The Analytical Overview of the Main Currency Pairs on 2022.01.06

The EUR/USD currency pair

• Prev Open: 1.1281
• Prev Close: 1.1312
• % chg. over the last day: +0.27%

According to preliminary information, the ECB is ready to decrease its stimulus measures and raise rates if necessary. But that hasn’t happened yet. Given the high probability of the interest rate increase by the Fed in March, the dollar index will keep being stable, which will be negatively reflected in EUR/USD quotes (decrease of EUR/USD).

• 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. After the December FOMC minutes publication, the EUR/USD quotes started a sharp decline, as a more hawkish policy of the Fed led to a rise in the dollar index. 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.

• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US ISM Services PMI (m/m) at 17:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.3528
• Prev Close: 1.3555
• % chg. over the last day: +0.20%

The UK is approaching a daily sickness rate of 200,000. But the government is promising not to shut down the country entirely. This is a positive factor since companies have already begun to raise prices for goods and services due to concerns about inflation growth. Any additional restrictions may push inflation higher.

• Support levels: 1.3465, 1.3396, 1.3352, 1.3257, 1.3220
• Resistance levels: 1.3551, 1.3583, 1.3685

On the hourly time frame, the trend on GBP/USD is still bullish. But yesterday, the price formed a false breakout zone higher, which will now act as a good resistance area. 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 1.3551 or 1.3583.

Alternative scenario: if the price breaks down through the 1.3465 support level and consolidates below, the bearish scenario will likely resume.

• – UK Services PMI (m/m) at 11:30 (GMT+2).

The USD/JPY currency pair

• Prev Open: 116.13
• Prev Close: 116.09
• % chg. over the last day: -0.03%

Due to the rise in COVID-19 cases, Tokyo may take emergency measures and impose restrictions. Japanese Prime Minister Kishida said yesterday that once the country manages to get COVID-19 under control, the economy will see a vertical increase in all indicators.

• Support levels: 115.64, 115.34, 115.09, 113.74
• Resistance levels: 116.11, 116.50

The global trend on the USD/JPY currency pair is bullish. The price has started a corrective movement, and this is an excellent opportunity to open buy trades. It is best to look for buy deals from the support levels around the moving average. Sell positions are better to look from the resistance level of 116.11, but only with confirmation and short targets.

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

• – Japan Services PMI (m/m) at 02:30 (GMT+2).

The USD/CAD currency pair

• Prev Open: 1.2706
• Prev Close: 1.2755
• % chg. over the last day: +0.38%

Economists predict three interest rate hikes from the Central Bank of Canada, starting in April. But they are confident that the Canadian economy will show a decline in the first quarter due to the Omicron strain and new restrictions. Fundamentally, both the US Fed and the Central Bank of Canada intend to tighten monetary policy this year, so both currencies will have support from the central banks. As a result, investors should not hope for medium-term trends on the currency pair USD/CAD. In annual terms, quotes will be flat.

• Support levels: 1.2757, 1.2710, 1.2667, 1.2628
• Resistance levels: 1.2824, 1.2903, 1.2951

From the technical point of view, the USD/CAD currency pair has changed to bullish. After the December FOMC minutes publication, the USD/CAD quotes showed a sharp increase, as a more “hawkish” policy of the Fed led to a rise in the dollar index. The MACD indicator became positive, with no signs of reversal. Under such market conditions, it is better to look for buy trades from the support level 1.2757 or 1.2710, but with an additional confirmation in the form of a buyer’s initiative. Sell trades are best to consider from the resistance levels of higher time frames.

Alternative scenario: if the price breaks down through the 1.2667 support level and fixes below, the downtrend is likely to resume.