InvestMacro

The EUR/USD currency pair

• Prev Open: 1.0545
• Prev Close: 1.0603
• % chg. over the last day: +0.55 %

According to the minutes of the Federal Reserve’s December meeting, Federal Reserve policymakers agreed that an extended period of restrictive policy would be needed to cool “unacceptably high” inflation. The Open Market Committee (FOMC) raised its rate target to a range of 5% to 5.25%. Minneapolis Fed President Neel Kashkari predicts the Fed will raise rates to 5.4%, after which the Central Bank will take a long pause. Markets expect the Fed to raise rates by 0.25% at its next meeting on February 1, with an 84% probability of such a scenario.

• Support levels: 1.0574, 1.0554, 1.0528, 1.0483, 1.0361, 1.0332, 1.0284
• Resistance levels: 1.0640, 1.0664, 1.0695

The trend on the EUR/USD currency pair on the hourly time frame is still bullish. The price is trading at the level of moving averages and above the priority change level. The MACD indicator is positive again. Under such market conditions, buy trades are best considered from the support level of 1.0574 or 1.0554 on intraday time frames. Sell deals can be considered from the resistance level of 1.0640 but better with confirmation in the form of a reverse initiative or a false breakout.

Alternative scenario: if the price breaks down through the support level of 1.0528 and fixes below it, the downtrend will likely resume.

• – Italian Consumer Price Index (m/m) at 12:00 (GMT+2);
• – US ADP Non-Farm Employment Change (m/m) at 15:15 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.1965
• Prev Close: 1.2057
• % chg. over the last day: +0.77 %

In the macro outlook for 2023, Goldman Sachs analysts forecast a 1.2% decline in UK real GDP, well below all other G-10 countries. According to the report, the Eurozone and the UK are already in recession, and more stretched-out increases in energy bills will push inflation to higher peaks than in other countries. High inflation will affect real personal income, consumption, and industrial production. Investors are dumping the sterling, believing that a weakening UK economy will prevent the Bank of England from being as hawkish as its peers.

• Support levels: 1.2000, 1.1944, 1.1893, 1.1684, 1.1476, 1.1418
• Resistance levels: 1.2100, 1.2166, 1.2218, 1.2308, 1.2431, 1.2519

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. But yesterday, the price rose sharply and approached the priority change level. The MACD indicator became positive, and the buyers dominated inside the day. Under such market conditions, it is better to look for buy trades on the intraday timeframes from the support level 1.2000 or 1.1944, but with confirmation. Sell trades are best looked for from the resistance level of 1.2166, but they are also better with confirmation.

Alternative scenario: if the price breaks out through the 1.2100 resistance level and fixes above it, the uptrend will likely resume.

• – UK Services PMI (m/m) at 11:30 (GMT+2).

The USD/JPY currency pair

• Prev Open: 131.01
• Prev Close: 132.64
• % chg. over the last day: +1.24 %

According to the latest S&P Global PMI data, the decline in Japan’s manufacturing sector worsened in the last month of the year. The Manufacturing Business Activity Index fell from 49.0 to 48.9, the second consecutive month of declining activity. Weak global economic trends led to a steady decline in production and a drop in new orders. Companies have markedly reduced purchases of inputs, and optimism has weakened to its highest level since May.

• Support levels: 130.58, 129.65, 128.85
• Resistance levels: 132.92, 133.58, 134.45, 135.88, 137.03, 138.00, 139.09

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. But the price is now trading above the moving averages, while the MACD indicator has become positive, indicating buying pressure inside the day. Buy trades are best considered on intraday time frames from the support level of 130.58, but only with confirmation. Sell deals can be looked for from the resistance level of 132.92, provided there is a reversal.

