The Analytical Overview of the Main Currency Pairs on 2022.01.31

The EUR/USD currency pair

• Prev Open: 1.1142
• Prev Close: 1.1147
• % chg. over the last day: +0.04%

Statistical data showed GDP growth in the major Eurozone economies, except Germany. French economy added 0.7% in Q4 compared to the previous three months. Analysts, on average, predicted an increase of 0.5%. The GDP of Spain increased by 2% against a growth forecast of 1.4%. German GDP decreased by 0.7% against expectations of decline by 0.3%.

• Support levels: 1.1145
• Resistance levels: 1.1186, 1.1215, 1.1263, 1.1308

From a technical point of view, the EUR/USD on the hour time frame is bearish. The price has found the support level and showed a buyer’s initiative. However, it doesn’t mean that a reversal would happen. The downtrend may resume from the nearest resistance level. Under such market conditions, it is better to consider sell trades after a small pullback, as the price has strongly deviated from the average values. There are no optimal entry points for buy deals now.

Alternative scenario: if the price breaks out through the 1.1263 resistance level and fixes above, the mid-term uptrend will be renewed.

• – Spanish Consumer Price Index (m/m) at 10:00 (GMT+2);
• – Eurozone GDP (q/q) at 12:00 (GMT+2);
• – German Consumer Price Index (m/m) at 15:00 (GMT+2);
• – US Chicago PMI (m/m) at 16:45 (GMT+2);
• – US FOMC Member George’s Speech at 19:40 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.3373
• Prev Close: 1.3392
• % chg. over the last day: +0.14%

The Bank of England will hold its meeting this week on Thursday, where analysts forecast a 0.25% interest rate hike. Such a move will directly support the British pound, but before that time, the price may show another wave of decline amid a strengthening US dollar due to the withdrawal of dollar liquidity from the financial system.

• Support levels: 1.3352
• Resistance levels: 1.3415, 1.3468, 1.3524, 1.3583, 1.3633, 1.3662

On the hourly time frame, the trend on GBP/USD is bearish. The MACD is negative, but there is divergence towards buy deals. Under such market conditions, sell deals are best to look at from the resistance levels of 1.3468. Buy trades should be considered from the support level of 1.3352, but only with an additional confirmation in the form of buyers’ initiative.

Alternative scenario: if the price breaks out through the 1.3524 resistance level and consolidates above, the bearish scenario will be broken

The USD/JPY currency pair

• Prev Open: 115.35
• Prev Close: 115.22
• % chg. over the last day: -0.11%

On Friday, Bank of Japan Governor Haruhiko Kuroda said that it was premature to raise the bank’s target rate. 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. Industrial production in Japan declined in December compared to the previous month. At the same time, retail sales increased for the third month in a row.

• Support levels: 115.05, 114.77, 114.37
• Resistance levels: 115.55, 115.73

The global trend on the USD/JPY currency pair is bullish. But the price has now deviated strongly from the average values and reached the resistance level, so it is better to wait for a small pullback. It is best to buy from the support level of 114.77 or 115.05 on the lower time frames. Sell positions are better to look at lower time frames, but only with confirmation in the form of a sellers’ initiative.

Alternative scenario: if the price fixes below 114.37, the uptrend will likely be broken.

• – Japan Retail Sales at 01:50 (GMT+2);
• – Japan Industrial Production (m/m) at 01:50 (GMT+2).

The USD/CAD currency pair

• Prev Open: 1.2739
• Prev Close: 1.2766
• % chg. over the last day: +0.21%

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. Fundamentally, both the dollar index and oil quotes are inclined to grow now, so USD/CAD will be traded in a wide corridor in the mid-term perspective.

• Support levels: 1.2726, 1.2679, 1.2613, 1.2586, 1.2506
• Resistance levels: 1.2792

From a technical point of view, the USD/CAD currency pair is bullish. But the MACD indicator is signaling a divergence towards sales, which means that traders should expect a local corrective movement down. Under such market conditions, it is better to look for buy trades from the support levels closer to the moving average. The level of 1.2680 is the best for long deals, but the price can also react to 1.2726. There are no optimal entry points for sell deals right now.

Alternative scenario: if the price breaks through the 1.2613 support level and fixes below, the downtrend is likely to resume.