The Analytical Overview of the Main Currency Pairs on 2022.01.10

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1296
• Prev. Close: 1.1361
• % chg. over the last day: +0.57%

The inflation rate in Europe increased to 5%, which was the highest value since the founding of the European Union. Last week, Eurozone policymakers said that they expected inflation to slow gradually in 2022, and this year, a rate hike will likely not be necessary. ECB officials, including ECB head Christine Lagarde, are expected to speak this week. Industrial production in Germany fell unexpectedly in November. The production decreased by 2.4% in annual terms in November.

Trading recommendations

• Support levels: 1.1322,1.1305,1.1288,1.1271
• Resistance levels: 1.1350,1.1369,1.1436,1.1535,1.1613,1.1667,1.1717

From a technical point of view, the EUR/USD on the hour time frame is bullish. On Friday, the price jumped sharply on a non-farm report. Under such market conditions, it is better to consider sell deals from the 1.1350 resistance level, but with additional confirmation. Buy trades can be considered on the lower time frames from the support level 1.1322 or from 1.1305, but only with additional confirmation in the form of the buyers’ initiative.

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: 1.3527
• Prev. Close: 1.3588
• % chg. over the last day: +0.45%

Growth in the UK construction sector slowed due to the Omicron spread in December. On Saturday, the UK Prime Minister Boris Johnson urged the UK public to get vaccinated against COVID-19 as the number of deaths in the country exceeded 150,000. A series of reports showed that the UK economy would face difficulties in the spring as strong consumer price increases have already hit disposable income and undermined consumer confidence.

Trading recommendations

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

On the hourly time frame, the GBP/USD trend is bullish. The price is now traded in a wide corridor. The MACD indicator is still signaling divergence. Under such market conditions, traders should consider buy positions from the 1.3551 support level but only with additional confirmation in the form of a buyers’ initiative. Sell trades can be considered from the resistance level of 1.3583 after a new initiative from the sellers.

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: 115.82
• Prev. Close: 115.52
• % chg. over the last day: -0.26%

On Friday, Japanese Finance Minister Shunichi Suzuki said that the national currency should be stable. Domestic media and some market participants have warned of the potential downside of a weak yen, which raises import prices and household living costs. Japanese policymakers have traditionally favored a weak yen because it gives exporters a competitive advantage. Analysts at J.P. Morgan believe the yen, which has fallen to its lowest level in 50 years, will continue to fall, reducing consumer purchasing power.

Trading recommendations

• Support levels: 115.64,115.34,115.09,113.74
• Resistance levels: 116.08,116.50

The global USD/JPY currency pair trend is bullish. The MACD indicator has become inactive. The price is now trading in a price range, and a false breakdown zone was formed. It is best to look for buy deals from the support level of 115.64. Sell positions are better to look from the resistance level of 116.08, but only with confirmation and with 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: 1.2724
• Prev. Close: 1.2641
• % chg. over the last day: -0.66%

A Reuters poll showed that the Canadian dollar would strengthen this year as the global economy recovered from the crisis, but the currency’s gains could be tempered by interest rate hikes by the Federal Reserve. The median forecast in the Reuters poll is that the Canadian dollar will strengthen to 1.26 per US dollar. The strengthening Canadian dollar is also supported by rising oil prices and the monetary policy of the Bank of Canada, which is likely to start raising interest rates in the near future. The Canadian dollar was the only currency from the G10 countries to strengthen against the US dollar in 2021.

Trading recommendations

• Support levels: 1.2628,1.2598
• Resistance levels: 1.2681,1.2715,1.2792,1.2824,1.2903,1.2951

From a technical point of view, the USD/CAD currency pair has changed to bearish. Friday’s increase in oil prices and the decline in the dollar index on non-farm reports led to the strengthening of the Canadian dollar. The MACD indicator is in the negative zone. Under such market conditions, it is better to look for buy trades from 1.2628, but after additional confirmation in the form of the buyers’ initiative. It is best to look for sell deals from the resistance levels around the moving average.

Alternative scenario:

if the price breaks through the 1.2792 resistance level and fixes above, the downtrend is likely to be broken.