The EUR/USD currency pair

• Prev Open: 1.2151
• Prev Close: 1.2206
• % chg. over the last day: +0.45%

On Tuesday, EUR/USD bounced off the support level, which casts doubt on the option with a deep correction. But the fundamental part is showing play on the side of the dollar over the medium term. The yield spread remains strongly widened in favor of US bonds.

• Support levels: 1.2283, 1.2349
• Resistance levels: 1.2130, 1.2059

The main scenario for EUR/USD trading is cautious buying on growth. A rebound from the support level and consolidation above the moving averages temporarily canceled the southern scenario. This possibility is indicated by the ADX, which reacted very weakly to Monday’s decline but rose sharply on Tuesday, demonstrating the presence of bullish strength. In this case, the pair can reach the price of 1.2283.

Alternative scenario: if the price can consolidate below 1.2172, the pair may return to 1.2130.

• – 13:00 (GMT+2) Eurozone Industrial Production (MoM) (Nov);
• – 16:30 (GMT+2) US Core Consumer Price Index (CPI) (YoY) (Dec);
• – 16:30 (GMT+2) US Consumer Price Index (CPI) (MoM) (Dec).

The GBP/USD currency pair

• Prev Open: 1.3510
• Prev Close: 1.3661
• % chg. over the last day: +1.11%

On Tuesday, sterling showed the largest daily gain since October last year. The driver of the northern movement was the Governor of the Bank of England’s statement, Andrew Bailey, about the undesirability of introducing negative interest rates. Since the market estimated the rate cut this year with a probability of 75%, sterling rebounded sharply after the bank’s statements.

• Support levels: 1.3532, 1.3428
• Resistance levels: 1.3702, 1.4386

The main scenario in GBP/USD is cautious buying on growth. Strong northern momentum reversed technical indicators. ADX has not yet reached the overvalued area, but it is close to it. In this case, a rollback from the resistance level is possible. But since the pair is near the highs of the year, caution should be exercised with long positions.

Alternative scenario: if the pair consolidates below the moving averages around 1.3580, the growth is likely to stop, and the pair will return to 1.3532.

The USD/JPY currency pair

• Prev Open: 104.24
• Prev Close: 103.73
• % chg. over the last day: -0.50%

On Tuesday, the USD/JPY quickly consolidated below the moving averages and broke through the support level. With this, the northern scenario was canceled. Fundamental analysis suggests a continuation of the downtrend as bond yields returned to decline. The stock market correction is still possible.

• Support levels: 103.18, 102.89
• Resistance levels: 103.90, 104.76

The main scenario is selling. On Tuesday, when falling, ADX showed a significant increase in bearish potential. As long as the pair is below the moving averages, the southern bias will remain in place. The pair will likely be able to reach the 103.18 level.

An alternative scenario assumes the price-fixing above the 103.90 – 104.06 area. In this case, the pair may return to growth up to 104.75.

• – 16:30 (GMT+2) US Core Consumer Price Index (CPI) (YoY) (Dec);
• – 16:30 (GMT+2) US Consumer Price Index (CPI) (MoM) (Dec).

The USD/CAD currency pair

• Prev Open: 1.2781
• Prev Close: 1.2709
• % chg. over the last day: -0.57%

On Tuesday, the Canadian dollar was under significant pressure. The rise in oil prices and the decline in the dollar index completed the corrective pullback. Further growth with the current dynamics of the commodity market remained a big question.

• Support levels: 1.2630, 1.2523
• Resistance levels: 1.2797, 1.2875

The main scenario is selling. Technical indicators turned in the opposite direction, indicating the completion of the correction. ADX has grown significantly, showing a rise in the strength of the bears in the pair. The price consolidated below the moving averages, while the MACD returned to negative values. Thus, all indicators point south.

Alternative scenario: if the price manages to consolidate above 1.2797, the pair may return to 1.2875.