The Analytical Overview of the Main Currency Pairs on 2023.01.04

The EUR/USD currency pair

• Prev Open: 1.0664
• Prev Close: 1.0648
• % chg. over the last day: -0.15 %

Preliminary data showed that inflation in Germany slowed to an annualized rate of 8.6% in December from 10% as one-time government payments came into effect to help consumers pay their heating and gas bills. In recent months, many German unions have successfully advocated above-average wage increases to offset the impact of inflation. Meanwhile, unemployment rates in Europe’s largest economy rose slightly in December to 2.45 million, or 5.5%.

• Support levels: 1.0528, 1.0483, 1.0361, 1.0332, 1.0284, 1.0193
• Resistance levels: 1.0612, 1.0664, 1.0695

The EUR/USD currency pair trend on the hourly time frame is still bullish. The price is still trading in a wide price corridor. The MACD indicator has become negative. Volatility remains low. Under such market conditions, buy trades are best considered from the support level of 1.0638 on intraday time frames. Sell deals can be considered from the resistance level of 1.0689, but better with confirmation in the form of a reverse initiative or a false breakout since the level has already been tested.

Alternative scenario: if the price breaks down through the support level of 1.0549 and fixes below it, the downtrend will likely resume.

• – French Consumer Price index (m/m) at 09:45 (GMT+2);
• – Spanish Services PMI (m/m) at 10:00 (GMT+2);
• – Italian Services PMI (m/m) at 10:45 (GMT+2);
  • – French Services PMI (m/m) at 10:50 (GMT+2);
  • – Germany Services PMI (m/m) at 10:55 (GMT+2);
  • – Eurozone Services PMI (m/m) at 11:00 (GMT+2);
    • – US ISM Manufacturing PMI (m/m) at 17:00 (GMT+2);
    • – US JOLTs Job Openings (m/m) at 17:00 (GMT+2);
    • – US FOMC minutes at 21:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2042
• Prev Close: 1.1966
• % chg. over the last day: -0.64 %

The UK manufacturing sector ended 2022 on a weak footing, with output, new orders, and employment declining faster. Domestic and foreign demand remained lackluster as customers faced rising costs, increased market volatility, and Brexit-related complications. The seasonally adjusted Purchasing Managers’ Index for the UK manufacturing sector fell to a 31-month low of 45.3 in December, down from 46.5 in November. The PMI has remained below the neutral 50.0 mark for five months in a row. All five PMI sub-indices point to a weakening operating environment for the UK manufacturing economy.

• Support levels: 1.1893, 1.1684, 1.1476, 1.1418
• Resistance levels: 1.2056, 1.2167, 1.2218, 1.2308, 1.2431, 1.2519

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The MACD indicator is in the negative zone, but there is a divergence on several timeframes, indicating a limited further decline. Under such market conditions, buy trades are better to look for on intraday time frames from the support level of 1.1893, but with confirmation. Sell trades are best sought from the resistance level of 1.2056 but also better with confirmation.

Alternative scenario: if the price breaks out through the 1.2100 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

• Prev Open: 130.77
• Prev Close: 130.97
• % chg. over the last day: +0.16 %

The Japanese yen rose to a seven-month high against the US dollar on Tuesday, crossing the 130 mark. The strengthening of the yen was triggered by the Bank of Japan’s (BOJ) decision to loosen control over the yield curve and allow holders of certain government bonds to move within a wider range. The US Federal Reserve and other central banks are seeking to slow the pace of interest rate hikes, while the BOJ will only begin to move toward policy normalization this year. Analysts believe the first half of 2023 may pass under the strengthening of the Japanese yen.

• Support levels: 129.65, 128.85
• Resistance levels: 132.92, 133.58, 134.45, 135.88, 137.03, 138.00, 139.09

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price is now trading at the level of the moving averages, while the MACD indicator has become inactive, but the divergence on several time frames indicates that further decline is limited. Buy trades are best considered on intraday time frames from the support level of 129.65, but only with confirmation. Sell deals be looked at from the resistance level of 132.92, provided there is a reversal.

Alternative scenario: If the price fixes above 133.58, the uptrend will likely resume.

• – Japan Manufacturing PMI (m/m) at 02:30 (GMT+2).

The USD/CAD currency pair

• Prev Open: 1.3569
• Prev Close: 1.3668
• % chg. over the last day: +0.72 %

Canada’s manufacturing economy remains in a moderate contraction zone, characterized by further declines in production, new orders, and buying activity. The seasonally adjusted Manufacturing PMI registered 49.2 in December, down from 49.6 in November and below the 50.0 mark for the fifth consecutive month. This is the longest decline since August 2015. The main reason for the decline is a drop in new orders due to continuing high inflation and uncertainty in sales.

• Support levels: 1.3627, 1.3570, 1.3530, 1.3437, 1.3386, 1.3360, 1.3281, 1.3212
• Resistance levels: 1.3700, 1.3776, 1.3855

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is trading above the moving averages and forming provocation zones along the move, which do not allow the price to go down. The MACD indicator is in the positive zone. Within the day, buying prevails. Buy trades should be considered from the support at 1.3570, but with confirmation. Sell deals are better to look for on the intraday time frames from the resistance level of 1.3700, but with a confirmation in the form of a reverse initiative on the lower time frames or a false breakout, since the level has already been tested.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3529, the downtrend will likely resume.