InvestMacro

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).

The EUR/USD currency pair

• Prev Open: 1.0679
• Prev Close: 1.0724
• % chg. over the last day: +0.42 %

New inflation data will be released in the US today. The Consumer Price Index is expected to fall from 6.5% to 6.3% year-over-year, while basic inflation (excluding food and energy prices) will also decrease from 5.7% to 5.4%. If the actual data matches, or at least is no worse, the dollar index will probably start to lose ground, as falling inflation would indicate that the US Fed is on the right track and the high probability of a “soft” economic landing. But if inflation turns out to be hotter, especially the core index, it will give confidence to the dollar on the back of the fact that the US Fed will not stop and continue to raise interest rates.

• Support levels: 1.0651, 1.0597
• Resistance levels: 1.0739, 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, and volatility in anticipation of CPI data is reducing. The MACD indicator has become positive, but buying pressure is weak. Under such market conditions, buy trades are best considered from the support level of 1.0651 or after the breakout of the 1.0739 resistance level, but with confirmation in the form of impulse movement. Sell deals can be considered from the resistance level of 1.0739, but 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.

• – Eurozone GDP (q/q) at 12:00 (GMT+2);
• – US Consumer Price Index (m/m) at 15:30 (GMT+2);
• – US FOMC Member Williams Speaks at 21:05 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2062
• Prev Close: 1.2139
• % chg. over the last day: +0.64 %

Important labor market data will be released today in Great Britain. The unemployment rate is projected to be unchanged, with jobless claims up slightly. Such data is likely to cause a less aggressive reaction from the Bank of England (BoE) at the expense of easing inflationary pressure in the services sector. Traders need to understand that a strong labor market does not benefit the central bank in raising rates, as rising wages fuel inflationary indicators.

• Support levels: 1.2078, 1.2073, 1.2000, 1.1930
• Resistance levels: 1.2150, 1.2202, 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. 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 turned positive. Under such market conditions, buy trades are better to look for on intraday time frames from the support level of 1.2078, but with confirmation in the form of initiative and short targets. Sell trades are best sought after a pullback from the resistance level of 1.2150 or 1.2203, but also better with confirmation in the form of a reverse initiative or a false breakout.

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

• – UK Average Earnings Index (m/m) at 09:00 (GMT+2);
• – UK Claimant Count Change (m/m) at 09:00 (GMT+2);
• – UK Unemployment Rate (m/m) at 09:00 (GMT+2).

The USD/JPY currency pair

• Prev Open: 131.25
• Prev Close: 132.40
• % chg. over the last day: +0.87 %

The new Governor of the Bank of Japan (BoJ) will be announced today, and Kazuo Ueda is expected to be endorsed by the government. His attitude to monetary policy is somewhat unclear. During his tenure as representative of the Bank of Japan board from 1998 to 2005, Ueda played a key role in introducing new monetary policy easing tools to combat the domestic banking crisis and ease deflation. Analysts believe that Kazuo Ueda is likely to be in no rush to revise the ultra-soft policy and instead let economic data determine the future outcome, especially inflation and wage data.

• Support levels: 131.45, 129.68, 129.98, 129.19, 129.04, 128.16
• Resistance levels: 132.89, 133.23

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. At the same time, at the level of 132.89, a double top has been formed. The MACD indicator has become inactive. Under such market conditions, it is worth expecting the price to rise above 132.89 to test the liquidity above the level. Most likely, it will happen at the publication of today’s CPI. Buy trades are best to look for from the support level of 131.46, but only with confirmation on the lower time frames. Sell deals can be searched for from the resistance level of 132.89, but only after a false breakout.

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

• – Japan GDP (q/q) at 01:50 (GMT+2);
• – Japan Industrial Production (m/m) at 06:30 (GMT+2).

The USD/CAD currency pair

• Prev Open: 1.3340
• Prev Close: 1.3330
• % chg. over the last day: -0.08 %

The Canadian dollar is a commodity currency, so it is highly dependent on instruments such as the dollar index and oil. Concerns about another hot US inflation figure have led to speculation that the Federal Reserve may have to be more hawkish than previously thought. Any rally in the US currency would put pressure on commodities, led by oil. The dollar index will get fundamental support if today’s US inflation data is worse than forecast and vice versa.

