InvestMacro

The EUR/USD currency pair

• Prev Open: 1.0684
• Prev Close: 1.0684
• % chg. over the last day: 0.0 %

The Federal Reserve and the European Central Bank reiterated their commitment to curbing inflation through additional rate hikes. On these expectations, the EUR/USD quotes have no clear dynamics, and this situation will persist at least until Wednesday, when the minutes of the January FOMC meeting will be published. Yesterday the latest data showed that consumer sentiment in the Eurozone increased to the highest level in a year, which is a sign of sustainability and a growing hope that the region can avoid recession this year. Investors should pay attention to the ZEW sentiment data for Germany today, which will give a hint on how the region’s largest economy will behave over the next six months.

• Support levels: 1.0653, 1.0618, 1.0544
• Resistance levels: 1.0704, 1.0804, 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 formed a false breakdown zone below the level of 1.0653 and returned to the wide-volatile corridor. The MACD indicator has become inactive, but the divergence is still observed in many time frames. Under such market conditions, buy trades are best considered from the support level of 1.0653, subject to confirmation on the intraday time frames. Sell deals can be considered from the resistance level of 1.0704, but better with confirmation in the form of a reverse initiative on the lower time frames or a false breakout.

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

• – French Manufacturing PMI (m/m) at 10:15 (GMT+2);
• – French Services PMI (m/m) at 10:15 (GMT+2);
• – German Manufacturing PMI (m/m) at 10:30 (GMT+2);
• – German Services PMI (m/m) at 10:30 (GMT+2);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+2);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+2);
• – Germany ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+2);
• – US Existing Home Sales (m/m) at 17:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2024
• Prev Close: 1.2039
• % chg. over the last day: +0.12 %

Overall, sterling remains under pressure against the two major currencies, largely influenced by the ECB’s and the Fed’s aggressive behavior against the Bank of England (BoE). Recent UK economic data has reduced the likelihood of further rate hikes. Many Bank of England officials believe the impact will be more severe, especially in the housing market, since most mortgages in the UK are under term contracts. Also, core inflation remains resilient due to wage pressures.

• Support levels: 1.1964, 1.1930
• Resistance levels: 1.2065, 1.2117, 1.2267, 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 at the level of the moving averages and forming a narrow flat. Last week the price formed a false breakdown zone below the level of 1.1964, which will now act as a support zone. The MACD indicator has become inactive. Under such market conditions, it is better to look for buy deals on intraday time frames from the support level of 1.1964, but with confirmation. Sell trades are best sought from the resistance level of 1.2065 or 1.2117, but also better with 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 Manufacturing PMI (m/m) at 11:30 (GMT+2);
• – UK Services PMI (m/m) at 11:30 (GMT+2);

The USD/JPY currency pair

• Prev Open: 134.21
• Prev Close: 134.25
• % chg. over the last day: +0.03 %

Japan’s finance minister said Friday that the new governor of the Bank of Japan (BoJ) should lower inflation to target levels and support economic growth and wage growth without touching the issue of monetary policy changes. It is becoming clear that hopes for monetary policy changes under the new governor are greatly exaggerated. Thus, the Japanese yen might again come under pressure before mid-spring due to the soft policy and the strength of the dollar index.

• Support levels: 134.03, 133.47, 132.95, 131.43, 129.68, 129.98, 129.19
• Resistance levels: 135.88

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. At the moment, the price is trading in a narrow corridor at the level of the moving averages. The MACD indicator has become inactive, but signs of divergence are still observed on several timeframes. Buying pressure is present, but the higher it is, the harder it is for the price to advance. It is better to look for buy trades from the support level of 134.04 or 133.47, but only with confirmation on the lower time frames. Sell deals can be sought from the 135.88 level, 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.

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

The USD/CAD currency pair

• Prev Open: 1.3475
• Prev Close: 1.3451
• % chg. over the last day: -0.18 %

Inflation data will be released today in Canada. Analysts are forecasting a decline in consumer prices from 6.3% to 6.1% year-over-year. But special attention should be paid to core inflation, which excludes food and energy prices. A rise in core inflation will increase the likelihood that the Bank of Canada will hold another 0.25% rate hike. A decline in core inflation will likely confirm that the Bank of Canada has ended its tightening cycle. Also, do not forget about the dynamics of oil quotes since the Canadian dollar is a commodity currency.

• Support levels: 1.3444, 1.3390, 1.3347, 1.3295, 1.3212
• Resistance levels: 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 MACD has become positive, buying pressure returns. Buy trades can be considered from the support of 1.3468, but with additional confirmation on the lower time frames. Above the resistance level of 1.3520, a false breakout zone was formed, so sell deals can be considered from this level, but on the condition of a reverse reaction.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3347, the downtrend will likely resume.

• – Canada Consumer Price Index (m/m) at 15:30 (GMT+2);
• – Canada Retail Sales (m/m) at 15:30 (GMT+2).

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).