InvestMacro

The EUR/USD currency pair

• Prev Open: 1.0631
• Prev Close: 1.0680
• % chg. over the last day: +0.46 %

The US Federal Reserve raised its interest rate by 0.5% on Wednesday and raised its rate forecast to a peak of 5.1%. Thus, the Federal Reserve moved to a slower pace of rate hikes and also signaled that rates would reach higher levels than previously expected. At the Fed press conference, Mr. Powell indicated that it is too early to talk about interest rate cuts by the US central bank and that the Fed’s focus is on developing policies that will eventually return inflation to the 2% target.

• Support levels: 1.0580, 1.0549, 1.0483, 1.0361, 1.0332, 1.0284, 1.0193
• Resistance levels: 1.0695

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages. The MACD indicator has become overbought, and there are signs of divergence, which, coupled with the resistance of the higher time frame, may trigger a correction. Under such market conditions, buy trades are better to consider from the support level of 1.0580 or 1.0549, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0695, but it is better with a confirmation in the form of a reverse initiative or a false breakout.

Alternative scenario: if the price breaks down through the support level of 1.0446 and fixes below it, the downtrend will likely resume.

• – Eurozone ECB Interest Rate Decision at 15:15 (GMT+2);
• – Eurozone ECB Monetary Policy Statement at 15:15 (GMT+2);
• – US Retail Sales (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);
• – Eurozone ECB Press Conference at 15:45 (GMT+2);
• – US Industrial Production (m/m) at 16:15 (GMT+2);

The GBP/USD currency pair

• Prev Open: 1.2357
• Prev Close: 1.2427
• % chg. over the last day: +0.56 %

In the UK, the consumer inflation rate fell from 11.1% to 10.7% on an annualized basis. Core inflation (a more important indicator because it excludes food and energy prices) fell from 6.5% to 6.3% y/y. After Monday’s positive GDP data, UK Chancellor Jeremy Hunt warned that the economy might get worse before it gets better. However, yesterday’s employment data were mostly positive. The Bank of England (BoE) will meet today with the market consensus for a 50 basis point rate hike.

• Support levels: 1.2320, 1.2177, 1.2024, 1.1964, 1.1684, 1.1476, 1.1418
• Resistance levels: 1.2431, 1.2519

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages. The MACD indicator is in the positive zone, and the buyers’ pressure remains, but there are signs of divergence. Under such market conditions, it is better to look for buy deals from the support level of 1.2320, but with confirmation on intraday time frames. Sell trades are best looked for from the resistance level of 1.2431, but also better with confirmation in the form of a reverse initiative or a false breakout since the level has already been

Alternative scenario: if the price breaks down from the 1.2100 support level and fixes below it, the downtrend will likely resume.

• – UK BoE Interest Rate Decision at 14:00 (GMT+2);
• – UK BoE MPC Meeting Minutes at 14:00 (GMT+2).

The USD/JPY currency pair

• Prev Open: 135.57
• Prev Close: 135.45
• % chg. over the last day: -0.09 %

The US dollar has lost about 10% of its value against the Japanese yen over the past two months. However, the decrease was mainly due to expectations of a slowdown in the pace of rate hikes by the US Federal Reserve. The difference in the interest rates between the Bank of Japan and the US Federal Reserve became even bigger after yesterday’s rate hike, so the JPY has no fundamental support from the Bank of Japan in the mid-term perspective.

• Support levels: 134.79, 133.53
• Resistance levels: 135.90, 137.18, 139.09, 140.75, 143.17, 145.16

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The MACD indicator is in the negative zone, showing signs of divergence. Sell deals may be searched for from the resistance level of 135.90, provided that there is a reverse reaction. Buy trades are best considered on intraday time frames from the support level of 134.79, but only with confirmation since the level has already been tested.

Alternative scenario: If the price fixes above 139.00, the uptrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3545
• Prev Close: 1.3545
• % chg. over the last day: 0.00 %

Oil prices fell slightly yesterday due to a stronger dollar, and the possibility of further interest rate hikes by global central banks has also added to demand concerns. The Canadian dollar is a commodity currency, so rising oil prices are strengthening the Canadian currency, while falling oil leads to Canadian weakness.

• Support levels: 1.3521, 1.3438, 1.3386, 1.3360, 1.3281, 1.3212
• Resistance levels: 1.3601, 1.3643, 1.3690, 1.3776, 1.3855

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish. The MACD indicator shows the divergence, which suggests that the technical correction is coming to an end. Buy trades should be considered from the support level of 1.3521, but with additional confirmation. For sell deals, it is better to consider the resistance level of 1.3601 or 1.3643 but with a confirmation in the form of a reverse initiative or after a false breakout.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3386, the downtrend will likely resume.

