The Analytical Overview of the Main Currency Pairs on 2021.12.17

The EUR/USD currency pair

• Prev Open: 1.1287
• Prev Close: 1.1330
• % chg. over the last day: +0.38%

The ECB expectedly kept the base interest rate at zero level, while the deposit rate was left at minus 0.5%. The ECB will end its PEPP program in March 2022. The ECB can also extend PEPP reinvestment until at least the end of 2024. With a high probability, investors should not expect the ECB to raise interest rates in 2022. Eurozone inflation data will be released today.

• Support levels: 1.1323, 1.1265, 1.1230, 1.1168
• Resistance levels: 1.1360, 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 still bearish. The price is trading in a wide corridor. Yesterday, there was an attempt to break out through the priority change level, but the sellers were stronger. The MACD indicator became positive, and the buyers’ pressure is still strong. Under such market conditions, traders should consider sell positions from the priority change level, but with additional confirmation. Buy trades can be considered after a true breakout of the priority change level.

Alternative scenario: if the price breaks out through the 1.1360 resistance level and fixes above, the mid-term uptrend will likely resume.

• – Germany IFO Business Climate Index (m/m) at 11:00 (GMT+2);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+2);
• – US FOMC Member Wallers’ speech at 20:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.3256
• Prev Close: 1.3324
• % chg. over the last day: +0.52%

The Bank of England unexpectedly raised its key interest rate to 0.25% from 0.1%. At the same time, the central bank left the volume of the government bond-buying program at 875 billion pounds. According to the Bank of England forecasts, inflation may reach 6% in the coming months.

• Support levels: 1.3301, 1.3272, 1.3220, 1.3189
• Resistance levels: 1.3365, 1.3434, 1.3507, 1.3575, 1.3685

On the hourly time frame, the trend on GBP/USD has changed to bullish. An interest rate hike from the central bank played a key role. The price broke through the priority change level and closed higher. The MACD indicator became positive. Under such market conditions, traders should consider buy positions from the support levels near the moving average. Sell trades can be considered from the resistance levels of the higher time frame, but only with additional confirmation; as an option – to sell after a false breakout of the 1.3365 level.

Alternative scenario: if the price breaks down through the 1.3189 support level and consolidates below, the bearish scenario will likely resume.

• – UK Retail Sales (m/m) at 09:00 (GMT+2).

The USD/JPY currency pair

• Prev Open: 113.98
• Prev Close: 113.69
• % chg. over the last day: -0.26%

The Bank of Japan has made no changes to its ultra-soft monetary policy as it monitors the impact of the new variant of the Omicron coronavirus. At the same time, the Bank of Japan decided to cut its funding support program from the effects of COVID-19 as financing conditions for large companies improved. The interest rate remained unchanged.

• Support levels: 113.30, 112.62, 112.30
• Resistance levels: 113.95, 114.17, 115.15, 115.50

The global trend on the USD/JPY currency pair is bearish. Yesterday, the price tried to break out through the priority change level, but the sellers managed to protect the level. Today, on the news from the Bank of Japan, the yen strengthened against the dollar, as the Bank of Japan began to take the first steps to tighten its policy. Under such market conditions, traders can look for sell positions from the 113.95 resistance level but with additional confirmation. Buy positions should be considered from the 113.30 support level, but with additional confirmation in the form of a buyers’ initiative or after the price breakout the priority change level.

Alternative scenario: if the price rises above 114.17, the uptrend will likely resume.

• – Japan BoJ Interest Rate Decision at 04:30 (GMT+2);
• – Japan BoJ Monetary Policy Statement at 04:30 (GMT+2).

The USD/CAD currency pair

• Prev Open: 1.2831
• Prev Close: 1.2774
• % chg. over the last day: -0.44%

The USD/CAD quotes are declining again amid rising oil prices and a decline in the dollar index. The Canadian dollar is a commodity currency, so it is highly correlated with these instruments. The tightening of the monetary policy from the US Federal Reserve will stimulate the dollar index to grow, while oil prices will depend on the demand for fuel.

• Support levels: 1.2721, 1.2677, 1.2638
• Resistance levels: 1.2828, 1.2891, 1.2951

From a technical point of view, the USD/CAD currency pair trend is bullish. The MACD became negative; the price corrected the dynamic moving average level. Under such market conditions, it is better to look for buy deals from the support levels near the moving average on the lower time frames. It is best to look for sell deals from the false breakout area, but with additional confirmation.

Alternative scenario: if the price breaks down through the 1.2721 support level and fixes below, the downtrend will likely resume.