The Analytical Overview of the Main Currency Pairs on 2021.12.31

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1346
• Prev. Close: 1.1325
• % chg. over the last day: -0.18%

According to the ECB officials, after the completion of the bond purchases programm the interest rate may rise in early 2023. Considering that the FED is planning 2-3 interest rate hikes as early as next year, the EUR/USD currency pair will have a downward trend in the long term. But in the short term, until March 2022, the Euro may strengthen a little due to the reduced pace of asset purchases by the ECB.

Trading recommendations

• Support levels: 1.1293,1.1230,1.1168
• Resistance levels: 1.1342,1.1360,1.1436,1.1535,1.1613,1.1667,1.1717

From a technical point of view, the EUR/USD on the hour time frame is still bearish. The price is trading in a corridor. The MACD indicator has become inactive. With a high probability, the price will stay in the balance until next year because volatility is declining in the run-up of the holiday. It is better to consider sell deals from the1.1342 resistance level, but with an additional confirmation, because the price already tested that level yesterday. Buy trades can be considered on the lower time frames from the support level of 1.1293, but only with additional confirmation in the form of the buyers’ initiative.

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: 1.3486
• Prev. Close: 1.3502
• % chg. over the last day: +0.12%

COVID-19 continues to rise in the UK. The British rail operator was forced to suspend all departures to London Station until January 10. If the situation continues in such a way, Britain risks facing a partial economic shutdown, which will undoubtedly affect the Q4 economic performance.

Trading recommendations

• Support levels: 1.3443,1.3362,1.3301,1.3277,1.3220
• Resistance levels: 1.3507,1.3575,1.3685

On the hourly time frame, the GBP/USD trend is still bullish. But the MACD indicator is showing divergence on several timeframes; a technical correction may occur soon. Under such market conditions, traders should consider buy positions from the 1.3443 support level but only with additional confirmation in the form of a buyers’ initiative. Sell trades can be considered from the resistance level of 1.3507, but for confirmation, it is better to wait for the sellers’ initiative or a false breakout.

Alternative scenario:

if the price breaks down through the 1.3362 support level and consolidates below, the bearish scenario will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 114.89
• Prev. Close: 115.05
• % chg. over the last day: +0.14%

In terms of monetary policy analysis, Japan’s central bank is now actively stimulating the economy, while the US Federal Reserve is reducing its stimulus program. This central bank policy will contribute to a decline in the yen and a strengthening of the dollar index. USD/JPY is trading near its highest level in four and a half years.

Trading recommendations

• Support levels: 114.70,114.50,114.16,113.76,113.32,112.62,112.30
• Resistance levels: 115.15,115.50

The global USD/JPY currency pair trend is bullish. The MACD indicator is signaling a divergence at several timeframes, which means that a slight correction should be expected. Buy positions should be considered from the 114.70 support level, but with additional confirmation in the form of a buyers’ initiative. For sell positions, it is better to look for the lower time frames from the resistance level of 115.15, but with short targets.

Alternative scenario:

if the price fixes below 114.50, the uptrend will likely be broken.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2789
• Prev. Close: 1.2737
• % chg. over the last day: -0.40%

The Canadian dollar is a commodity currency, which correlates strongly with oil prices and the dollar index. Oil prices continue to grow, which supports the Canadian dollar. The dollar index also increased yesterday, but the USD/CAD quotes are decreasing. This means that the Canadian dollar now looks more confident.

Trading recommendations

• Support levels: 1.2717,1.2677,1.2638
• Resistance levels: 1.2770,1.2857,1.2903,1.2951

From a technical point of view, the USD/CAD currency pair trend has changed to bearish. The sellers managed to break down the priority change level and consolidated it below. The MACD indicator is in the negative zone, but it is still signaling a buy divergence. Under such market conditions, it is better to look for sell deals from the resistance levels near the moving average. Sell trades can be considered from the support level of 1.2718, but with short targets.

Alternative scenario:

if the price breaks out through the 1.2857 resistance level and fixes above, the downtrend will likely be broken.