The EUR/USD currency pair

• Prev Open: 1.0531
• Prev Close: 1.0632
• % chg. over the last day: +0.96 %

The US consumer inflation rate declined from 7.7% to 7.1% year-over-year. Core inflation (which excludes food and energy prices) also fell from 6.3% to 6.1%. Germany’s inflation rate fell from 10.4% to 10% year-over-year. On the back of such a sharp decline in inflation, investors renewed their interest in risky assets, which led to a sharp drop in the dollar against major currency pairs.

• Support levels: 1.0580, 1.0549, 1.0483, 1.0361, 1.0332, 1.0284, 1.0193
• Resistance levels: 1.0657, 1.0695

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages. The MACD indicator has become overbought, but there are no signs of divergence yet. Under such market conditions, it is best to wait for a small correction. It is better to consider the deals to buy from the support level of 1.0580 or 1.0549, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0657 or 1.0695, but it is better with a confirmation in the form of a reverse initiative or a false breakout.

Alternative scenario: if the price breaks down through the support level of 1.0446 and fixes below it, the downtrend 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 Fed Interest Rate Decision at 21:00 (GMT+2);
• – US FOMC Statement at 21:00 (GMT+2);
• – US FOMC Press Conference at 21:30 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2260
• Prev Close: 1.2364
• % chg. over the last day: +0.84 %

The UK will publish inflation data today, giving clues as to what interest rate hike the Bank of England will choose on Thursday. Analysts forecast a decline in consumer inflation from 11.1% to 10.9% year-over-year. Core inflation is expected to remain unchanged. If the data coincides with the consensus forecast or is better, the Bank of England will likely raise the interest rate by 0.50% tomorrow. If the data is worse than expected and inflation shows no signs of slowing down, the Bank of England might take a more aggressive step of 0.75%.

• Support levels: 1.2320, 1.2177, 1.2024, 1.1964, 1.1684, 1.1476, 1.1418
• Resistance levels: 1.2431, 1.2519

From the technical point of view, the GBP/USD currency pair trend on the hourly time frame is bullish. The price is trading above the moving averages. The MACD indicator is in the positive zone, and buyers’ pressure is still present. Under such market conditions, it is better to look for buy deals from the support level of 1.2320, but with confirmation on intraday time frames. Sell trades are best looked for from the resistance level of 1.2431, but also better with confirmation in the form of a reverse initiative or a false breakout, as the level has already been tested.

Alternative scenario: if the price breaks down of the 1.2100 support level and fixes below it, the downtrend will likely resume.

• – UK Consumer Price Index (m/m) at 09:00 (GMT+2).

The USD/JPY currency pair

• Prev Open: 137.66
• Prev Close: 135.57
• % chg. over the last day: -1.54 %

Japanese producer sentiment worsened in the final quarter of 2022 to its lowest level in almost two years. The reasons are price pressures and the prospect of slower global demand. The study found that both large manufacturers and the service sector expect business conditions to deteriorate further. Because of this, large firms expect to increase capital spending by 19.2% in the current fiscal year. The decline in economic indicators signifies that the Bank of Japan will continue to pursue a soft stimulative economy.

• Support levels: 134.79, 133.53
• Resistance levels: 135.90, 137.18, 139.09, 140.75, 143.17, 145.16

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The MACD indicator is in the negative zone, and there are signs of oversold, but without any signs of divergence. Sell deals may be sought from the resistance level of 139.09, provided that there is a reverse reaction. Buy trades are best considered on intraday time frames from the support level of 137.13, but only with confirmation.

Alternative scenario: If the price fixes above 139.00, the uptrend will likely resume.

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

The USD/CAD currency pair

• Prev Open: 1.3637
• Prev Close: 1.3543
• % chg. over the last day: -0.69 %

The oil price surpassed $80 a barrel on Tuesday and recorded its biggest daily gain in more than a month as investors bought up risky assets after US data pointed to a slowdown in inflation. A weaker dollar makes oil cheaper for holders of other currencies, which could boost demand. The Canadian dollar is a commodity currency, so rising oil prices are strengthening the Canadian currency.

• Support levels: 1.3521, 1.3438, 1.3386, 1.3360, 1.3281, 1.3212
• Resistance levels: 1.3601, 1.3643, 1.3690, 1.3776, 1.3855

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish. But sellers prevail inside the day. The price is trading below the moving averages, and the MACD indicator has become negative. Buy trades should be considered from the support level of 1.3521, but with additional confirmation. For sell deals, it is best to consider the resistance level of 1.3601 or 1.3643, but with confirmation in the form of a reverse initiative or after a false breakout.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3386, the downtrend will likely resume.