Alternative scenario: If the price fixes above 132.92, the uptrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3665
• Prev Close: 1.3477
• % chg. over the last day: -1.39 %

Global growth concerns, along with growing COVID-19 problems in China (the largest oil importer) caused the black gold price to drop another 5% yesterday. The overall drop in oil over the last 2 days was almost 10%. Considering that the Canadian dollar is a commodity currency and is highly correlated with the dollar index and oil prices, the prices of USD/CAD continued to decline sharply on Wednesday. With China increasing its export quotas for petroleum products in the first batch for 2023, indicating expectations of low domestic demand, the oil may continue to fall, which is negative for the Canadian currency.

• Support levels: 1.3478, 1.3439, 1.3386, 1.3360, 1.3281, 1.3212
• Resistance levels: 1.3530, 1.3604, 1.3640, 1.3700, 1.3776, 1.3855

From the point of view of technical analysis, the trend on the USD/CAD currency pair is close to changing to bearish. The price is trading below the moving averages. The MACD indicator has become deeply negative, and inside the day, sales prevail. A price fixation below 1.3478 will lead to a change of trend to a downtrend. Buy trades should be considered from the support level of 1.3478, but with confirmation, since the level has already been tested. Sell deals are better to look for on the intraday time frames from the resistance level of 1.3530 or 1.3604, but with a confirmation in the form of a reverse initiative on the lower time frames or a false breakout.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3478, the downtrend will likely resume.

• – US Crude Oil Reserves (w/w) at 18:00 (GMT+2).

The EUR/USD currency pair

• Prev Open: 1.0664
• Prev Close: 1.0648
• % chg. over the last day: -0.15 %

Preliminary data showed that inflation in Germany slowed to an annualized rate of 8.6% in December from 10% as one-time government payments came into effect to help consumers pay their heating and gas bills. In recent months, many German unions have successfully advocated above-average wage increases to offset the impact of inflation. Meanwhile, unemployment rates in Europe’s largest economy rose slightly in December to 2.45 million, or 5.5%.

• Support levels: 1.0528, 1.0483, 1.0361, 1.0332, 1.0284, 1.0193
• Resistance levels: 1.0612, 1.0664, 1.0695

The EUR/USD currency pair trend on the hourly time frame is still bullish. The price is still trading in a wide price corridor. The MACD indicator has become negative. Volatility remains low. Under such market conditions, buy trades are best considered from the support level of 1.0638 on intraday time frames. Sell deals can be considered from the resistance level of 1.0689, but better with confirmation in the form of a reverse initiative or a false breakout since the level has already been tested.

Alternative scenario: if the price breaks down through the support level of 1.0549 and fixes below it, the downtrend will likely resume.

• – French Consumer Price index (m/m) at 09:45 (GMT+2);
• – Spanish Services PMI (m/m) at 10:00 (GMT+2);
• – Italian Services PMI (m/m) at 10:45 (GMT+2);
  • – French Services PMI (m/m) at 10:50 (GMT+2);
  • – Germany Services PMI (m/m) at 10:55 (GMT+2);
  • – Eurozone Services PMI (m/m) at 11:00 (GMT+2);
    • – US ISM Manufacturing PMI (m/m) at 17:00 (GMT+2);
    • – US JOLTs Job Openings (m/m) at 17:00 (GMT+2);
    • – US FOMC minutes at 21:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2042
• Prev Close: 1.1966
• % chg. over the last day: -0.64 %

The UK manufacturing sector ended 2022 on a weak footing, with output, new orders, and employment declining faster. Domestic and foreign demand remained lackluster as customers faced rising costs, increased market volatility, and Brexit-related complications. The seasonally adjusted Purchasing Managers’ Index for the UK manufacturing sector fell to a 31-month low of 45.3 in December, down from 46.5 in November. The PMI has remained below the neutral 50.0 mark for five months in a row. All five PMI sub-indices point to a weakening operating environment for the UK manufacturing economy.

• Support levels: 1.1893, 1.1684, 1.1476, 1.1418
• Resistance levels: 1.2056, 1.2167, 1.2218, 1.2308, 1.2431, 1.2519

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The MACD indicator is in the negative zone, but there is a divergence on several timeframes, indicating a limited further decline. Under such market conditions, buy trades are better to look for on intraday time frames from the support level of 1.1893, but with confirmation. Sell trades are best sought from the resistance level of 1.2056 but also better with confirmation.

