The EUR/USD currency pair

• Prev Open: 1.0861
• Prev Close: 1.0989
• % chg. over the last day: +1.17 %

The euro area’s overall inflation rate fell sharply in January from 9.2% to 8.5% year-on-year, while the core indicator was unchanged from the previous month at 5.2%. Earlier data showed that the Eurozone Manufacturing PMI Index reached a five-month high of 48.8, up from 47.8 the previous month. Although the manufacturing sector remains in contraction territory (below 50), the data indicate that the worst of the recession is over. Today traders will focus on the ECB monetary policy meeting, where a 0.5% rate hike is expected.

• Support levels: 1.0967, 1.0923, 1.0875, 1.0834, 1.0801, 1.0781, 1.0710, 1.0650, 1.0597
• Resistance levels: 1.1017, 1.1077

The trend on the EUR/USD currency pair on the hourly time frame is still bullish. The Euro is getting stronger on the background of the decreasing interest rate differential between the US Federal Reserve and the ECB. The MACD indicator is overbought, and the price has deviated strongly from the moving averages. Under such market conditions, buy trades are best considered after correcting to the nearest support levels. The first such level is 1.0969, but confirmation in the form of a false breakdown is necessary. Sell deals can be considered from the resistance level of 1.1017, but better with a confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down through the support level of 1.0834 and fixes below it, the downtrend will likely resume.

• – Eurozone ECB Monetary Policy Statement at 15:15 (GMT+2);
• – Eurozone ECB Interest Rate Decision at 15:15 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – Eurozone ECB Press Conference at 15:45 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 17:15 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2316
• Prev Close: 1.2372
• % chg. over the last day: +0.45 %

The UK Manufacturing PMI rose from 46.7 to 47. Annual home price growth slowed to 1.1% from 2.8% in December, with prices now 3.2% below their August peak. These are encouraging signs that the real estate market is recovering. But there are new problems on the horizon: strikes. Yesterday, Britain faced one of the biggest strikes in a decade. Teachers, machinists, civil servants, and bus drivers did not go to work. People are demanding higher wages amid record rises in the cost of living. The Bank of England will hold its monetary policy meeting today, where a 0.5% rate hike is also expected.

• Support levels: 1.2343, 1.2311, 1.2263, 1.2220, 1.2080, 1.2000, 1.1928
• Resistance levels: 1.2416, 1.2446, 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 is trading above the moving averages again. The MACD indicator is in the positive zone, and buyers’ pressure is prevailing again. Under such market conditions, it is better to look for buy deals on intraday time frames from the support level of  1.2343, but with confirmation in the form of initiative on the lower time frames. Sell trades are better to look for from the resistance level of 1.2416, but it is also better with a confirmation in the form of a reverse initiative or a false breakout because the level has been tested before.

Alternative scenario: if the price breaks down through the 1.2311 support level and fixes above it, the downtrend will likely resume.

• – UK BoE Inflation Report at 14:00 (GMT+2);
• – UK BoE Interest Rate Decision at 14:00 (GMT+2);
• – UK BoE Monetary Policy Statement at 14:00 (GMT+2).

The USD/JPY currency pair

• Prev Open: 130.08
• Prev Close: 128.95
• % chg. over the last day: -0.87 %

Fed officials have largely abandoned their hawkish views. But Jerome Powell denied cutting rates later in the year and indicated that the central bank would continue on its path of “fighting inflation.” The dollar index reacted to this news by falling because, despite further rate hikes, the Fed is nearing the end of its tightening cycle. And given the fact that the Bank of Japan is likely to start the process of monetary policy normalization this year, the USD/JPY outlook looks towards the downside, as the Japanese yen will start to strengthen on the background of the policy change.

• Support levels: 128.16, 127.53, 126.19
• Resistance levels: 129.05, 130.58, 131.10, 130.61, 131.58, 132.37, 132.95, 133.23

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price is trading below the moving averages. The MACD indicator has become negative, there is seller’s pressure inside the day, but the price has reached the support level. Buy trades are best sought from the level of 128.16, but only with confirmation on the lower time frames. Sell deals can be searched from the resistance level of 129.05, provided that there is a reverse reaction.

Alternative scenario: If the price fixes above the resistance level of 131.58, the uptrend will be renewed with a high probability.

The USD/CAD currency pair

• Prev Open: 1.3303
• Prev Close: 1.3289
• % chg. over the last day: -0.10 %

The Canadian dollar is a commodity currency and is dependent on instruments such as the dollar index and oil. The US dollar declined yesterday as the US Fed’s tightening slowed, while oil prices also fell more than 3% as oil inventories rose and the OPEC+ countries decided to leave production levels unchanged in the expectation that Chinese demand will pick up. The Canadian reacted to this news with volatility. At the moment, the midterm picture is toward the further decrease of the USD/CAD quotes.

• Support levels: 1.3281, 1.3212
• Resistance levels: 1.3326, 1.3379, 1.3428, 1.3445, 1.3496, 1.3520, 1.3554, 1.3595

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bearish. The price is trading below the moving averages. The MACD indicator is in the negative zone, there is seller’s pressure inside the day, but there are signs of divergence. Now the price has reached the support level. Under such market conditions, buy trades can be considered from the 1.3281 support level, but with additional confirmation in the form of impulse initiative on the lower time frames. Sell deals should be considered from the resistance level of 1.3326, subject to a reverse reaction.

Alternative scenario: if the price breaks out and consolidates above the resistance level of 1.3428, the uptrend will likely resume.