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

The EUR/USD currency pair

• Prev Open: 1.0528
• Prev Close: 1.0537
• % chg. over the last day: +0.09 %

The US consumer price data will be released today, and an important interest rate meeting of the Federal Reserve will be held tomorrow. Analysts forecast that the consumer inflation rate will fall from 7.7% to 7.4% year-over-year, and core inflation (which excludes food and energy prices) will fall from 6.3% to 6.1%. Amid the slowdown in rate hikes, investors will turn their attention to riskier assets such as the euro. Also, on Tuesday, Germany will publish inflation data where inflationary pressures are also expected to decrease. Thus, volatility in currency pairs with the US dollar and euro will be extremely high.

• Support levels: 1.0510, 1.0483, 1.0361, 1.0332, 1.0284, 1.0193
• Resistance levels: 1.0583, 1.0610

The trend on the EUR/USD currency pair on the hourly time frame is bullish. But at the moment, the price is forming a wide-volatile flat. The MACD indicator has become inactive. Under such market conditions, moving to lower time frames or waiting for an impulse movement is necessary. Buy trades are best considered from the support level of 1.0483, but with additional confirmation. Sell deals can be considered from the resistance level of 1.0584, but it is better with a confirmation in the form of a reverse initiative or a false breakout, as the level has already been tested.

Alternative scenario: if the price breaks down through the support level of 1.0446 and fixes below it, the downtrend will likely resume.

• – German Consumer Price Index (m/m) at 09:00 (GMT+2);
• – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – US Consumer Price Index (m/m) at 15:30 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2245
• Prev Close: 1.2264
• % chg. over the last day: +0.16 %

The Bank of England and the UK Treasury have already acknowledged that the country is in recession. However, technically, there have not been two consecutive quarters of negative growth so far. There has only been one-quarter of negative growth. The latest GDP data showed that the UK economy grew by 0.5% in the last month. Since the last Bank of England meeting, the data have been consistent with the recession estimate but not as bad as expected. This creates a difficult scenario for the Bank of England as inflation is still in double digits, and therefore the Bank of England is likely to raise its rate by 0.5% this Thursday.

• Support levels: 1.2177, 1.2024, 1.1964, 1.1684, 1.1476, 1.1418
• Resistance levels: 1.2304, 1.2381, 1.2431

From the technical point of view, the GBP/USD currency pair trend on the hourly time frame is bullish. The price is trading at the level of the moving averages, but there are signs of liquidity narrowing. The MACD indicator has become inactive. Under such market conditions, buy trades are better to look for from the support level of 1.2177, but with confirmation on intraday time frames. Sell trades are best looked for from the resistance level of 1.2304 but also better with confirmation in the form of a reverse initiative or a false breakout.

Alternative scenario: if the price breaks down from the 1.2100 support level and fixes below it, the downtrend 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);
• – UK BoE Gov Bailey Speaks at 13:00 (GMT+2).

The USD/JPY currency pair

• Prev Open: 136.55
• Prev Close: 137.64
• % chg. over the last day: +0.79 %

The situation on the USD/JPY currency pair has not changed. Fundamentally, in the medium term, USD/JPY quotes are inclined to grow as the difference between the interest rates of the US Federal Reserve and the Bank of Japan is increasing. On Wednesday, the Fed will raise the rate by at least another 0.5%, while the Bank of Japan is firmly committed to a soft monetary policy until spring 2023. This divergent policy contributes to the decline of the Japanese currency against the dollar.

• Support levels: 137.13, 135.33, 133.53
• Resistance levels: 139.09, 140.75, 143.17, 145.16

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The MACD indicator is in the positive zone, and the buyer’s pressure on the intraday time frames is increasing, but there are the first signs of divergence. Sell deals can be looked for from the resistance level of 139.09 if there is a reverse reaction. Buy trades are best considered on intraday time frames from the support level of 137.13, but only with confirmation.

Alternative scenario: If the price fixes above 139.00, the uptrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.3633
• Prev Close: 1.3633
• % chg. over the last day: 0.00 %

Oil prices jumped by 3% yesterday. Oil was supported by the continued closure of the pipeline that connects Canadian oil to the US Gulf Coast. How long it will take Canada’s TC Energy Corp to clean up and restart its Keystone pipeline is still unknown. The Canadian dollar is a commodity currency, so rising oil prices have strengthened the Canadian dollar. A decline in US inflation today may trigger a further rise in oil prices.

• Support levels: 1.3621, 1.3518, 1.3438, 1.3386, 1.3360, 1.3281, 1.3212
• Resistance levels: 1.3690, 1.3776, 1.3855

From the point of view of technical analysis, the trend on the USD/CAD currency pair has changed to bullish. The price is trading at the level of moving averages, and the MACD indicator has become inactive. Such market conditions significantly complicate the search for good entry points. Buy trades should be considered from the 1.3621 support level, but with additional confirmation. For sell deals, it is better to consider the resistance level of 1.3690 but with confirmation in the form of a reverse initiative or after a false breakout, as the level has already been tested.

Alternative scenario: if the price breaks down and consolidates below the support level of 1.3386, the downtrend will likely resume.