The Analytical Overview of the Main Currency Pairs on 2021.12.21

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1236
• Prev. Close: 1.1276
• % chg. over the last day: +0.36%

Electricity prices in Europe increased to record levels due to the cold weather on Monday. Also, there is a rising incidence of disease in the region. Bundesbank predicts that the German economy may contract this quarter due to the Omicron strain. At the moment, the ECB is not taking any decisive steps to tighten monetary policy, so there are no fundamental reasons for the European currency to grow.

Trading recommendations

• Support levels: 1.1243,1.1230,1.1168
• Resistance levels: 1.1323,1.1360,1.1436,1.1535,1.1613,1.1667,1.1717

From a technical point of view, the EUR/USD on the hour time frame is still bearish. The MACD indicator has become inactive. Under such market conditions, traders should consider sell positions from the resistance level of 1.1323. Buy trades can be considered on the lower time frames from the support level of 1.1243, but only with additional confirmation.

Alternative scenario:

if the price breaks out through the 1.1360 resistance level and fixes above, the mid-term uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3238
• Prev. Close: 1.3208
• % chg. over the last day: -0.23%

The UK reported 91,743 new Covid-19 cases on Monday, compared to 82,886 the day before. The country has already imposed strict restrictions, and the government is ready to tighten even more if necessary. The British pound may be supported by oil quotes growth, as well as the monetary policy of the Bank of England, which has already raised the interest rate last week.

Trading recommendations

• Support levels: 1.3189
• Resistance levels: 1.3272,1.3301,1.3365,1.3434,1.3507,1.3575,1.3685

On the hourly time frame, the GBP/USD trend is still bullish. The price reached the priority change level yesterday, but the buyers defended their positions. The MACD indicator has become inactive. Under such market conditions, traders should consider buy positions from the priority change level but only with additional confirmation in the form of a new buyers’ initiative. Sell trades can be considered from the resistance levels near the moving average.

Alternative scenario:

if the price breaks down through the 1.3189 support level and consolidates below, the bearish scenario will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 113.61
• Prev. Close: 113.62
• % chg. over the last day: +0.00%

From a fundamental point of view, the situation on the USD/JPY currency pair remains the same. The monetary policy of the Bank of Japan is aimed at active economic stimulation, while the US Federal Reserve, on the contrary, accelerated the reduction of the quantitative easing program last week. Such a situation is in favor of further growth of USD/JPY quotes.

Trading recommendations

• Support levels: 113.30,112.62,112.30
• Resistance levels: 113.95,114.17,115.15,115.50

The global trend on the USD/JPY currency pair is bearish. The price is trading in a wide corridor. Under such market conditions, traders are best to look for sell positions from the resistance level of 113.95, but with additional confirmation. Buy positions should be considered from the 113.30 support level, but with additional confirmation in the form of a buyers’ initiative or after the price breaks out the priority change level.

Alternative scenario:

if the price rises above 114.17, the uptrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2889
• Prev. Close: 1.2943
• % chg. over the last day: +0.42%

The Canadian dollar is a commodity currency, so it is highly correlated with both the dollar index and oil prices. Now the dollar index has fundamental support from the US Federal Reserve, while oil prices have been declining because of the Omicron strain, which negatively impacts fuel demand. However, analysts expect oil prices to recover soon, which could lead to a temporary strengthening of the Canadian dollar and a decrease in USD/CAD quotes.

Trading recommendations

• Support levels: 1.2918,1.2828,1.2721,1.2677,1.2638
• Resistance levels: 1.2951

From a technical point of view, the trend of the USD/CAD currency pair is bullish. The MACD indicator is in the positive zone, but there are the first signs of divergence. Under such market conditions, it’s better to look for buy deals from the support levels near the moving average on the lower time frames. Sell deals should be considered after the price returns below the level of 1.2918, but with additional confirmation in the form of a sellers’ initiative.

Alternative scenario:

if the price breaks down through the 1.2766 support level and fixes below, the downtrend will likely resume.