Alternative scenario: if the price breaks out through the 1.2100 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

• Prev Open: 130.77
• Prev Close: 130.97
• % chg. over the last day: +0.16 %

The Japanese yen rose to a seven-month high against the US dollar on Tuesday, crossing the 130 mark. The strengthening of the yen was triggered by the Bank of Japan’s (BOJ) decision to loosen control over the yield curve and allow holders of certain government bonds to move within a wider range. The US Federal Reserve and other central banks are seeking to slow the pace of interest rate hikes, while the BOJ will only begin to move toward policy normalization this year. Analysts believe the first half of 2023 may pass under the strengthening of the Japanese yen.

• Support levels: 129.65, 128.85
• Resistance levels: 132.92, 133.58, 134.45, 135.88, 137.03, 138.00, 139.09

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price is now trading at the level of the moving averages, while the MACD indicator has become inactive, but the divergence on several time frames indicates that further decline is limited. Buy trades are best considered on intraday time frames from the support level of 129.65, but only with confirmation. Sell deals be looked at from the resistance level of 132.92, provided there is a reversal.

Alternative scenario: If the price fixes above 133.58, the uptrend will likely resume.

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

The USD/CAD currency pair

• Prev Open: 1.3569
• Prev Close: 1.3668
• % chg. over the last day: +0.72 %

Canada’s manufacturing economy remains in a moderate contraction zone, characterized by further declines in production, new orders, and buying activity. The seasonally adjusted Manufacturing PMI registered 49.2 in December, down from 49.6 in November and below the 50.0 mark for the fifth consecutive month. This is the longest decline since August 2015. The main reason for the decline is a drop in new orders due to continuing high inflation and uncertainty in sales.

• Support levels: 1.3627, 1.3570, 1.3530, 1.3437, 1.3386, 1.3360, 1.3281, 1.3212
• Resistance levels: 1.3700, 1.3776, 1.3855

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 and forming provocation zones along the move, which do not allow the price to go down. The MACD indicator is in the positive zone. Within the day, buying prevails. Buy trades should be considered from the support at 1.3570, but with confirmation. Sell deals are better to look for on the intraday time frames from the resistance level of 1.3700, but with a confirmation in the form of a reverse initiative on the lower time frames or a false breakout, since the level has already been tested.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3529, the downtrend will likely resume.

The EUR/USD currency pair

• Prev Open: 1.0696
• Prev Close: 1.0658
• % chg. over the last day: -0.35 %

The ECB is expected to go against the trend of most other major central banks early this year and continue its aggressive pace of rate hikes, even though inflationary pressures across Europe are forecast to ease this week. The ECB was the last of the big central banks to start raising rates, which means Europe’s Central Bank has more “room” to continue tightening. Moreover, the index of business activity in the manufacturing sector indicates that the European industry has already adapted to high prices, the recession in manufacturing activity in the euro area is probably over, and supply chains are recovering.

• Support levels: 1.0638, 1.0589, 1.0483, 1.0361, 1.0332, 1.0284, 1.0193
• Resistance levels: 1.0689

The EUR/USD currency pair trend on the hourly time frame is still bullish. The price is still trading in a wide price corridor. The MACD indicator has become negative. Volatility remains low. Under such market conditions, buy trades are best considered from the support level of 1.0638 on intraday time frames. Sell deals can be considered from the resistance level of 1.0689, but better with confirmation in the form of a reverse initiative or a false breakout since the level has already been tested.

Alternative scenario: if the price breaks down through the support level of 1.0549 and fixes below it, the downtrend will likely resume.

• – German Unemployment Rate (m/m) at 10:55 (GMT+2);
• – German Consumer Price index (m/m) at 15:00 (GMT+2);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2061
• Prev Close: 1.2044
• % chg. over the last day: -0.14 %

The Bank of England is expected to start slowing the pace of rate hikes as inflation declines, as UK economic indicators point to a recessionary scenario. The Resolution Foundation has warned that the cost-of-living crisis, which has led to a sharp drop in living standards, will continue into the new year. Income is expected to fall another 3.8%, and households will continue to struggle with soaring energy prices and tax increases.

