InvestMacro

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).

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.

The EUR/USD currency pair

• Prev Open: 1.0725
• Prev Close: 1.0727
• % chg. over the last day: +0.02 %

On Tuesday, Federal Reserve Chairman Jerome Powell reiterated that inflation is slowing but reaffirmed the need for it to continue rising. Morgan Stanley predicts that the US Federal Reserve will end its tightening cycle at the May meeting at 5.00-5.25%, after which it will take a long pause. According to the Fed’s rate monitoring tool, expectations of a rate hike in March are almost entirely factored into prices, while the probability of a rate hike in May jumped from 38% to 69%.

• Support levels: 1.0710, 1.0650, 1.0597
• Resistance levels: 1.0781, 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. Yesterday the price formed a false breakdown zone, which can now act as a support zone. The MACD indicator is in the negative zone, but sellers’ pressure is weak. Under such market conditions, buy trades are better to be considered from the support level of 1.0710. Sell deals can be considered from the resistance level of 1.0838, but better with confirmation in the form of 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 FOMC Member Williams Speaks at 16:15 (GMT+2);
• – US FOMC Member Waller Speaks at 20:45 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2020
• Prev Close: 1.2047
• % chg. over the last day: +0.22 %

Friday’s US jobs report continues to support the dollar index and, in turn, limits GBP/USD quotes recovery attempts. Market participants estimate a higher Fed peak rate for 2023 than the Bank of England (BoE). Given the problems in the UK economy, the Bank of England is much closer to completing its rate hike cycle. The Bank of England will likely hold another 0.25% hike at its next meeting, but that will not narrow the interest rate differential between the BoE and the US Fed, which is negative for the pound.

• Support levels: 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 1.2000, but with confirmation in the form of reverse initiative. It is best to look for sell trades after the pullback, as the price has deviated strongly from the moving averages. The best resistance levels are 1.2147 and 1.2202, but it is also better with a confirmation in the form of the 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: 132.63
• Prev Close: 131.07
• % chg. over the last day: -1.19 %

Solid payroll data has once again sparked rumors that the Bank of Japan might reconsider its ultra-soft monetary policy after all. Even though it is just a rumor, the Japanese Yen managed to appreciate slightly against the dollar. A lot will depend on who becomes the next governor of the Bank of Japan. A more hawkish politician might reverse the trend in the USD/JPY currency pair, while a more dovish candidate who will continue with the current soft monetary policy will lead to even more weakness in the Japanese currency as the interest rate differential between the Bank of Japan and the US Fed continues to widen.

• Support levels: 130.34, 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 has corrected to the “discount” area but hasn’t reached the support level, which is why one more decrease in quotes is possible. The MACD indicator has become negative. It is better to look for buy deals from the support level of 130.34, but only with confirmation on the lower time frames. Sell deals can be searched 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: 1.3444
• Prev Close: 1.3397
• % chg. over the last day: -0.35 %

Just two weeks ago, when the Bank of Canada raised its interest rate, analysts were certain that this was the last rate hike. But yesterday, the BoC head dispelled those predictions, pointing out that it was too early to think about lowering rates, and it was not entirely clear if the Bank of Canada had raised rates enough. The Canadian dollar strengthened yesterday on the back of a 4% rise in oil prices. Oil prices were supported by continuing bets on consumption growth in China, as well as the fact that all operations at the Turkish oil export terminal with a capacity of 1 million barrels per day in Ceyhan were halted after a major earthquake. This terminal exports Azeris crude oil to international markets.

• Support levels: 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. Yesterday the price formed a false break zone above the level of 1.3442, which will act as resistance. The MACD indicator has become negative, and there is slight seller pressure. Sell deals should be considered from the resistance of 1.3442 in case of a reversal in the intraday time frames since it has already been tested. Buy trades could be considered from the 1.3333 support level, 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.

• – US Crude Oil Reserves (w/w) at 17:30 (GMT+2).