The Analytical Overview of the Main Currency Pairs on 2022.01.07

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1312
• Prev. Close: 1.1298
• % chg. over the last day: -0.12%

German inflation accelerated to 5.3% in December. The last time German inflation was 5.3%, the Bundesbank’s key interest rate was 8.6%. Today, the ECB’s key rate remains at 0%. Analysts expect the ECB to raise interest rates by 10-15 basis points in October-December 2022.

Trading recommendations

• Support levels: 1.1288,1.1271
• Resistance levels: 1.1336,1.1368,1.1369,1.1436,1.1535,1.1613,1.1667,1.1717

From the technical point of view, the EUR/USD on the hour time frame is still bullish. After the December FOMC minutes publication, the EUR/USD quotes started a decline, as a more hawkish policy of the Fed led to a rise in the dollar index. Under such market conditions, it is better to consider sell deals from the 1.1336 resistance level, but with additional confirmation. Buy trades can be considered on the lower time frames from the support level 1.1288, but only with additional confirmation in the form of the buyers’ initiative. However, it should be noted that the price has already tested this level several times, and each rebound was weaker than the previous one, which suggests that a breakdown below it and a change of the priority is likely.

Alternative scenario:

if the price breaks down through the 1.1288 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: 1.3554
• Prev. Close: 1.3534
• % chg. over the last day: -0.15%

According to a survey of the Bank of England, British firms expect that the inflation of production prices this year will be 4.5% compared with 4.2% at the end of last year. This suggests that consumer inflation will also rise following higher producer prices.

Trading recommendations

• Support levels: 1.3465,1.3396,1.3352,1.3257,1.3220
• Resistance levels: 1.3551,1.3583,1.3685

On the hourly time frame, the trend on GBP/USD is still bullish. The price is now trading in a wide corridor. On Wednesday, the price formed a false breakout zone higher, which will now act as a good resistance area. The MACD indicator is still signaling divergence. Under such market conditions, traders should consider buy positions from the 1.3465 support level but only with additional confirmation in the form of a buyers’ initiative. Sell trades can be considered from the resistance level of 1.3551 or 1.3583.

Alternative scenario:

if the price breaks down through the 1.3465 support level and consolidates below, the bearish scenario will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 116.07
• Prev. Close: 115.84
• % chg. over the last day: -0.19%

The consumer price index (CPI) in Japan’s capital, which includes oil prices but excludes food prices, increased by 0.5% in December from a year earlier. It’s the biggest year-over-year increase since February 2020. Meanwhile, inflation-adjusted wages fell by 1.6% in annual terms, declining for the third straight month. Such data does not foresee a stronger economic recovery.

Trading recommendations

• Support levels: 115.64,115.34,115.09,113.74
• Resistance levels: 116.11,116.50

The global trend on the USD/JPY currency pair is bullish. The price is now trading in a price range. It is best to look for buy deals from the support levels around the moving average or from the lower boundary of 115.64, but with additional confirmation. Sell positions are better to look from the resistance level of 116.11, but only with confirmation and short targets.

Alternative scenario:

if the price fixes below 115.09, the uptrend will likely be broken.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2755
• Prev. Close: 1.2725
• % chg. over the last day: -0.24%

In November, Canada’s trade surplus increased for the sixth month straight, easing worries about the economic impact after the pandemic. Canada’s trade surplus reached a 13-year high, indicating that the economy is stronger than expected. This economic situation will contribute to a more rapid increase in interest rates, so traders should expect the strengthening of the Canadian dollar shortly. Also, it should be kept in mind that the Canadian dollar is a commodity currency, so rising oil prices almost always positively affect the Canadian dollar.

Trading recommendations

• Support levels: 1.2710,1.2667,1.2628
• Resistance levels: 1.2792,1.2824,1.2903,1.2951

From the technical point of view, the USD/CAD currency pair has changed to bullish. After the December FOMC minutes publication, the USD/CAD quotes showed a sharp increase, as a more “hawkish” policy of the Fed led to a rise in the dollar index. But yesterday, the oil prices growth contributed to the strengthening of the Canadian dollar and decrease of the USD/CAD quotes. The MACD indicator became negative. Under such market conditions, it is better to look for buy trades from the 1.2710 support level, but with an additional confirmation in the form of a buyers initiative. Sell trades are best to consider from the resistance levels of higher time frames.

Alternative scenario:

if the price breaks down through the 1.2667 support level and fixes below, the downtrend is likely to resume.