InvestMacro

The EUR/USD currency pair

• Prev Open: 1.0686
• Prev Close: 1.0672
• % chg. over the last day: -0.13 %

The EU economy has not yet felt the full impact of an interest rate hike from the European Central Bank, two senior ECB officials said Thursday. Nevertheless, the Eurozone economy is holding up better than expected, and inflation indicators are trending downward. According to ECB policymakers, overall inflation in the Eurozone could fall below 3% by the end of the year if falling energy prices continue. Financial markets expect the ECB to raise the bank deposit rate to at least 3.5% by summer 2023.

• Support levels: 1.0597
• Resistance levels: 1.0695, 1.0839, 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 forms a wide corridor, inside which there is a downward channel. The MACD indicator is negative again, but the divergence is becoming more pronounced on many timeframes. Under such market conditions, buy trades are best considered from the support level of 1.0597. Sell deals can be considered from the resistance level of 1.0695, but it is better with confirmation in the form of a reverse initiative on the lower time frames.

Alternative scenario: if the price breaks down through the resistance level of 1.0839 and fixes above it, the uptrend will likely resume.

• – US FOMC Member Mester Speaks at 01:00 (GMT+2);
• – German Producer Price Index (m/m) at 09:00 (GMT+2);
• – French Consumer Price Index (m/m) at 09:45 (GMT+2);
• – US FOMC Member Barkin Speaks at 15:30 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2021
• Prev Close: 1.1986
• % chg. over the last day: -0.29 %

The recent rise in the dollar has knocked the pound sterling’s confidence. St. Louis Federal Reserve Bank President James Bullard said yesterday that the prospect of the US Federal Reserve returning to larger hikes is not out of the table. Bullard’s comments echoed those of Cleveland Fed President Loretta Mester, who said she saw a compelling case for a 0.5% rate hike at the Fed’s last meeting. The dollar index has short-term fundamental support right now. In the medium term, the US Fed and the Bank of England are at the end of the rate hike cycle. Therefore, traders should not expect medium-term trends in the GBP/USD currency pair.

• Support levels: 1.1930
• Resistance levels: 1.2055, 1.2118, 1.2188, 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. At the moment, the price is trading below the moving averages, and sellers’ pressure remains intraday. The MACD indicator has become negative but with signs of divergence. Under such market conditions, it is better to look for buy trades on intraday time frames from the support level of 1.1930 but with a confirmation in the form of a false breakdown. Sell deals are best sought from the resistance level of 1.2055 or 1.2118, but also better with a confirmation in the form of a reverse initiative on the lower time frames.

Alternative scenario: if the price breaks out through the 1.2200 resistance level and fixes above it, the uptrend will likely resume.

• – UK Retail Sales (m/m) at 09:00 (GMT+2).

The USD/JPY currency pair

• Prev Open: 134.09
• Prev Close: 133.94
• % chg. over the last day: -0.12 %

The appointment of former Bank of Japan policy council representative Kazuo Ueda as central bank governor has cooled rumors of an earlier interest rate normalization. In the past, Ueda has warned of the dangers of premature interest rate hikes, dispelling any fears of higher interest rates in the foreseeable future. However, a reassessment of the yield curve management policy cannot be ruled out, given that he has pointed out its potential shortcomings.

• Support levels: 133.47, 132.95, 131.43, 129.68, 129.98, 129.19, 129.04, 128.16
• Resistance levels: 134.65

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading above the moving averages, but it has reached the daily resistance level. The MACD indicator is in the positive zone, and there are signs of divergence already on several timeframes. Buying pressure is present, but it is limited. It is best to look for buy deals from the support level of 133.47 or 132.95, but only with confirmation on the lower time frames. Sell deals can be sought from 134.65, but with additional confirmation.

Alternative scenario: if the price fixes below the 131.43 support level, the downtrend will be resumed with a high probability.

The USD/CAD currency pair

• Prev Open: 1.3384
• Prev Close: 1.3456
• % chg. over the last day: +0.54 %

The US and Canada are closely linked economies. Their economic health and financial flows between them are fairly stable relative to external exchange rates. The US Fed and the Bank of Canada practically go hand in hand in terms of raising interest rates, so only energy prices, especially oil prices, will cause an imbalance in USD/CAD pricing. The OPEC+ countries do not intend to lose profits on the background of falling oil prices and will try by all means to keep the quotations from falling, up to a reduction of the production volume. A significant rise in oil prices is also undesirable as it might trigger a new wave of inflation while the rates are already at their highest levels.

• Support levels: 1.3444, 1.3390, 1.3347, 1.3295, 1.3212
• Resistance levels: 1.3497, 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 trading above the moving averages. The MACD indicator is in the positive zone, with no signs of divergence. Buy trades can be considered from the support of 1.3390, but with additional confirmation on the lower time frames. Sell deals should be considered from the resistance level of 1.3497 or 1.3520, but on the condition of a reverse reaction or false breakout, as the levels have already been tested.

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

• – Canada Producer Price Index (m/m) at 15:30 (GMT+2).