• Support levels: 1.2057, 1.1999, 1.1979, 1.1684, 1.1476, 1.1418
• Resistance levels: 1.2167, 1.2218, 1.2308, 1.2431, 1.2519

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The MACD indicator has become inactive, and the price is trading in a narrow price corridor, but there are signs of buying strength inside the day. Under such market conditions, it is better to look for buy trades on intraday time frames from the support level of 1.2057, but with confirmation. Sell trades are best sought from the resistance level of 1.2167 but also better with confirmation.

Alternative scenario: if the price breaks out through the 1.2308 resistance level and fixes above it, the uptrend will likely resume.

• – UK Manufacturing PMI (m/m) at 11:30 (GMT+2).

The USD/JPY currency pair

• Prev Open: 130.91
• Prev Close: 130.61
• % chg. over the last day: -0.23 %

The Japanese yen has strengthened by about 16% from its October low amid Bank of Japan intervention, as well as hopes of a slowdown in US interest rate hikes and speculation about possible Bank of Japan policy changes this year. The Bank of Japan’s unexpected December decision to change the parameters for managing the yield curve is still seen by many as a sign that ultra-easy monetary policy may soon come to an end. But traders should not expect any changes before the spring of 2023.

• Support levels: 129.65, 128.33
• Resistance levels: 131.24, 133.58, 134.45, 135.88, 137.03, 138.00, 139.09

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price is now trading below the moving averages, while the MACD indicator is in the negative zone, but there is a divergence. There is selling pressure inside the day. Buy trades are best considered on intraday time frames from support at 129.65, but only with confirmation. Sell deals can be sought from the resistance level of 131.22, provided there is a reversal.

Alternative scenario: If the price fixes above 133.58, the uptrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3550
• Prev Close: 1.3570
• % chg. over the last day: +0.14 %

The USD/CAD currency pair gained 7% over 2022 primarily due to the US Federal Reserve’s tightening of monetary policy, which led to a 7.61% rise in the dollar index. WTI crude oil price rose by 4.57% over the year, which helped keep the Canadian dollar from plummeting. It should also be noted that the Bank of Canada was one of the first to begin tightening monetary policy but did it less aggressively than the US Fed, so now the US Fed rate (4.5%) is slightly higher than the Bank of Canada rate (4.25%). The Bank of Canada is projected to schedule another 0.25% rate hike in January and then keep rates at 4.5% through the end of 2023. With the US Fed starting to slow the rate hikes and Canada’s economic outlook now more optimistic, this could play for the Canadian currency’s strength in the first half of 2023.

• Support levels: 1.3437, 1.3386, 1.3360, 1.3281, 1.3212
• Resistance levels: 1.3583, 1.3614, 1.3656, 1.3700, 1.3776, 1.3855

From the point of view of technical analysis, the trend on the USD/CAD currency pair is still bullish. The price forms a wide price corridor. The MACD indicator is in the positive zone, but sales prevail during the day. Buy trades should be considered from the support level of 1.3537, but with confirmation. Sell deals are best to look for on intraday time frames from the resistance level of 1.3583, but with confirmation in the form of reverse initiative on the lower time frames.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3529, the downtrend will likely resume.

• – OPEC+ Meeting (m/m) at 12:00 (GMT+2);
• – Canada Manufacturing PMI (m/m) at 16:30 (GMT+2).

The EUR/USD currency pair

• Prev Open: 1.0638
• Prev Close: 1.0611
• % chg. over the last day: -0.25 %

Inflation in the Eurozone lags Lithuanian inflation by half a year, which means that its peak is still to come. This is the opinion of the representative of the European Central Bank (ECB) Governing Council, Gediminas Simkus. The main risk comes from the energy crisis amid falling temperatures in winter. If Europe manages to pass this winter without considerable problems in the energy system, it is possible to say with certainty that the inflation peak has already passed this spring.

