The Analytical Overview of the Main Currency Pairs on 2022.02.03

The EUR/USD currency pair

• Prev Open: 1.1269
• Prev Close: 1.1304
• % chg. over the last day: +0.31%

Despite declining inflation in countries such as Spain and Germany, the Eurozone consumer price index increased unexpectedly in January. Inflation was 5.1% (previous 5.0%) in annual terms, more than double the ECB’s target of 2%. Investors now expect the ECB to become more aggressive in its monetary policy, but analysts do not share this view and believe the ECB will leave its policy unchanged. The next ECB meeting will be held today. On Wednesday, the ADP data showed that the US private sector jobs declined by 301,000 last month, much worse than analysts expected.

• Support levels: 1.1275, 1.1253, 1.1233
• Resistance levels: 1.1321, 1.1384

From the technical point of view, the EUR/USD on the hourly time frame has changed to bullish. The price showed strong growth for three days in a row and finally broke through and consolidated above the priority change level. Under such market conditions, buy trades should be looked for after a slight pullback because the price has deviated strongly from the average values. Sell trades are better to look for on intraday time frames but with short targets.

Alternative scenario: if the price breaks out through the 1.1203 support level and fixes below, the mid-term uptrend is likely to be broken.

• – Eurozone Services PMI (m/m) at 11:00 (GMT+2);
• – Eurozone Producer Price Index (m/m) at 12:00 (GMT+2);
• – Eurozone ECB Monetary Policy Statement (m/m) at 14:45 (GMT+2);
• – Eurozone ECB Interest Rate Decision (m/m) at 14:45 (GMT+2);
• – Eurozone ECB Press Conference (m/m) at 15:30 (GMT+2);
• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US ISM Services PMI (m/m) at 17:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.3515
• Prev Close: 1.3576
• % chg. over the last day: +0.45%

Today the Bank of England will hold its next monetary policy meeting. Analysts expect the Bank of England to raise the interest rate again by 0.25% and report its plans to withdraw economic stimulus gradually. In December, the Bank of England forecast inflation to peak at around 6% in April, but price growth this month jumped more than expected to 5.4%, the highest in almost 30 years. The labor market also tightened. An increase in interest rates, as a rule, leads to a rise in the national currency in the medium term.

• Support levels: 1.3524, 1.3457, 1.3434
• Resistance levels: 1.3583, 1.3619, 1.3639, 1.3662

On the hourly time frame, the trend on GBP/USD has changed to bullish. The price confidently broke through the priority change level and consolidated higher. Under such market conditions, buy trades should be looked for after a slight pullback because the price has deviated strongly from the average values. Sell trades are better to look for on intraday time frames but with short targets.

Alternative scenario: if the price breaks out through the 1.3434 support level and consolidates below, the bullish scenario will be broken.

• – UK Services PMI (m/m) at 11:30 (GMT+2);
• – UK BoE Inflation Report (m/m) at 14:00 (GMT+2);
• – UK BoE Interest Rate Decision (m/m) at 14:00 (GMT+2);
• – UK BoE Monetary Policy Statement (m/m) at 14:00 (GMT+2);
• – UK BoE Gov Bailey’s Speech at 16:15 (GMT+2).

The USD/JPY currency pair

• Prev Open: 114.64
• Prev Close: 114.42
• % chg. over the last day: -0.19%

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. But amid a drop in the dollar index, the Japanese yen has strengthened over the past three days. Analysts remain confident that USD/JPY will rise this year.

• Support levels: 114.37
• Resistance levels: 114.69, 114.87, 115.19

The global trend on the USD/JPY currency pair is bullish. Yesterday, the price tried to break down through the priority change level but failed to consolidate lower. Now a false breakout has been formed. Under such market conditions, it is better to buy on the lower time frames from the priority change level. There are no optimal entry points for sell deals right now.

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

• – Japan Services PMI (m/m) at 02:30 (GMT+2).

The USD/CAD currency pair

• Prev Open: 1.2682
• Prev Close: 1.2666
• % chg. over the last day: -0.13%

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. As expected, OPEC+ countries did not change their moderate production plan, despite pressure from major consumers in favor of increased production. The US crude oil inventories fell by another 1 million barrels last week. Supply shortage and geopolitical tensions in Eastern Europe and the Middle East keep oil high.

• Support levels: 1.2649, 1.2613, 1.2586, 1.2506
• Resistance levels: 1.2729, 1.2792

From a technical point of view, the USD/CAD currency pair is bullish. The price is trading in a flat near the moving average. The MACD indicator has become inactive. Under such market conditions, it is better to look for buy trades on the lower time frames from the support levels of 1.2649. There are no optimal entry points to sell deals now.

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