The Analytical Overview of the Main Currency Pairs on 2022.02.23

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1310
• Prev. Close: 1.1325
• % chg. over the last day: +0.13%

In February, the US CB consumer confidence fell to 110.5 but was higher than the analysts’ consensus forecast of 110.0. Germany’s IFO Business Climate Index increased to 98.9 in February from 96 (revised from 95.7 in January). This value was above market expectations. Improved economic indicators in Europe are a prerequisite for the ECB to start cutting its stimulus program early. But given geopolitics and slowing inflation in the EU, it is very likely that the ECB will remain true to its policy until the end of the year.

Trading recommendations

• Support levels: 1.1305,1.1283,1.1247
• Resistance levels: 1.1392,1.1423,1.1481,1.1534

From the technical point of view, the EUR/USD on the hourly time frame is bearish. The MACD indicator has become inactive. The price is trading in a wide price corridor. Under such market conditions, it is best to look for sell trades on intraday time frames from the resistance level of 1.1392. Buy trades should be considered from the support level of 1.1305, but only with additional confirmation.

Alternative scenario:

if the price breaks out through the 1.1392 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: 1.3599
• Prev. Close: 1.3585
• % chg. over the last day: -0.10%

The British pound is trading unchanged, although yesterday’s decline in Brent oil prices led to a slight decrease in GBP/USD quotes. The UK Monetary Policy Report, also known as the inflation report, will be released today. Given the positive statistics on economic indicators, the UK will continue to tighten its monetary policy to overcome high inflation.

Trading recommendations

• Support levels: 1.3561,1.3549,1.3506,1.3475,1.3457
• Resistance levels: 1.3625,1.3639,1.3662

On the hourly time frame, the GBP/USD currency pair trend is still bullish. The price is trading in a wide corridor with boundaries of 1.3549-1.3639. Yesterday, the price reached the priority change level, but the buyers defended their positions. Under such market conditions, buy trades should be looked at from the 1.3561 level, but with confirmation. The resistance level of 1.3625 may be considered for opening sell deals, but only with additional confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks out through the 1.3549 support level and consolidates below, the bullish scenario will be broken.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 114.73
• Prev. Close: 115.07
• % chg. over the last day: +0.30%

The Japanese yen is a safe-haven currency in case of various financial shocks. Due to geopolitical tension in Eastern Europe, investors started to move to defensive assets. For this reason, investors have seen a decline in USD/JPY quotes for the past two trading weeks. However, it should be noted that the monetary policy of Japan’s central bank is currently aimed at weakening the Japanese yen. At the same time, the US Federal Reserve will tighten its monetary policy, contributing to the dollar index growth. Analysts expect that as soon as the situation in Eastern Europe “cools down,” the USD/JPY quotes will return to the uptrend.

Trading recommendations

• Support levels: 114.78,114.44,113.99
• Resistance levels: 115.43,115.64,116.12,116.50

The global trend on the USD/JPY currency pair is bearish. But yesterday, the USD/JPY quotes increased amid sanctions imposed by the West against Russia. The MACD indicator became positive. Under such market conditions, it is best to look for buy deals on the lower time frames from the support level of 114.78, but with additional confirmation. For sell deals, a resistance level of 115.43 may be considered, but only with additional confirmation in the form of a seller’s initiative.

Alternative scenario:

if the price fixes above 115.64, the uptrend will likely resume.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2750
• Prev. Close: 1.2769
• % chg. over the last day: +0.15%

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. The fundamental picture now is that both the dollar index and oil prices will rise. Investors are buying the dollar index as a defensive asset, and next month the Fed will begin to tighten its monetary policy, which will also support the US currency. According to Bank of America, oil prices could jump another $5-20 if the situation in Ukraine worsens. Investors continue to hold on to oil contracts, fearing disruptions in supplies from Russia. However, if the situation “cools down” shortly, there is a high probability that oil quotes will drop by $2-4. Also, investors should not forget that Iran is getting closer to lifting sanctions.

Trading recommendations

• Support levels: 1.2740,1.2680,1.2600,1.2506
• Resistance levels: 1.2794

From a technical point of view, the USD/CAD currency pair is bullish. The price is in a wide flat with high volatility. It is worth trading only with short targets, as both oil and the dollar index are inclined to grow now. Under such market conditions, it is better to look for buy trades on the lower time frames from the support level of 1.2740. For sell deals, it is better to consider the resistance level of 1.2794, but with an additional confirmation in the form of an initiative of sellers.

Alternative scenario:

if the price breaks through the 1.2680 support level and fixes below, the downtrend will likely resume.