The Analytical Overview of the Main Currency Pairs on 2022.01.18

The EUR/USD currency pair

• Prev Open: 1.1414
• Prev Close: 1.1406
• % chg. over the last day: -0.07%

The ECB has started to talk about a 10-20 basis point interest rate hike by September-December 2022. So far, it is only a rumor, but markets may put such scenarios in the price ahead of time. But analysts are confident that if inflation in the Eurozone does not grow or be accelerated by a slow pace, given the conservatism of the ECB, no changes to monetary policy should be expected before the end of 2022.

• Support levels: 1.1394, 1.1369, 1.1330, 1.1305, 1.1288, 1.1271
• Resistance levels: 1.1436, 1.1457, 1.1514, 1.1613, 1.1667, 1.1717

From a technical point of view, the EUR/USD on the hour time frame is bullish. On Friday, a correctional movement began, and yesterday, the price traded flat almost all day since it was a day off in the USA. The MACD indicator is in the negative zone, but there are signs of divergence. Under such market conditions, it is better to consider sell deals from the daily resistance level of 1.1436, but with additional confirmation. Buy trades can be considered on the lower time frames from the support level 1.1394 or 1.1369, but only with additional confirmation in the form of the buyers’ initiative.

Alternative scenario: if the price breaks down through the 1.1369 support level and fixes below, the mid-term uptrend will be broken.

• – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+2);
• – US NY Empire State Manufacturing Index (m/m) at 15:30 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.3668
• Prev Close: 1.3644
• % chg. over the last day: -0.18%

In the UK, expectations are growing that the Bank of England will make another interest rate hike at its meeting in February. According to ING analysts, any weakening of the British pound will be contained due to Prime Minister Boris Johnson’s calls to resign.

• Support levels: 1.3633, 1.3581, 1.3551
• Resistance levels: 1.3667, 1.3708, 1.3732, 1.3753, 1.3786

On the hourly time frame, the GBP/USD trend is bullish. But on Friday, a correctional movement began, and today at the opening, the price reached the priority change level. The MACD indicator is in the negative zone, but there are signs of divergence towards long positions. Under such market conditions, traders should consider buy positions from the support level of 1.3633 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 1.3633 support level and consolidates below, the bearish scenario will likely resume.

• – UK Average Earnings Index (m/m) at 09:00 (GMT+2);
• – UK Claimant Count Change (m/m) at 09:00 (GMT+2);
• – UK Unemployment Rate (m/m) at 09:00 (GMT+2).

The USD/JPY currency pair

• Prev Open: 114.11
• Prev Close: 114.60
• % chg. over the last day: +0.43%

The Bank of Japan raised its inflation forecasts at its meeting on Tuesday, but as inflation is projected to be well below the 2% target in the coming years, it decided to keep monetary policy ultra-soft.

• Support levels: 114.55, 113.99, 113.72, 114.18, 113.95
• Resistance levels: 115.04, 115.35, 115.64

The global trend on the USD/JPY currency pair is bearish. But in the background of the JPY’s fall after the BOJ meeting, the price has reached the priority change level. Buy deals are best to look after the breakout of the priority change level of 115.04. Sell trades can be considered from the priority change level, but only with confirmation in the form of a sellers’ initiative, as the monetary policy of the Bank of Japan is now aimed at decreasing the Japanese yen.

Alternative scenario: if the price fixes above 115.04, the uptrend will likely resume.

• – Japan BoJ Interest Rate Decision (Tentative);
• – Japan BoJ Monetary Policy Statement (Tentative);
• – Japan BoJ Outlook Report (Tentative);
• – Japan Industrial Production (m/m) at 06:30 (GMT+2);
• – Japan BoJ Press Conference (Tentative).

The USD/CAD currency pair

• Prev Open: 1.2535
• Prev Close: 1.2516
• % chg. over the last day: -0.15%

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, Brent crude oil increased to its highest level in seven years as geopolitical tensions in the Middle East intensified and concerns over the impact of the Omicron virus on-demand eased. Yesterday, the Canadian dollar strengthened as a result of the rise in the value of oil. Analysts are now revising their 2022 and 2023 oil forecasts upwards, which may provide additional support for the Canadian currency.

• Support levels: 1.2490, 1.2427
• 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 has found support on the higher time frame, the rebound occurred. The MACD indicator became inactive. Under such market conditions, it is better to look for buy trades on the lower time frames from the 1.2490 support level. Sell deals; it is better to look from the resistance levels around the moving average.

Alternative scenario: if the price breaks through the 1.2628 resistance level and fixes above, the downtrend is likely to be broken.