• 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 has corrected to the “discount” market area, where traders can look for good buying points. The MACD indicator is in the negative zone, and there are signs of divergence. Buy trades can be considered from the support of 1.3333, 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 1.3416 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.

The EUR/USD currency pair

• Prev Open: 1.0734
• Prev Close: 1.0676
• % chg. over the last day: -0.54 %

Speaking at the Warwick Economics Summit on Saturday, Bank of Italy Governor Ignazio Visco pointed out that the extreme uncertainty the ECB is experiencing today must necessarily imply a continued tightening of monetary policy to avoid the possibility of related secondary effects. Visco also added that if there are signs of a wage spiral and inflation expectations become insufficiently anchored, a further and significant tightening of monetary policy will certainly be warranted. Thus, the ECB remains on an aggressive path of policy tightening until at least May.

• Support levels: 1.0651, 1.0597
• Resistance levels: 1.0728, 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 trading below the moving averages. The MACD indicator has become negative, but divergence can be seen on several timeframes. Under such market conditions, buy trades are best considered from the support level of 1.0651 but with confirmation in the form of a reverse impulse. Sell deals can be considered from the resistance level of 1.0728, but it is better with confirmation in the form of the 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 FOMC Member Bowman Speaks at 15:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2113
• Prev Close: 1.2052
• % chg. over the last day: -0.51 %

Friday’s data showed that UK GDP declined by 0.5% for the month, but quarterly GDP was 0.0%, indicating that the economy has not grown in the last 3 months but has avoided a technical recession for now. Industrial production was up by 0.3%. Economic activity in Britain has stagnated mainly because of energy price pressures on households and businesses, with the Bank of England believing that the economy is probably already in recession. This is a negative factor for the British pound, as the Bank of England has no room for further policy tightening, unlike the US Federal Reserve and the Bank of Canada.

• Support levels: 1.2040, 1.2073, 1.2000, 1.1930
• Resistance levels: 1.2150, 1.2202, 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. At the moment, the price is trading below the moving averages. The MACD indicator has become negative, and sellers dominate within the day. Under such market conditions, it is better to look for buy trades on intraday time frames from the support level of 1.2040 or 1.2000, but with a confirmation in the form of an initiative and short targets. It is better to look for sell trades after a pullback to the resistance level of 1.2150, 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.

The USD/JPY currency pair

• Prev Open: 131.55
• Prev Close: 131.41
• % chg. over the last day: +0.08 %

The policy leader of the ruling Liberal Democratic Party of Japan said that the country’s soft monetary policy should be maintained. Investors are keeping a close eye on who might be appointed head of the Central Bank, as it could signal a change or continuation of Japan’s ultra-easy monetary policy. Financial markets were surprised that the Japanese government decided to nominate Kazuo Ueda as governor of the Bank of Japan after Deputy Governor Masayoshi Amamiya reportedly refused this role. Amamiya was thought to provide some continuity to Kuroda’s policies. Investors forecast strong uncertainty in yen trading until a new governor is appointed.

• Support levels: 131.45, 129.68, 129.98, 129.19, 129.04, 128.16
• Resistance levels: 132.37, 132.95, 133.23

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. On Friday, the price tested the support level of 130.34 in the “discount” zone, where the correction was finished. The MACD indicator is in the positive zone, and there is slight buying pressure. Buy trades are best to look for from the support level of 131.45, but only with confirmation on the lower time frames. Sell deals can be sought from the resistance level of 132.37, but it is also better with confirmation in the form of reverse initiative.

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: 1.3447
• Prev Close: 1.3344
• % chg. over the last day: -0.77 %

Canadian labor market data on Friday showed that the economy added 150,000 jobs (forecast 15,000, prev. 104,000), and the unemployment rate remained at 5.0%. Such strong labor market data challenges the Bank of Canada’s “pause.” With GDP growth and a strong labor market, the Bank of Canada has room for maneuvering in terms of further policy tightening to surely tame inflation even more. And the Bank of Canada may well take this opportunity not to increase the difference in interest rates with the US Federal Reserve. Therefore, the Canadian dollar may get some short-term fundamental support, especially if oil prices continue to rise.

• Support levels: 1.3333, 1.3295, 1.3212
• Resistance levels: 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 has corrected to the “discount” market area, where traders can look for great buying points. The MACD indicator is in the negative zone, and there is no sign of divergence, which is not very good for buying. Sell deals are worth considering from the resistance level of 1.3416 but on the condition of a reverse reaction. Buy trades can be considered from the support of 1.3333, but with additional confirmation in the form of an impulse initiative on the lower time frames.

