The Analytical Overview of the Main Currency Pairs on 2022.01.27

The EUR/USD currency pair

• Prev Open: 1.1300
• Prev Close: 1.1241
• % chg. over the last day: -0.52%

With the Fed tightening its monetary policy, the dollar index is strengthening, which negatively affects the European currency. The ECB is not going to raise rates in 2022, so the monetary policy of the Fed and the ECB is now looking in different directions. Fundamentally, a scenario with a decrease in EUR/USD quotes is predicted for the coming months.

• Support levels: 1.1186, 1.1145
• Resistance levels: 1.1244, 1.1263, 1.1308

From a technical point of view, the EUR/USD on the hour time frame is bearish. The selling pressure has increased, but the MACD indicator is still signaling divergence on the higher timeframes. Under such market conditions, it is better to consider sell trades from the resistance levels of 1.1244 or 1.1263. There are no optimal entry points for buy trades now. It is necessary to wait for the price to reach the nearest support level.

Alternative scenario: if the price breaks out through the 1.1308 resistance level and fixes above, the mid-term uptrend will be renewed.

• – US Core Durable Goods Orders (m/m) at 15:30 (GMT+2);
• – US GDP (q/q) at 15:30 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US Pending Home Sales (m/m) at 17:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.3497
• Prev Close: 1.3465
• % chg. over the last day: -0.24%

The British pound is also declining against a rising dollar index. Still, unlike the euro, the pound has fundamental support in the form of monetary policy from the Bank of England, which is going to raise its interest rate for the second time. With the IMF predicting the UK economy to grow in 2022, the GBP is likely to be more stable if the dollar strengthens.

• Support levels: 1.3431, 1.3352
• Resistance levels: 1.3491, 1.3524, 1.3583, 1.3633, 1.3662

On the hourly time frame, the GBP/USD trend is bearish. The MACD is negative again, but there is divergence towards buy deals. Under such market conditions, sell deals are best to look at from the resistance levels of 1.3491. Buy trades should be considered from the support level of 1.3431, but only with an additional confirmation in the form of buyers’ initiative.

Alternative scenario: if the price breaks out through the 1.3583 resistance level and consolidates above, the bearish scenario will be broken.

The USD/JPY currency pair

• Prev Open: 113.84
• Prev Close: 114.66
• % chg. over the last day: +0.72%

The monetary policy of the Bank of Japan is now aimed at making the Japanese Yen cheaper because of the maximum economic stimulus, while the Fed is tightening monetary policy. After the Fed meeting yesterday, the USD/JPY jumped on the back of the dollar index rise. Analysts expect the uptrend to continue in the coming months.

• Support levels: 114.37, 113.99, 113.76
• Resistance levels: 114.77, 115.03, 115.35

The global trend on the USD/JPY currency pair has changed to bullish. But the price has now reached the resistance level, so it is better to wait for a small pullback. It is best to buy from the support level of 114.37 or 113.99 on the lower timeframes. Sell positions are better to consider from the resistance level of 115.03, but only with confirmation in the form of sellers’ initiative, because fundamentally, the Japanese Yen will be getting cheaper.

Alternative scenario: if the price fixes below 113.76, the uptrend will likely be broken.

The USD/CAD currency pair

• Prev Open: 1.2624
• Prev Close: 1.2663
• % chg. over the last day: +0.31%

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. On Wednesday, oil rose and reached $90 a barrel for the first time in seven years, helped by tight supply and rising political tensions between Russia and Ukraine, raising fears of further disruptions in an already tight market. The Bank of Canada left interest rates unchanged but said the economic slowdown had passed and the economy is ready for the first rate hike at the next meeting. According to the forecasts, inflation will remain higher than previously predicted. The Bank of Canada expects consumer price growth to average 4.2% in 2022, up from the 3.4% forecast in October, and fall to 2.3% in 2023.

• Support levels: 1.2671, 1.2613, 1.2586, 1.2506
• Resistance levels: 1.2754, 1.2813

From a technical point of view, the USD/CAD currency pair is bullish. The MACD indicator has become inactive. Under such market conditions, it is better to look for buy trades from the support levels closer to the moving average. Sell trades are best to consider from the resistance levels of higher time frames, but only with additional confirmation in the form of a reverse initiative.

Alternative scenario: if the price breaks through the 1.2556 support level and fixes below, the downtrend is likely to resume.