The Analytical Overview of the Main Currency Pairs on 2022.01.19

The EUR/USD currency pair

• Prev Open: 1.1406
• Prev Close: 1.1327
• % chg. over the last day: -0.70%

According to data from the ZEW Institute, economic sentiment in Germany and the Eurozone has improved significantly over the past month. At the same time, inflation expectations have declined. More than half of analysts expect inflation to decline in the region over the next six months. With a high probability, the ECB will not change its monetary policy before the end of the year, so the euro has no fundamental support, unlike the dollar index, where the US Federal Reserve will hike rates soon.

• Support levels: 1.1320, 1.1305, 1.1288
• Resistance levels: 1.1356, 1.1384, 1.1405

From a technical point of view, the EUR/USD on the hour time frame has changed to bearish. The price broke through the priority change level and consolidated lower. The MACD indicator became negative, with no signs of a reversal. Under such market conditions, it is better to consider sell trades from the resistance levels near the moving average, as the price has deviated strongly from the average values. Buy trades can be considered on the lower time frames from the support level of 1.1320 or 1.1305, but only with additional confirmation in the form of a buyers’ initiative.

Alternative scenario: if the price breaks out through the 1.1405 resistance level and fixes above, the mid-term uptrend will be renewed.

• – German Consumer Price Index (m/m) at 09:00 (GMT+2);
• – US Building Permits (m/m) at 15:30 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.3642
• Prev Close: 1.3597
• % chg. over the last day: -0.33%

Labor market statistics showed that the UK was facing wage cuts. At the same time, the unemployment rate fell from 4.2% to 4.1%. Inflation data will be released today. Analysts expect inflation in December to rise to its highest level in a decade. The Bank of England has warned that inflation could peak close to 6% in April, up from the current level of 5.1%. Rising inflation will further increase the probability of an interest rate hike at the next Bank of England meeting.

• Support levels: 1.3581, 1.3551, 1.3479
• Resistance levels: 1.3620, 1.3661, 1.3689, 1.3715

On the hourly time frame, the GBP/USD trend has changed to bearish. The price broke through the priority change level and consolidated lower. The MACD indicator became negative, with no signs of a reversal. Under such market conditions, sell deals are best to look at from the resistance level of 1.3620 or 1.3661. Buy trades should be considered from the support level of 1.3580, but only with additional confirmation in the form of buyers’ initiative.

Alternative scenario: if the price breaks out through the 1.3661 resistance level and consolidates above, the bearish scenario will be broken.

• – UK Consumer Price Index (m/m) at 09:00 (GMT+2);
• – UK BoE Gov Bailey Speaks at 16:15 (GMT+2).

The USD/JPY currency pair

• Prev Open: 114.59
• Prev Close: 114.58
• % chg. over the last day: -0.01%

Prime Minister Kishida intends to declare a state of emergency in certain regions of Japan from January 21 to February 13. This is likely to lead to a slowdown in economic activity. But the Japanese Yen is strengthening now due to investors returning to safe-haven currencies as traders start to fear another hawkish surprise from the Federal Reserve, which is expected to meet next week.

• Support levels: 114.25, 113.99, 113.72
• Resistance levels: 114.63, 115.04, 115.35, 115.64

The global trend on the USD/JPY currency pair is bearish. The sellers managed to protect the priority change level. Buy deals are best to look at the lower time frames from the nearest support levels. Sell trades can be considered from the resistance level of 114.63, 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.

The USD/CAD currency pair

• Prev Open: 1.2514
• Prev Close: 1.2511
• % chg. over the last day: -0.02%

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. The price of Brent oil reached $88 per barrel for the first time since October 2014. Analysts point out that the demand for oil in the last three months was higher than previously expected. The fundamental situation is now in favor of the growth of oil prices. Therefore, with the Bank of Canada also set to hike rates, the Canadian dollar will be strong.

• 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 is now trading in a corridor with a range of 1.2490-1.2558. The MACD indicator has become inactive. Under such market conditions, it is better to look for buy deals from the level of 1.2490 on the lower time frames. It is better to consider sell deals from the upper border of the range of 1.2558.

Alternative scenario: if the price breaks through the 1.2575 resistance level and fixes above, the downtrend is likely to be broken.

• – Canada Consumer Price Index (m/m) at 15:30 (GMT+2).