The Analytical Overview of the Main Currency Pairs on 2022.01.20

The EUR/USD currency pair

• Prev Open: 1.1319
• Prev Close: 1.1342
• % chg. over the last day: +0.20%

Germany’s consumer price index increased by 0.5% in December to 3.1% in annual terms. This is the highest level since 1993. At the same time, the ECB balance sheet continues to increase. Aggregate assets rose by another 20.7 billion euros. The ECB continues to stimulate the region’s economy actively. On Wednesday, German 10-year bond yields increased above 0% for the first time since 2019, providing support for the euro. Eurozone inflation data will be released today. Analysts expect consumer prices to remain at the same level.

• 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 is bearish. The MACD indicator became inactive, 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. 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 Producer price index (m/m) at 09:00 (GMT+2);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+2);
• – Eurozone ECB Monetary Policy Statement at 14:30 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+2);
• – US Existing Home Sales (m/m) at 17:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.3588
• Prev Close: 1.3612
• % chg. over the last day: +0.18%

The UK inflation rate increased from 5.1% to 5.4% in annual terms; it’s a 30-year high. The sharp rise in the CPI is due to higher prices for products made in British factories, energy prices, and rising food prices. Analysts believe that sufficiently sustainable indicators of economic activity and high inflation are likely to convince the Bank of England to raise rates by another 25 bps in February to 0.5%.

• Support levels: 1.3602, 1.3581, 1.3551, 1.3479
• Resistance levels: 1.3661, 1.3689, 1.3715

On the hourly time frame, the GBP/USD trend is bearish. The MACD indicator became inactive, with no signs of a reversal. Under such market conditions, sell deals are best to look at from the resistance level of 1.3661. Buy trades should be considered from the support level of 1.3602, 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.

The USD/JPY currency pair

• Prev Open: 114.58
• Prev Close: 114.32
• % chg. over the last day: -0.23%

Japan’s economic performance is improving despite an increase in Omicron disease. Exports increased by 17.5% in December compared with the previous year. Auto export growth accelerated to 17.5% from 4.1% in November. But despite the “reviving” tendencies of the Japanese economy, experts think that new restrictions, increase in raw material prices, and the stimulating policy of the Bank of Japan will lead to a JPY decline in the coming months.

• 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: 1.2512
• Prev Close: 1.2514
• % 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 oil price is traded near its maximum, and the fundamental situation is now in favor of the oil price growth. Inflation in Canada increased to a new 30-year high of 4.8% in annual terms. This adds to analysts’ confidence that Canada’s central bank will raise its interest rate in the near term.

• Support levels: 1.2483, 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 1.2483-1.2558. The MACD indicator has become inactive. Under such market conditions, it is better to look for buy deals from the level of 1.2483 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.

• – US Crude Oil Reserves (w/w) at 18:00 (GMT+2).