The Analytical Overview of the Main Currency Pairs on 2022.01.12

The EUR/USD currency pair

• Prev Open: 1.1322
• Prev Close: 1.1368
• % chg. over the last day: +0.41%

The head of the Bundesbank said yesterday that inflation would remain elevated in the country for longer than initially expected. At the same time, ECB officials have a different view and believe that inflation will even decrease in the region this year. Over the past week, the ECB’s balance sheet increased by 6.9 billion euros, much less than the previous week’s 53 billion euros. The reduction in the balance of the ECB has a positive effect on the strength of the European currency. However, in the long term, a rate hike by the Fed will provide strong support for the dollar index, which will be reflected in the EURUSD quotes by a fall.

• Support levels: 1.1330, 1.1305, 1.1288, 1.1271
• Resistance levels: 1.1369, 1.1385, 1.1436, 1.1535, 1.1613, 1.1667, 1.1717

From a technical point of view, the EUR/USD trend on the hour time frame is bullish. The European currency is strengthening. But the price is now strongly deviating from its averages, while the MACD is pointing to the divergence, traders should expect a corrective movement downwards. Under such market conditions, it is better to consider sell deals from the 1.1369 resistance level, but with additional confirmation. Buy trades can be considered on the lower time frames from the support level 1.1330, 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.

• – Eurozone Industrial Production (m/m) at 12:00 (GMT+2);
• – US Consumer Price Index (m/m) at 15:30 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.3570
• Prev Close: 1.3633
• % chg. over the last day: +0.46%

The British pound is strengthening for two main reasons. Firstly, the Bank of England raised its key interest rate in December and is likely to raise it again in February. Secondly, the 3-month LIBOR rates on the interbank lending market are two times higher than similar rates on the dollar index.

• Support levels: 1.3601, 1.3581, 1.3551, 1.3528, 1.3396, 1.3352, 1.3257, 1.3220
• Resistance levels: 1.3685

On the hourly time frame, the GBP/USD trend is bullish. The price is rising steadily, but the MACD indicator is still signaling divergence. Under such market conditions, traders should consider buy positions from the support level 1.3601 or 1.3581 but only with additional confirmation in the form of a buyers’ initiative. Sell trades can be considered from the resistance level of 1.3685.

Alternative scenario: if the price breaks down through the 1.3528 support level and consolidates below, the bearish scenario will likely resume.

The USD/JPY currency pair

• Prev Open: 115.15
• Prev Close: 115.29
• % chg. over the last day: +0.12%

Japan’s central bank governor Haruhiko Kuroda said today that the economy is on the road to recovery, accompanied by rising inflation. At the same time, Mr. Kuroda added that consumer inflation is likely to accelerate gradually due to rising energy costs and the expected increase in demand. The US consumer inflation data will be released today. Investors believe that inflation will exceed 7% in annual terms, which might lead to a sharp upward movement of the USD index, which in turn will be reflected in the USDJPY price growth.

• Support levels: 115.09, 113.74
• Resistance levels: 115.34, 115.64, 116.08, 116.50

The global USD/JPY currency pair trend is bullish. But the price is trading near the priority change level. The MACD indicator has become inactive. It is best to look for buy deals from the support levels on the lower time frames, near the priority change level. Sell positions are better to look from the resistance level of 115.64, but only with confirmation and with short targets.

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

• – Japan BOJ Gov Kuroda’s Speech at 03:00 (GMT+2).

The USD/CAD currency pair

• Prev Open: 1.2675
• Prev Close: 1.2571
• % chg. over the last day: -0.82%

The Canadian dollar is a commodity currency, so it depends not only on the monetary policy of the Bank of Canada but also on the oil prices and the dollar index. Yesterday, oil prices jumped 4% ahead of weekly data on inventories and US consumer price index data. The rise in oil prices strengthens the Canadian dollar, which leads to a decline in USD/CAD quotes.

• Support levels: 1.2502
• Resistance levels: 1.2628, 1.2689, 1.2715, 1.2792, 1.2824, 1.2903, 1.2951

From a technical point of view, the USD/CAD currency pair is bearish. The price is steadily declining. But the MACD indicator began to signal a divergence. Under such market conditions, it is better to look for buy trades from 1.2503. It is best to look for sell deals from the resistance levels around the moving average or from the descending local trend line.

Alternative scenario: if the price breaks through the 1.2689 resistance level and fixes above, the downtrend is likely to be broken.