The Analytical Overview of the Main Currency Pairs on 2023.02.09

The EUR/USD currency pair

• Prev Open: 1.0720
• Prev Close: 1.0713
• % chg. over the last day: -0.06 %

According to the ECB Governing Council spokesman Martins Kazaks, the central bank should raise interest rates to levels that will “significantly” constrain the economy. At the same time, the politician added that rate hikes might have to be maintained after the March meeting. That said, the peak in borrowing costs will have to be maintained for some time to ensure that the eurozone’s strongest price spike is subdued. Analysts are predicting that the ECB will raise the rate by 0.5% at the March meeting and a 0.25% rate hike in May.

• Support levels: 1.0710, 1.0650, 1.0597
• Resistance levels: 1.0838, 1.0906, 1.0926, 1.0967, 1.1017, 1.1077

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is forming a narrow corridor. But the false breakdown zone below 1.0710 works as support and does not let the price go lower. The MACD indicator has become inactive, and sellers’ pressure is weak. Under such market conditions, buy trades are best considered from the support level of 1.0710, but with confirmation since the level has already been tested. Sell deals can be considered from the resistance level of 1.0838, but better with confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks down through the resistance level of 1.0967 and fixes above it, the uptrend will likely resume.

• – German Consumer Price Index at 09:00 (GMT+2);
• – Eurozone Economic Forecasts (m/m) at 12:00 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2037
• Prev Close: 1.2070
• % chg. over the last day: +0.27 %

Strikes remain a problem for the UK government. On March 15, civil servants are planning another strike. On the same day, Chancellor of the Exchequer Jeremy Hunt will present his financial plan, and there will be additional pressure to revise payroll requests possibly. Since the strike is undermining the UK economy, this is a negative for the British currency. Friday’s GDP data may serve as an additional catalyst for price movement.

• Support levels: 1.2059, 1.2000, 1.1930
• Resistance levels: 1.2147, 1.2202, 1.2311, 1.2416

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price is trading at the level of the moving averages. A false breakdown zone was formed below the level of 1.2000. The MACD indicator has become positive. Under such market conditions, it is better to look for buy deals on intraday time frames from the support level of 1.2059 or 1.2000, but with a confirmation in the form of an impulse initiative. It is best to look for sell deals after a pullback. The best resistance levels are 1.2147 and 1.2202, but it is also better with a confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks out through the 1.2416 resistance level and fixes above it, the uptrend will likely resume.

• – UK Monetary Policy Report Hearings at 11:45 (GMT+2).

The USD/JPY currency pair

• Prev Open: 131.05
• Prev Close: 131.43
• % chg. over the last day: +0.29 %

Most Japanese inflation indicators show that price growth has no signs of easing, despite the Bank of Japan holding firm to its forecast that inflation will return to the 2% target in the first half of this year. In addition, rising wage growth (+4.8%) is also raising concerns about the wage and price spiral. This inflationary pressure has sparked rumors that the Bank of Japan will simply be forced to abandon its soft monetary policy.

• Support levels: 130.34, 129.68, 129.98, 129.19, 129.04, 128.16
• Resistance levels: 131.58, 132.95, 133.23

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading at the level of moving averages. Above the level of 131.58, a false breakout area was formed, which is now acting as resistance. The MACD indicator has become inactive. It is better to look for buy deals from the support level of 130.34 or 129.68, but only with confirmation on the lower time frames. Sell deals can be sought from the resistance level of 131.59, but it is also better with confirmation.

Alternative scenario: If the price fixes below the support level of 128.16, the downtrend will be renewed with a high probability.

The USD/CAD currency pair

• Prev Open: 1.3386
• Prev Close: 1.3446
• % chg. over the last day: +0.35 %

Oil prices rose yesterday due to supply chain problems in Turkey because of the earthquake. In addition, the inventory data from the American Petroleum Institute (API) showed a 2.18 million barrels decline instead of a projected increase of the same amount. The Canadian dollar is a commodity currency, so rising oil prices help to strengthen the Canadian currency. However, it is always worth keeping in mind that an excessive rise in oil prices may increase inflation again.

• Support levels: 1.3385, 1.3333, 1.3281, 1.3212
• Resistance levels: 1.3442, 1.3472, 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 bullish. The price is forming a wide-volatile sideways trend. The MACD indicator is positive again. Sell deals should be considered from the resistance level of 1.3442 but on the condition of a false breakout, as the level has already been tested. Buy trades can be considered from the support of 1.3385 or 1.3333, but with additional confirmation in the form of an impulse initiative.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3263, the downtrend will likely resume.