The Analytical Overview of the Main Currency Pairs on 2022.02.04

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1302
• Prev. Close: 1.1438
• % chg. over the last day: +1.20%

The ECB left monetary policy unchanged. But it is reported that a possible policy review may occur in March as inflation continues to rise in the region. At the ECB’s press conference, Christine Lagarde said that it is wise not to rule out a rate hike in 2022 as March and June will be crucial for inflation assessment. Investors are betting on a 40 basis point interest rate hike by December, given the ECB’s changed rhetoric.

Trading recommendations

• Support levels: 1.1414,1.1329,1.1275,1.1254
• Resistance levels: 1.1481,1.1534,1.1617

From the technical point of view, the EUR/USD on the hour time is bullish. With the ECB starting to think about a rate hike this year, the euro immediately rose. Under such market conditions, buy trades should be looked for after a small pullback because the price has deviated strongly from the average values. Sell trades are better to look for on intraday time frames but with short targets.

Alternative scenario:

if the price breaks out through the 1.1254 support level and fixes below, the mid-term uptrend is likely to be broken.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3569
• Prev. Close: 1.3590
• % chg. over the last day: +0.15%

As expected, the Bank of England raised the interest rates by another 0.25%, to 0.5%, to accelerate the slowdown in inflation. The bank will also complete a £20 billion corporate bond sale by the end of 2023. Inflation will remain above 5% until the end of the year. Traders have raised their bets on future increases in borrowing costs, and markets now expect the Bank of England to raise interest rates to at least 1% by May and 1.5% by November.

Trading recommendations

• Support levels: 1.3583,1.3524,1.3457,1.3434
• Resistance levels: 1.3619,1.3639,1.3662

On the hourly time frame, the trend on GBP/USD is bullish. The British pound is fundamentally supported by the Bank of England now. Under such market conditions, buy trades should be looked for after a small pullback because the price has deviated strongly from the average values. At the same time, the MACD indicator indicates a divergence. Sell trades are better to look for on intraday time frames but with short targets.

Alternative scenario:

if the price breaks out through the 1.3475 support level and consolidates below, the bullish scenario will be broken.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 114.37
• Prev. Close: 114.98
• % chg. over the last day: +0.53%

The Japanese Yen continues to fall despite the decline in the dollar index. The monetary policy of the Bank of Japan is now aimed at making the JPY cheaper because of the maximum stimulus, while the Fed is tightening monetary policy. The Japanese yen can get a boost only in 2 cases. The first is if the Bank of Japan tightens its monetary policy. The second one is that investors will buy the yen as a safe-haven asset in case of various panic moods in the financial markets like it happened earlier this year.

Trading recommendations

• Support levels: 114.59,115.37,115.73
• Resistance levels: 114.98,114.37,113.99

The global trend on the USD/JPY currency pair is bullish. The price failed to break through the priority change level. The buyers were able to protect their interests. Under such market conditions, it is best to look for buy deals on the lower time frames from the support level of 114.59. Sell potions can be looked for at the nearest resistance levels, but only with additional confirmation.

Alternative scenario:

if the price fixes below 114.37, the uptrend will likely be broken.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2665
• Prev. Close: 1.2675
• % chg. over the last day: +0.08%

The Canadian dollar is a commodity currency, so it depends not only on the monetary policy of the Bank of Canada but also on oil prices and the dollar index. Yesterday, Brent crude oil reached $91 a barrel for the first time since October 2014, as cold weather engulfed large parts of the US, threatening further oil supply disruptions. As recovering demand outpaces supply, oil markets become increasingly vulnerable to supply shocks. The Canadian dollar has strengthened in recent days due to rising oil prices and a declining dollar index. But now the situation is becoming less clear, so USD/CAD is trading in a flat.

Trading recommendations

• Support levels: 1.2649,1.2613,1.2586,1.2506
• Resistance levels: 1.2729,1.2792

From a technical point of view, the USD/CAD currency pair is bullish. The price is trading in a flat near the moving average. The MACD indicator has become inactive. Under such market conditions, it is better to look for buy trades on the lower time frames from the support levels of 1.2649. There are no optimal entry points to sell deals now.

Alternative scenario:

if the price breaks through the 1.2613 support level and fixes below, the downtrend is likely to resume.