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: 1.0708
• Prev Close: 1.0737
• % chg. over the last day: +0.27 %

Germany’s inflation rate increased from 8.6% to 8.7% (forecast 8.9%) annually. Despite the fact that the data was better than forecasted, the rising inflation is not a pleasant factor in itself, especially for the largest economy in the region. Although the outlook for the eurozone has improved in recent months, many Wall Street analysts still believe a shallow recession will materialize later this year. Weak economic data in the coming weeks may limit the euro’s potential to grow in the short term.

• 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 still forming a corridor. But the false breakdown zone below 1.0710 works as support and does not allow the price to go lower. The MACD indicator has become inactive, and volatility has decreased. 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.

• – US Michigan Consumer Sentiment (m/m) at 17:00 (GMT+2);
• – US FOMC Member Waller Speaks at 19:30 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2057
• Prev Close: 1.2117
• % chg. over the last day: +0.50 %

The British pound has been showing growth in recent days and looks more confident than the euro. Last month’s minutes of the Bank of England’s Monetary Policy Committee (MPC) meeting showed that some policymakers are still set for another rate hike in March as they warn of rising risks to UK inflation. Meanwhile, the Bank of England expects inflation to start falling rapidly from mid-2023 and reach about 4% by the end of the year. Today, the UK will publish GDP data for the quarter as well as data on industrial production levels. A strong reading may give sterling confidence against the dollar and other currencies.

• Support levels: 1.2073, 1.2000, 1.1930
• Resistance levels: 1.2202, 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. Yesterday the price reached the “premium” area but did not reach the resistance level. Statistically, about 70% of reversals occur in this zone. At the moment, the price is trading at the level of the moving averages. 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 1.2073 or 1.2000, but with confirmation in the form of an impulse initiative. Sell trades are best sought after a pullback from the resistance level of 1.2202 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 GDP (q/q) at 09:00 (GMT+2);
• – UK Industrial Production (m/m) at 09:00 (GMT+2);
• – UK Manufacturing Production (m/m) at 09:00 (GMT+2).

The USD/JPY currency pair

• Prev Open: 131.40
• Prev Close: 131.51
• % chg. over the last day: +0.08 %

Bank of Japan Governor Haruhiko Kuroda said yesterday that the benefits of the soft monetary policy outweigh any other side effects on the economy, failing to boost wages over the past decade. Kuroda believes that the soft monetary policy should continue after the change in the governor of the Bank of Japan. But that will be up to the new governor, who will be chosen this month and appointed in April 2023. The Producer Price Index, which measures inflation between plants and factories, has declined from 10.5% to 9.5% year-over-year, the first sign of declining inflation.

• Support levels: 131.09, 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. Yesterday the price tested the support level of 130.34 in the “discount” zone. The MACD indicator is in the positive area, and there is slight buying pressure. It is better to look for buy deals from the support level of 131.09, but only with confirmation on the lower time frames. Sell positions can be searched from the resistance level of 131.59, but it is also better with confirmation in the form of reverse initiative.

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

• – Japan Producer Price Index (m/m) at 01:50 (GMT+2).

The USD/CAD currency pair

• Prev Open: 1.3439
• Prev Close: 1.3454
• % chg. over the last day: +0.11 %

At the Bank of Canada’s latest interest rate meeting, it became clear that the Bank of Canada may have held the last rate hike of the year. Overall inflation was down from a June peak of 6.2%, and December inflation was 5.4%. The short-term interest rate markets see interest rates unchanged for the rest of the year. Canada’s labor market data will be released today. The employment change is expected to show an increase of 15,000 jobs from the previous figure of 104,000. Unemployment is also projected to rise to 5.1%, and average hourly earnings to fall to 5.2%. If the labor market data is negative, the Canadian dollar may lose some ground, especially if oil prices are also down.

• Support levels: 1.3421, 1.3333, 1.3295, 1.3212
• Resistance levels: 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. The MACD indicator is positive again, but there are signs of divergence. Sell positions should be considered from the resistance level 1.3472, but on the condition of a false breakout, as the level has already been tested. Buy trades can be considered from the support level of 1.3421 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.

• – Canada Unemployment Rate (m/m) at 15:30 (GMT+2).