The Analytical Overview of the Main Currency Pairs on 2022.01.05

The EUR/USD currency pair

• Prev Open: 1.1296
• Prev Close: 1.1287
• % chg. over the last day: -0.07%

In November, German retail sales increased unexpectedly to a record annual high despite renewed COVID-19 restrictions that are holding back a recovery in consumer activity in Europe’s largest economy. The unemployment rate in Germany fell from 5.3% to 5.2%.

• Support levels: 1.1288, 1.1271
• Resistance levels: 1.1336, 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 is still bullish. Due to the sharp drop in the quotes, there is a high probability that the trend will change back to bearish. Yesterday, the price tried to break through the priority change level but failed to consolidate lower. The buyers managed to push the price higher. Under such market conditions, it is better to consider sell deals from the 1.1336 resistance level, but with additional confirmation. Buy trades can be considered on the lower time frames from the support level 1.1288, 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 Services PMI (m/m) at 10:55 (GMT+2);
• – Eurozone Services PMI (m/m) at 11:00 (GMT+2);
• – US ADP Non-Farm Employment Change (m/m) at 15:15 (GMT+2);
• – US FOMC Meeting Minutes at 21:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.3471
• Prev Close: 1.3528
• % chg. over the last day: +0.42%

In December, manufacturing growth in the UK was slightly faster than initially anticipated, and supply problems related to the pandemic eased slightly. Rob Dobson, director of IHS Markit, said the economic recovery is still lower than in mid-2021 due to continued supply chain constraints and weak exports, which have been affected by Brexit-related problems and the prospect of further COVID-19 restrictions.

• Support levels: 1.3465, 1.3396, 1.3352, 1.3257, 1.3220
• Resistance levels: 1.3549, 1.3575, 1.3685

On the hourly time frame, the trend on GBP/USD is still bullish. The price is now trading in a wide corridor. The MACD indicator is still signaling divergence. Under such market conditions, traders should consider buy positions from the 1.3465 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 only after a false breakout.

Alternative scenario: if the price breaks down through the 1.3396 support level and consolidates below, the bearish scenario will likely resume.

The USD/JPY currency pair

• Prev Open: 115.31
• Prev Close: 116.12
• % chg. over the last day: +0.70%

The Japanese yen fell to a 5-year low against the dollar. The medium-term uptrend on the USD/JPY currency pair will continue as the monetary policies of the Japanese and US central banks are now diametrically opposed. The tightening policy of the US Federal Reserve will help the dollar index strengthen, while the easing stimulation policy of the Central Bank of Japan will make the yen weaker.

• Support levels: 115.78, 115.34, 115.09, 113.74
• Resistance levels: 116.50

The global trend on the USD/JPY currency pair is bullish. Yesterday, the price easily broke through the daily resistance level and fixed higher. But at the moment, 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. It is better to look for sell positions from the next resistance level of 116.50.

Alternative scenario: if the price fixes below 115.09, the uptrend will likely be broken.

The USD/CAD currency pair

• Prev Open: 1.2741
• Prev Close: 1.2703
• % chg. over the last day: -0.30%

In December, Canada’s manufacturing sector activity grew at its slowest pace in five months as material shortages, and delivery delays held back output. Canada’s PMI for the manufacturing sector declined to 56.5 from 57.2 in November. A rapidly spreading variant of the Omicron coronavirus could be an additional challenge for the industry. But since the Canadian dollar is a commodity currency, rising energy prices positively affect the national exchange rate.

• Support levels: 1.2667, 1.2628
• Resistance levels: 1.2723, 1.2770, 1.2824, 1.2903, 1.2951

From the technical point of view, the USD/CAD currency pair trend is bearish. The sellers managed to protect the priority change level. The MACD indicator has become inactive. Under such market conditions, it is better to look for sell deals from the resistance levels near the moving average. Buy trades can be considered from the support level of 1.2667, 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.

• – Canada Building Permits (m/m) at 15:30 (GMT+2);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+2).