The EUR/USD currency pair

• Prev Open: 1.0736
• Prev Close: 1.0686
• % chg. over the last day: -0.47 %

ECB head Christine Lagarde said yesterday that she would vote for a 0.5% rate hike at the next ECB meeting. The medium-term outlook for the euro remains bullish, but the EUR/USD is pulling lower amid a temporary rise in the dollar index. The dollar index is rising on the back of strong US economic data (labor market, GDP, industrial production), which opens up more room for the Fed to raise rates.

• Support levels: 1.0696, 1.0651, 1.0597
• Resistance levels: 1.0839, 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 forms a wide corridor, inside which there is a downward channel. The MACD indicator has become inactive again. Under such market conditions, buy trades are best considered on the lower time frames from the support level of 1.0696 or after the impulse breakout from the descending channel. Sell deals can be considered from the resistance level of 1.0839, but it is better with confirmation in the form of a reverse initiative on the lower time frames.

Alternative scenario: if the price breaks down through the resistance level of 1.0926 and fixes above it, the uptrend will likely resume.

• – US Building Permits (m/m) at 15:30 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+2);
• – US Producer Price Index (m/m) at 15:30 (GMT+2);
• – US FOMC Member Mester Speaks at 15:45 (GMT+2);
• – US FOMC Member Bullard Speaks at 20:30 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2169
• Prev Close: 1.2032
• % chg. over the last day: -1.14 %

The UK Consumer Price Index (CPI) fell from 10.5% to 10.1% (forecast 10.3%) in annual terms. Core inflation fell even more, from 6.3% to 5.8% (forecast 6.2%). Such data on the back of a strong labor market may provide the Bank of England with at least another 0.25% rate hike at its next meeting. The report indicates that the January 2023 decline mainly reflects price changes in the transportation segment. There was also a downward effect in the services sector. Since there is no mention of energy, the peak of UK inflation has likely passed. But since inflation remains extremely high and much higher than in other economies, the British pound reacted very negatively to the data.

• Support levels: 1.2000, 1.1930
• Resistance levels: 1.2055, 1.2117, 1.2188, 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. At the moment, the price is trading below the moving averages, and sellers’ pressure remains intraday. The MACD indicator has become negative, with no signs of divergence. Under such market conditions, it is better to look for buy trades on intraday time frames from the support level of 1.2200, but with a confirmation in the form of a false breakdown. Sell deals are best to look for from the resistance level of 1.2055 or 1.2117, but also better with a confirmation in the form of a reverse initiative on the lower time frames.

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

The USD/JPY currency pair

• Prev Open: 133.10
• Prev Close: 134.16
• % chg. over the last day: +0.80 %

Kazuo Ueda, nominated by the Japanese government as the next governor of the Bank of Japan (BoJ), will inherit a number of difficult challenges when he replaces the current governor Haruhiko Kuroda on April 8. Annualized inflation in Japan reached 4% in December, the highest level since January 1991, while GDP in the fourth quarter did not meet expectations of a 2% rise on an annualized basis and grew by a modest 0.6%. The new Central Bank Governor will have to decide when and by how much the Bank of Japan should start cutting back on its ultra-soft monetary policy in order to restrain inflation while allowing a sufficient reserve of the money supply to allow the economy to grow. It is unlikely that the new BOJ Governor will make any harsh statements on his first day in office, but there is a high probability that the BOJ will abandon its soft policy this year.

• Support levels: 133.47, 132.95, 131.43, 129.68, 129.98, 129.19, 129.04, 128.16
• Resistance levels: 134.65

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is traded above the moving averages while not falling below dynamic lines, supporting the upward movement. The MACD indicator is in the positive zone, but there are signs of divergence already on several timeframes. Buying pressure is present, but it is limited. It is best to look for buy trades from the support level of 133.47 or 132.95, but only with confirmation on the lower time frames. Sell deals can be sought after an impulse return of the price below the level of 132.95 or from 134.65, but with additional confirmation.

Alternative scenario: if the price fixes below the 131.43 support level, the downtrend will be resumed with a high probability.

The USD/CAD currency pair

• Prev Open: 1.3336
• Prev Close: 1.3392
• % chg. over the last day: +0.42 %

The International Energy Agency (IEA) raised its 2023 oil demand forecast by 500,000 BPD to nearly 102 million BPD. The agency also warned that an alliance of OPEC+ producers might try to cut production to support oil prices. What does this mean for USD/CAD quotes? With the Bank of Canada and the US Federal Reserve holding rates almost at the same level, only oil prices will be the imbalance in pricing. And since the Canadian dollar is a commodity currency, rising oil prices will strengthen the Canadian (USD/CAD decline).

• Support levels: 1.3347, 1.3295, 1.3212
• Resistance levels: 1.3390, 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 trading above the moving averages again. The MACD indicator has become positive, but there is some seller pressure inside the day. Buy trades can be considered from the support of 1.3347, but with additional confirmation on the lower time frames. Sell deals should be considered from the resistance level of 1.3390 but on the condition of a reverse reaction. Also, sales can be looked for after a false breakout of the 1.3439 resistance level.

