+2);
• – US ISM Services PMI (m/m) at 17:00 (GMT+2);
• – US Natural Gas Storage (w/w) at 17:30 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.3317
• Prev Close: 1.3404
• % chg. over the last day: +0.65%

Yesterday, the British pound increased after the speech of Fed Chairman Jerome Powell to Congress. He admitted the danger of geopolitical tension in Eastern Europe, which does not allow it to actively tighten the monetary policy in the coming months. Given that the Bank of England has already raised interest rates three times in the past three months, the British pound is likely to be more stable than the euro.

• Support levels: 1.3315, 1.3382, 1.3274, 1.3220
• Resistance levels: 1.3442, 1.3486, 1.3529, 1.3560

On the hourly time frame, the trend on the GBP/USD currency pair is bearish. Volatility remains high, and the price is trading in a wide corridor. Under such market conditions, buy trades should be considered from the support level of 1.3315, but with additional confirmation. The resistance level of 1.3442 is good for sell deals, but only with an additional confirmation in the form of sellers’ initiative.

Alternative scenario: if the price breaks out through the 1.3442 resistance level and fixes above, the mid-term uptrend will likely resume.

• – UK Services PMI (m/m) at 11:30 (GMT+2).

The USD/JPY currency pair

• Prev Open: 114.88
• Prev Close: 115.52
• % chg. over the last day: +0.55%

The Japanese yen is a safe-haven currency in case of various financial shocks. With the beginning of Russia’s aggression against Ukraine, the Japanese yen has become a safe-haven currency for many investors, along with the US Dollar. For this reason, both the Japanese yen and Dollar Index are now inclined to rise, even though the policies of the central banks of the USA and Japan are diametrically opposite. Now the debt market is experiencing growth between the US and Japanese government bonds, which will contribute to the growth of USD/JPY quotes.

• Support levels: 114.86, 114.78, 114.41
• Resistance levels: 115.69, 115.87, 116.32

The medium-term trend on the USD/JPY currency pair is bullish, but the structure is flatter, as the price has no single dynamics. The MACD indicator has become positive, and there is buying pressure. Under such market conditions, it is best to look for buy deals on the lower time frames from the support level of 114.86, but with additional confirmation. For sell deals, a resistance level of 115.69 may be considered, but it is better to wait for the reaction of sellers.

Alternative scenario: if the price fixes below 114.86, the uptrend will likely be broken.

The USD/CAD currency pair

• Prev Open: 1.2739
• Prev Close: 1.2630
• % chg. over the last day: -0.86%

On Wednesday, the Bank of Canada raised its benchmark interest rate to 0.5%, the first in a series of small rate hikes this year to fight inflation that has reached its highest level in decades. Large foreign buyers are boycotting Russian oil because of the situation around Ukraine, trying to find alternative sources of supply, which is likely to boost oil prices further. All these factors contribute to the strengthening of the Canadian currency (decrease in USD/CAD quotes).

• Support levels: 1.2555, 1.2517
• Resistance levels: 1.2653, 1.2723 1.2797

From the technical point of view, the USD/CAD currency pair trend is bearish. The MACD indicator is in the negative zone, but there are the first signs of divergence. It is worth trading only with short targets because both oil and the dollar index are inclined to grow. Under such market conditions, it is better to look for buy trades on the lower time frames from the support level of 1.2555, but it is better with additional confirmation. For sell deals, it is better to consider the resistance level of 1.2653.

Alternative scenario: if the price breaks through and consolidates above 1.2723, the downtrend will most likely be broken.

• – Canada BoC Maclem speaks at 18:30 (GMT+2).