The Analytical Overview of the Main Currency Pairs on 2021.01.05

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2238
• Prev. Close: 1.2246
• % chg. over the last day: +0.07%

On Monday, EUR/USD lost most of its gains amid new restrictions for the population in Britain. Yields of European bonds fell following the British Gilts, and the difference of yields to Treasuries fell even more. As a result, the dollar index stopped falling within the day and returned to the opening level.

Trading recommendations

• Support levels: 1.2216,1.2151
• Resistance levels: 1.2309,1.2353

The main scenario for trading EUR/USD is selling on growth. Despite the negative news from Foggy Albion, the euro is still in an uptrend in the medium term. However, the daily candle left a long shadow at the top. The local channel has been broken from top to bottom for the second time, and the moving averages are starting to rebuild in a southward direction. The ADX is still reacting only to the growth of the pair, but there is a rebound from the resistance level of 1.2309 for the second day in a row, at which a “double top” pattern has formed – the first sign of a reversal.

Alternative scenario:

if the price manages to fix above the level of 1.2309, it is possible that EUR/USD will resume its uptrend.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3649
• Prev. Close: 1.3541
• % chg. over the last day: -0.78%

The sterling fell the most against the dollar compared to the major currency pairs. The situation with an emergency lockdown threatens the UK economy with even greater economic losses than before. Small and medium businesses are already urging the government for help. This is a devastating blow to large and small companies, which haven’t adjusted yet since the pandemic in March. The retail, tourism, catering, and hotel businesses are likely to suffer the most.

Trading recommendations

• Support levels: 1.3627,1.3428
• Resistance levels: 1.3702,1.4386

The main scenario is selling on growth. There were dramatic changes in the technical characteristics of the pair yesterday. The ADX has sharply reorganized to the south, showing strong bearish pressure potential. The MACD has fixed in the negative zone. Now the price is fixing near the moving averages. The price consolidation below 1.3587 will strengthen the southern signal.

Alternative scenario:

if the pair consolidates above 1.3702, the growth is likely to resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 103.11
• Prev. Close: 103.12
• % chg. over the last day: +0.01%

On Monday, USD/JPY demonstrated an almost exact correlation with the dollar index. The pair stopped following the movement of the stock market. The impression is that the yen has lost the title of “defensive asset”. Leaving a long shadow at the bottom and adding one point at the end of the day, the chart shows some kind of “bullish engulfing”. But the signal for the bulls is very weak.

Trading recommendations

• Support levels: 102.71,102.03
• Resistance levels: 103.33,103.90

The main scenario is trading in a sideways range. Despite the strong rebound within the day, the technical characteristics of USD/JPY remained practically unchanged. The MACD remains below zero, while the ADX continues to react only to a decline. The price is still fixed below the moving averages. There wasn’t a break-through of SMA 100 from the bottom-up. The scenario looks bearish, but considering the general market trend of yesterday, further decline is now questionable.

Alternative scenario:

An alternative scenario assumes a break-through of 103.33 from the bottom-up. In this case, the pair may reach 103.90. A break-through of 102.71 would indicate a continuation of the bearish trend towards 102.03.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2719
• Prev. Close: 1.2771
• % chg. over the last day: +0.41%

USD/CAD bulls gain support from the OPEC+ disagreements. The early completion of the negotiations without any certainty plummeted oil quotes by almost 2%. The Canadian currency fell in value, and the rebound of the dollar index can extend the growth of the pair.

Trading recommendations

• Support levels: 1.2686,1.2523
• Resistance levels: 1.2875,1.2954

The main scenario is buying on growth. The daily candle has shown bullish engulfing, which is the first sign of a reversal. The MACD returned to the positive zone, and both moving averages were broken from the bottom-up. The ADX is still weakly reacting to growth, indicating low bullish potential. But, nevertheless, the oscillator is ready for a reversal in the north direction.

Alternative scenario:

if the price can fix below 1.2686, the pair may resume its downward movement.