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

The EUR/USD currency pair

• Prev Open: 1.0718
• Prev Close: 1.0735
• % chg. over the last day: +0.16 %

The US inflation rate declined from 6.5% to 6.4% (forecast 6.2%) annually, while core inflation, which excludes food and energy prices, also declined from 5.7% to 5.6% (forecast 5.5%). Although inflationary pressures are easing, the fall in inflation is not happening as quickly as the US Federal Reserve had predicted. This factor increases the likelihood that the US Fed will hold one or two more interest rate hikes before pausing. Therefore, in the short term, the dollar has fundamental reasons to strengthen. On the other hand, the ECB is now acting more aggressively than the US Fed, and the narrowing of the interest rate differential should play in favor of a stronger euro in the medium term.

• Support levels: 1.0686, 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 wide corridor. Yesterday, the liquidity above the level of 1.0791 was tested, after which the price returned to the balance. The MACD indicator became inactive. Under such market conditions, buy trades are best considered on the lower time frames from the support level of 1.0686. Sell deals can be considered from the resistance level of 1.0839, but it is better with confirmation in the form of reverse initiative on the lower time frames.

Alternative scenario: if the price breaks down through the resistance level of 1.0926 and fixes above it, the uptrend will likely resume.

• – Spanish Consumer Price Index (m/m) at 10:00 (GMT+2);
• – Eurozone Industrial Production (m/m) at 12:00 (GMT+2);
• – US Retail Sales (m/m) at 15:30 (GMT+2);
• – US NY Empire State Manufacturing Index (m/m) at 15:30 (GMT+2);
• – Eurozone ECB President Lagarde Speaks at 16:00 (GMT+2);
• – US Industrial Production (m/m) at 16:15 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2132
• Prev Close: 1.2174
• % chg. over the last day: +0.35 %

The GBP/USD quotes strengthened on Tuesday after UK employment figures beat estimates. The unemployment rate remained at 3.7% while the economy added 74K jobs last month, with expectations of 40K. But the potential for growth in quotes was limited by stronger-than-expected January US consumer price indices that resulted in an increase in Treasury bond yields. Expectations for the Fed’s final rate could rise slightly, which would create a favorable environment for the US dollar, and threaten the pound’s recovery, especially if the rate differential widens.

• Support levels: 1.2082, 1.2000, 1.1930
• Resistance levels: 1.2188, 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. At the moment, the price is trading above the moving averages, and there is a slight buying pressure inside the day. The MACD indicator has become inactive. Under such market conditions, buy trades are better to look for on intraday time frames from the support level of 1.2200, but with confirmation in the form of initiative and short targets. Sell trades are best sought after a pullback from the resistance level of 1.2188 but are also better with 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 Consumer Price Index (m/m) at 09:00 (GMT+2);
• – UK Producer Price Index (m/m) at 09:00 (GMT+2).

The USD/JPY currency pair

• Prev Open: 132.40
• Prev Close: 133.08
• % chg. over the last day: +0.87 %

The Japanese government on Tuesday introduced Kazuo Ueda as a candidate for the next governor of the Bank of Japan, suggesting the academic and former Bank of Japan policymaker will replace Haruhiko Kuroda. The new leadership is said to be attuned to the complex challenges facing the central bank, from addressing the side effects of years of monetary policy easing that has distorted bond markets and widened the Bank of Japan’s balance sheet. Ueda’s nomination, along with those of two deputy governors, Ryozo Himino, a former Financial Services Agency commissioner, and Shinichi Uchida, the Central Bank’s executive director, is expected to be approved by mid-March. Given that Ueda will not dramatically change monetary policy, the Japanese yen continued its decline.

• Support levels: 131.43, 129.68, 129.98, 129.19, 129.04, 128.16
• Resistance levels: 133.47, 134.65

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is forming a wide-volatile corridor. The MACD indicator is in the positive zone, but there are signs of divergence. Buying pressure is present, but it is limited. It is better to look for buy deals from the support level of 131.43, but only with confirmation on the lower time frames. Sell deals can be sought after an impulse return of the price to the balance below the level of 132.89.

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: 1.3331
• Prev Close: 1.3335
• % chg. over the last day: +0.03 %

The Canadian dollar is a commodity currency, so it highly depends on instruments such as the dollar index and oil. A decline in oil prices on the back of rising inventories and a strengthening dollar index are negative factors for the Canadian currency. Higher than expected US inflation data added to fears of more hawkish actions by the Federal Reserve, which caused the dollar to rise. At the moment, the interest rate differential between the US Fed and the Bank of Canada is only 0.25%, so any rise in oil prices would help to strengthen the Canadian economy.

• Support levels: 1.3333, 1.3295, 1.3212
• Resistance levels: 1.3416, 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 corrected up to the priority change level, after which there was a sharp rebound. The MACD indicator became positive, and buyers would dominate during the day. Buy trades can be considered from the support at 1.3333, but with additional confirmation on the lower time frames, as the level has already been tested. Sell deals should be considered from the resistance level of 1.3416 but on the condition of a reverse reaction.

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

• – Canada Manufacturing Sales (m/m) at 15:30 (GMT+2);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+2).