The Analytical Overview of the Main Currency Pairs on 2022.01.03

The EUR/USD currency pair

• Prev Open: 1.1321
• Prev Close: 1.1368
• % chg. over the last day: +0.42%

The European currency lost more than 7% against the dollar in a year, while the ECB has adhered to its ultra-soft monetary policy all along. The head of the Association of Senior Hospital Physicians in Germany believes that the coronavirus will no longer threaten the health care system, as the dominant variant is becoming the Omicron strain, which in most cases is easily tolerated. Analysts agree, believing that restrictions across Europe will subside as we approach spring. But economic indicators for the largest European economies are expected to be weak in December due to the introduction of restrictions.

• Support levels: 1.1336, 1.1288, 1.1271
• Resistance levels: 1.1368, 1.1369, 1.1436, 1.1535, 1.1613, 1.1667, 1.1717

From the technical point of view, the EUR/USD on the hour time frame has changed to bullish. On the last day of the year, the price was able to break through the priority change level and close higher. The MACD indicator is inactive. The buyers need to keep the price above the moving average line. Otherwise, a false breakout of the higher timeframe will occur. It is better to consider sell deals from the 1.1368 resistance level, but with additional confirmation. Buy trades can be considered on the lower time frames from the support level 1.1336, but only with additional confirmation in the form of the buyers’ initiative.

Alternative scenario: if the price breaks down through the 1.1288 support level and fixes below, the mid-term uptrend will be broken.

• – German Manufacturing PMI (m/m) at 10:55 (GMT+2);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+2);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.3491
• Prev Close: 1.3523
• % chg. over the last day: +0.23%

According to the year’s results, the British currency took second place in terms of stability. Over the year, the pound declined by just over 1% against the dollar, remaining at its highest level against the euro since February 2020. Analysts believe that the British pound will remain a stable currency this year as well, as it is fundamentally supported by the policy of the central bank of England and rising Brent oil prices.

• Support levels: 1.3492, 1.3443, 1.3362, 1.3301, 1.3277, 1.3220
• Resistance levels: 1.3549, 1.3575, 1.3685

On the hourly time frame, the trend on GBP/USD is still bullish. But the MACD indicator is showing divergence on several timeframes. A technical correction may occur soon. Under such market conditions, traders should consider buy positions from the 1.3443 support level but only with additional confirmation in the form of a buyers’ initiative. Sell trades can be considered from the resistance level of 1.3549, but it is better to wait for the sellers’ initiative or a false breakout for confirmation.

Alternative scenario: if the price breaks down through the 1.3362 support level and consolidates below, the bearish scenario will likely resume.

The USD/JPY currency pair

• Prev Open: 115.03
• Prev Close: 115.10
• % chg. over the last day: +0.06%

The Japanese yen performed the worst among the major currencies, losing about 10% against the US dollar in the year. This situation was caused by the opposite monetary policy of the central banks. The central Bank of Japan has been actively stimulating the economy all this time and will continue to do so, while the US Federal Reserve is already cutting QE. Such a policy of central banks will contribute to reducing the yen and strengthening the dollar index.

• Support levels: 115.15, 114.70, 114.50, 114.16, 113.76, 113.32, 112.62, 112.30
• Resistance levels: 115.50

The global trend on the USD/JPY currency pair is bullish. The MACD indicator signals a divergence at several timeframes, which means that a slight correction should be expected. It is already risky to consider buy trades. The price strongly deviated from the average values, so it is better to consider the buy deals either on the lower time frames or wait for the pullback to the support levels near the moving average. Sell positions are better to look at the lower time frames from the daily resistance level of 115.50.

Alternative scenario: if the price fixes below 114.50, the uptrend will likely be broken.

The USD/CAD currency pair

• Prev Open: 1.2746
• Prev Close: 1.2637
• % chg. over the last day: -0.86%

The best performing major currency against the dollar in 2021 was the Canadian dollar, which increased by 1% by the end of the year. The Canadian dollar is a commodity currency, so it was mainly supported by the rise in oil prices, which rose more than 50% over the year. The Canadian dollar is also supported by the monetary policy of the Canadian central bank, which will start tightening its monetary policy in January 2022.

• Support levels: 1.2638, 1.2597
• Resistance levels: 1.2718, 1.2770, 1.2903, 1.2951

From the technical point of view, the USD/CAD currency pair trend is bearish. The MACD indicator is in the negative zone with no signs of reversal. Under such market conditions, it is better to look for sell deals from the resistance levels near the moving average, from 1.2718 or 1.2770 levels. Buy trades can be considered from the support level of 1.2638, but with additional confirmation in the form of a buyers’ initiative.

Alternative scenario: if the price breaks out through the 1.2770 resistance level and fixes above, the downtrend will likely be broken.