The EUR/USD currency pair

• Prev Open: 1.1366
• Prev Close: 1.1441
• % chg. over the last day: +0.66%

Yesterday, at the end of the day, the EUR/USD quotes grew sharply against the background of the sharp decline in the USD index. However, investors should understand that this growth of the Euro is temporary, as the monetary policy of the US central bank and the ECB are now almost on different poles. The ECB keeps on actively stimulating the economy, though at a slower pace. The US Federal Reserve is already planning 3-4 interest rate hikes from March of this year, which gives clear support to the dollar index.

• Support levels: 1.1395, 1.1369, 1.1330, 1.1305, 1.1288, 1.1271
• Resistance levels: 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 bullish. The European currency is strengthening rapidly. However, the price is now strongly deviating from its averages, so for good entry longs, traders should expect a corrective movement downwards. Under such market conditions, it is better to consider sell deals after the price returns under the level of 1.1436, but with additional confirmation. Buy trades can be considered on the lower time frames from the support level 1.1395, but only with additional confirmation in the form of the buyers’ initiative.

Alternative scenario: if the price breaks down through the 1.1330 support level and fixes below, the mid-term uptrend will be broken.

• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US Producer Price Index (m/m) at 15:30 (GMT+2);
• – US FOMC Member Brainard’s Speech at 17:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.3635
• Prev Close: 1.3700
• % chg. over the last day: +0.48%

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, and this difference is increasing now. Analysts believe the British pound is aiming for 1.38 per US dollar since that is the price area from which the pound was falling when investors were disappointed by the Bank of England’s reluctance to raise the interest rate last fall.

• Support levels: 1.3667, 1.3641, 1.3581, 1.3551
• Resistance levels: 1.3708, 1.3753, 1.3786

On the hourly time frame, the GBP/USD trend is bullish. The price is steadily growing, but the MACD indicator is still signaling divergence on higher time frames. Under such market conditions, traders should consider buy positions from the support level of 1.3667 or 1.3641 but only with additional confirmation in the form of a buyers’ initiative. Sell trades can be considered on the lower time frames from the resistance level of 1.3708, but only with short targets.

Alternative scenario: if the price breaks down through the 1.3581 support level and consolidates below, the bearish scenario will likely resume.

The USD/JPY currency pair

• Prev Open: 115.28
• Prev Close: 114.62
• % chg. over the last day: -0.57%

Statistics suggest that business sentiment among Japan’s working class is increasing, while confidence among retailers is also rising ahead of the holidays. The economy is picking up thanks to a relatively low number of coronavirus cases. But it should be noted that the monetary policy of the central bank of Japan and the US Federal Reserve are now diametrically opposed, so the strengthening of the Japanese yen should be associated with a temporary decline in the dollar index. The analysts see growth in USDJPY quotes in 2022.

• Support levels: 114.40, 114.18, 113.95
• Resistance levels: 114.94, 115.09, 115.35, 115.64

The global USD/JPY currency pair trend has changed to bearish. The price confidently broke through the priority change level and consolidated lower. The MACD indicator has become negative without any signs of reversal. Buy deals are best to look from the support levels on the lower time frames near the daily support level. Sell trades can be considered from the resistance level of 114.94, but only with confirmation in the form of a sellers’ initiative.

Alternative scenario: if the price fixes above 115.35, the uptrend will likely resume.

The USD/CAD currency pair

• Prev Open: 1.2570
• Prev Close: 1.2505
• % chg. over the last day: -0.52%

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. Oil prices continue to rise, while the dollar index declined sharply on US CPI news yesterday. As a result, the Canadian dollar has strengthened substantially. Once the Fed starts to raise interest rates and/or reduce the Fed balance sheet, the dollar index will start to strengthen, which will cause oil prices to fall and the USD/CAD to rise.

• Support levels: 1.2502
• Resistance levels: 1.2558, 1.2628, 1.2678, 1.2715

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 on several timeframes. Under such market conditions it is better to look for buy trades on the lower time frames 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 1.2678 resistance level and fixes above, the downtrend will likely to be broken.