• Support levels: 1.0586, 1.0483, 1.0361, 1.0332, 1.0284, 1.0193
• Resistance levels: 1.0654, 1.0667, 1.0695

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is forming a price corridor. The price is forming a wide price corridor, and the volatility is reducing in anticipation of the holidays. The MACD indicator has become inactive, but there is a slight selling pressure. Under such market conditions, buy trades are best considered from support levels on intraday time frames, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0654 or 1.0667, but better with a confirmation in the form of a reverse initiative or a false breakout because the level has already been tested.

Alternative scenario: if the price breaks down through the support level of 1.0549 and fixes below it, the downtrend will likely resume.

• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2024
• Prev Close: 1.2018
• % chg. over the last day: -0.05 %

The situation on the GBP/USD currency pair has not changed compared to the previous day. Volatility remains below average in the run-up to the New Year holidays. Fundamental factors for the British pound are extremely weak now, so there are no prerequisites for growth. Traders should not expect significant changes in the price till the end of the year.

• Support levels: 1.1999, 1.1979, 1.1684, 1.1476, 1.1418
• Resistance levels: 1.2062, 1.2218, 1.2308, 1.2431, 1.2519

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The MACD indicator became inactive, and the price formed a narrow price corridor. Under such market conditions, it is better to look for buy deals from the support level of 1.1999 or 1.1979, but with confirmation on intraday time frames. Sell trades are best sought from the resistance level of 1.2062 but also better with confirmation.

Alternative scenario: if the price breaks out through the 1.2308 resistance level and fixes above it, the uptrend will likely resume.

The USD/JPY currency pair

• Prev Open: 133.35
• Prev Close: 134.47
• % chg. over the last day: +0.83 %

Japan’s industrial production index declined for the third consecutive month. Recent economic data, including exports, retail sales, and industrial production, signal that Japan’s economy is still very fragile and thus supports the Bank of Japan’s view that monetary policy easing should continue. At the moment, JPY does not have any fundamental support, so weak economic data and interest rate differentials between BoJ and FOMC will have a negative impact on JPY.

• Support levels: 133.75, 132.68, 132.27, 131.22
• Resistance levels: 134.45, 135.88, 137.03, 138.00, 139.09

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price is now trading above the moving averages, while the MACD indicator has become inactive. There is some buying pressure inside the day. Buy trades are best considered on intraday time frames from a support level of 133.75 or 132.68, but only with confirmation. Sell deals can be looked for from the resistance level of 134.45, provided there is a reverse reaction.

Alternative scenario: If the price fixes above 137.00, the uptrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3514
• Prev Close: 1.3604
• % chg. over the last day: +0.67 %

No economic events and data about Canada are expected before the end of the year, so the Canadian dollar these days will be completely dependent on the dynamics of the dollar index and oil prices, as Canadian is a commodity currency. Oil prices fell on Wednesday, as well as the likelihood that the easing of pandemic restrictions in China will increase demand for fuel. With the dollar rising, USD/CAD quotes jumped yesterday. The US crude oil inventories will be released today, which will add volatility to the currency pair.

• Support levels: 1.3529, 1.3438, 1.3386, 1.3360, 1.3281, 1.3212
• Resistance levels: 1.3614, 1.3656, 1.3700, 1.3776, 1.3855

From the point of view of technical analysis, the uptrend trend on the USD/CAD currency pair is still bullish. The price failed to consolidate below the priority level and is trading above the moving averages. The MACD indicator is in the positive zone, and buyers prevail inside the day. Buy trades should be considered from the support level 1.3529, but with confirmation. Sell deals are best to look for on intraday time frames from the resistance level of 1.3614, but with confirmation in the form of reverse initiative on the lower time frames.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3529, the downtrend will likely resume.

• – US Crude Oil Inventories (w/w) at 18:00 (GMT+2).