The Analytical Overview of the Main Currency Pairs on 2022.01.26

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1321
• Prev. Close: 1.1301
• % chg. over the last day: -0.17%

On Tuesday, the euro fell to a one-month low as tensions between Russia and the West over Ukraine drew investors to the dollar, a day before the US Federal Reserve would reveal details of its plans to tighten monetary policy. The ECB’s balance sheet continues to rise. Total assets increased by another €6.4 billion. The ECB balance sheet now equals 82% of Eurozone GDP compared to the Fed’s 38.2% and the Bank of Japan’s 134.5%.

Trading recommendations

• Support levels: 1.1288
• Resistance levels: 1.1356,1.1384,1.1414

From a technical point of view, the EUR/USD on the hour time frame is bearish. The MACD indicator has become inactive, but there is divergence towards buying. Under such market conditions, it is better to consider sell trades from the resistance levels near the moving average. Buy trades can be considered on the lower time frames from the support level of 1.1288, but only with additional confirmation in the form of a buyers’ initiative.

Alternative scenario:

if the price breaks out through the 1.1356 resistance level and fixes above, the mid-term uptrend will be renewed.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3483
• Prev. Close: 1.3499
• % chg. over the last day: +0.12%

The UK economy is expected to grow 4.7% in 2022, which is 0.3% less than the IMF forecast published in October 2021 in the World Economic Outlook. Despite the decline, the IMF expects the UK to grow faster this year than the other six members of the G-7, including the United States, Japan, Germany, France, Italy, and Canada.

Trading recommendations

• Support levels: 1.3431,1.3352
• Resistance levels: 1.3524,1.3583,1.3633,1.3662

On the hourly time frame, the GBP/USD trend is bearish. The MACD indicator became positive. Under such market conditions, sell deals are best to consider from the resistance levels of 1.3524 or 1.3583. Buy trades should be considered from the support level of 1.3431, but only with an additional confirmation in the form of buyers’ initiative.

Alternative scenario:

if the price breaks out through the 1.3583 resistance level and consolidates above, the bearish scenario will be broken.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 113.87
• Prev. Close: 113.85
• % chg. over the last day: -0.02%

The Japanese Yen acts as a safe haven currency for investors at the moment. For this reason, an increase in the dollar index doesn’t significantly impact the USD/JPY quotes. On the other hand, the monetary policy of the Bank of Japan is now aimed at making the Japanese Yen cheaper because of the maximum economic stimulus. Therefore, as soon as the situation with the Fed is clarified today and tension falls, USD/JPY quotes are likely to return to a medium-term uptrend.

Trading recommendations

• Support levels: 113.64,113.25,112.87
• Resistance levels: 113.99,114.63,115.04,115.35,115.64

The global trend on the USD/JPY currency pair is bearish. The price is now trading in a corridor with a range of 113.64-113.99. Buy deals are best to look at the lower time frames from the lower border of the range. Sell trades can be considered from the resistance level of 113.99, but only with confirmation in the form of a sellers’ initiative.

Alternative scenario:

if the price exceeds 114.63, the uptrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2633
• Prev. Close: 1.2631
• % chg. over the last day: -0.02%

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. Today the United States will publish its data on crude oil inventories. An increase in inventories may lead to a slight decrease in oil quotes. On the other hand, geopolitical tensions in Eastern Europe and the Middle East are keeping oil prices from declining. Also, today, the Bank of Canada will release its interest rate decision and tell its future monetary policy plans. Some analysts think the Bank of Canada may surprise and raise the rate today. With the Fed’s monetary policy decision coming today as well, volatility on the USD/CAD currency pair will be high.

Trading recommendations

• Support levels: 1.2586,1.2506
• Resistance levels: 1.2629,1.2698,1.2754,1.2813

From a technical point of view, the USD/CAD currency pair is bullish. The MACD indicator has become inactive. Under such market conditions, it is better to look for buy trades from the support levels closer to the moving average. Sell trades are best to consider from the resistance levels of higher time frames, but only with additional confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks through the 1.2546 support level and fixes below, the downtrend is likely to resume.