The Analytical Overview of the Main Currency Pairs on 2022.01.14

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1441
• Prev. Close: 1.1454
• % chg. over the last day: +0.11%

ECB officials indicate that supply chain problems, rising commodity prices, and Omicron continue to impact Europe’s near-term growth prospects. Such statements, as a rule, should be regarded as that the ECB does not plan to change something in its monetary policy soon. ECB head Christine Lagarde is expected to speak today. The European currency is getting stronger now due to a decrease in the dollar index.

Trading recommendations

• Support levels: 1.1457,1.1436,1.1395,1.1369,1.1330,1.1305,1.1288,1.1271
• Resistance levels: 1.1514,1.1613,1.1667,1.1717

From a technical point of view, the EUR/USD trend on the hour time frame is bullish. The European currency continues to strengthen due to the decline in the dollar index. But the price has now deviated strongly from the average values; the MACD indicator indicates a divergence. For good entry longs, traders should expect a corrective movement downwards. Under such market conditions, it is better to consider sell deals from the daily resistance level of 1.1514, but with additional confirmation. Buy trades can be considered on the lower time frames from the support levels 1.1457 or 1.1436, but only with additional confirmation in the form of the buyers’ initiative.

Alternative scenario:

if the price breaks down through the 1.1369 support level and fixes below, the mid-term uptrend will be broken.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3699
• Prev. Close: 1.3701
• % chg. over the last day: +0.01%

The British pound is strengthening for three main reasons. Firstly, the Bank of England raised its key interest rate in December and is likely to raise it again in February. Secondly, the 3-month LIBOR rates on the interbank lending market are two times higher than similar rates on the dollar index, and this difference is increasing now. Third, despite the reduction in the QE program, the US Fed balance sheet continues to rise, which negatively affects the dollar index.

Trading recommendations

• Support levels: 1.3667,1.3641,1.3581,1.3551
• Resistance levels: 1.3708,1.3753,1.3786

On the hourly time frame, the GBP/USD trend is bullish. The price is steadily growing, but the MACD indicator is still signaling divergence on higher time frames. Under such market conditions, traders should consider buy positions from the support level of 1.3708 or 1.3667 but only with additional confirmation in the form of a buyers’ initiative. Sell trades can be considered on the lower time frames from the resistance level of 1.3732, but only with short targets.

Alternative scenario:

if the price breaks down through the 1.3633 support level and consolidates below, the bearish scenario will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 114.62
• Prev. Close: 114.15
• % chg. over the last day: -0.41%

Investors are buying the Japanese Yen as an insurance asset due to US stock market uncertainty. Investors believe that the end of the quantitative easing program, four rate hikes, and the beginning of a nine-month Fed balance sheet reduction is so aggressive that it will limit the potential for further gains in stock indices. The dollar index reached its biggest weekly decline in eight months. At the same time, the Japanese currency is supported by good statistical data, which showed a decline in producer inflation from 9.2% to 8.5%.

Trading recommendations

• Support levels: 113.72,114.18,113.95
• Resistance levels: 113.99,114.40,115.04,115.35,115.64

The global trend on the USD/JPY currency pair is bearish. The price confidently broke through the priority change level and consolidated lower. The MACD indicator is in the negative zone, but there are the first signs of divergence. Buy deals are best to look from the support levels on the lower time frames near the daily support level of 113.72. Sell trades can be considered from the resistance level of 113.99 or 144.40, but only with confirmation in the form of a sellers’ initiative.

Alternative scenario:

if the price fixes above 115.04, the uptrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2500
• Prev. Close: 1.2519
• % chg. over the last day: -0.15%

The Canadian dollar is a commodity currency, so it depends not only on the monetary policy of the Bank of Canada but also on the oil prices and the dollar index. The oil price slightly decreased yesterday, which resulted in the decrease of the Canadian dollar and growth of the USD/CAD quotes. Analysts expect the dollar index to grow soon, which will provide additional support to the quotes.

Trading recommendations

• Support levels: 1.2470,1.2427
• Resistance levels: 1.2558,1.2628,1.2678,1.2715

From a technical point of view, the USD/CAD currency pair is bearish. The price has found support on the higher time frame. And the MACD indicator began to signal a divergence on several timeframes. Under such market conditions, it is better to look for buy trades on the lower time frames from 1.2470 support level. It is best to look for sell deals from the resistance levels around the moving average or from the descending local trend line.

Alternative scenario:

if the price breaks through the 1.2628 resistance level and fixes above, the downtrend is likely to be broken.