GLOBAL CURRENCY

OUTLOOK
April 2023

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 DXY Chart

➢ The DXY corrected sharply from the high of 105 levels on the back of improved global risk
sentiment in April. A series of weaker US CPI, PPI and other data weighed on the DXY.
➢ US FOMC minutes of the meeting highlighted that the US economy has mild chances of
going into recession, but the focus would remain on hiking interest rates as core inflation
is still at elevated levels. Furthermore, FOMC member Waller on Friday highlighted that
there is still a need for higher interest rates to contain inflation. Post comments, US DXY
made double bottom near 100.50 and jumped towards 101.50 levels.
➢ Technically, positive divergence in RSI, Bullish engulfing at the bottom near 100.50
suggests a reversal in the making. However, confirmation of the bullish trend should be
considered only after the breakout above the top-to-top trendline level of 101.80 levels.
If that is taken out in the near term, then one can expect a move towards 103.50 to 104.50
levels. On the contrary, case, if the 100.50 to 100.00 zone is taken out then the
continuation of the downtrend towards 99-98.50 levels can be expected. The possibility
of the breakout on the lower side is lesser.
 EURUSD Outlook

➢ The EUR railed sharply against the USD from 1.0800 levels to 1.1075 levels on the back of
broad weakness in the DXY.
➢ Markets have factored in the hawkish ECB vs the less hawkish US Fed as the US CPI fell
sharply but the eurozone CPI remains near 7%. However, several ECB members recently
highlighted that the current cycle of interest rates has reached the highest, limiting the
gains in the EURUSD.
➢ Technically, the pair found resistance near the upper Bollinger band and formed a bearish
engulfing pattern on the daily chart. If it manages to break the bottom-to-bottom
trendline support of 1.0940, then one can expect a reversal towards the 1.08 and 1.0740
levels. On the higher side, resistance is located at the recent top of the 1.1050-1.1075
zone. The bias is turning on the downside.
 GBPUSD Outlook

➢ The pound has soured against the USD, emerging as one of the best performances among G-
10 countries as recession fear in the UK receded.
➢ Upbeat key economic data and double-digit inflation in the UK kept the hope alive for BoE’s
aggressive rate hike.
➢ However, some caveat to the same is recent comments from IMF members. They that the UK
would suffer one of the deepest increases in unemployment due to a slowdown in demand.
This could weigh over the currency which has risen from 1.03 to 1.25 in recent months.
➢ Technically, the recent bearish candle engulfed the previous two bullish candles and broke a
key technical trend. The pair is holding a 23.6% retracement level & taking some breather but
will surely resume its corrective move towards 1.2270 and 1.2180 levels very soon. On the
north side, the 1.25-1.2570 zone seems a strong resistance.
 USDJPY Outlook

➢ Earlier there were rumours that Governor Ueda might tweak policy, such as widening the
target band on 10-year government bonds. The BoJ had surprised the markets with such
a move in December and which had pushed the USDJPY pair lower.
➢ However, the newly appointed Bank of Japan Governor highlighted that he would
continue with an ultra-loose monetary policy, as the central bank expects inflation, to
remain around 3%. In response to the same, the JPY continued to trade weaker against
the USD.
➢ Technically, The USDJPY continued to trade higher and has crossed 50% fib levels and now
it could move towards 61.80% fib level of 134.70 and further towards trendline resistance
of 135.50. On the lower side, 133.50 to 133.00 will act as a key trend reversal for the pair.