The Analytical Overview of the Main Currency Pairs on 2022.02.07

The EUR/USD currency pair

• Prev Open: 1.1434
• Prev Close: 1.1450
• % chg. over the last day: +0.14%

Klaas Knot, president of the Dutch Central Bank and a member of the European Central Bank’s Governing Council, said on Sunday that he expects the ECB to raise interest rates in the fourth quarter of this year. He supports cutting the Eurozone central bank’s asset purchase program as quickly as possible. In this case, the ECB must first complete its asset purchase programs, which must be reduced by 20 billion euros ($22.89 billion) per month by the fourth quarter.

• Support levels: 1.1414, 1.1329, 1.1275
• Resistance levels: 1.1481, 1.1534, 1.1617

From the technical point of view, the EUR/USD on the hour time frame is bullish. With the ECB starting to think about a rate hike this year, the euro reacted immediately with a rise. Under such market conditions, buy trades should be looked for after a small pullback because the price has deviated strongly from the average values. Sell trades are better to look for on intraday time frames, but only with short targets.

Alternative scenario: if the price breaks out through the 1.1275 support level and fixes below, the mid-term uptrend is likely to be broken.

• – German Industrial Production (m/m) at 09:00 (GMT+2);
• – ECB President Lagarde’s Speech at 17:45 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.3595
• Prev Close: 1.3526
• % chg. over the last day: -0.51%

The Bank of England has already implemented two rate hikes of 0.25% and is set to make a third rate hike in March. Thus, the British pound will have fundamental support now as the national exchange rate strengthens in the medium term as interest rates rise. However, it should not be forgotten that the Fed has been preparing to raise the interest rates from March and may do it more aggressively, so the British pound will not have a big advantage over the dollar.

• 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 is bullish. But the price has now locally corrected to the moving average, with the MACD indicator turning negative. Under such market conditions, buy trades should be looked at from the support level 1.3475. There are no optimal entry points for sell deals now.

Alternative scenario: if the price breaks out through the 1.3475 support level and consolidates below, the bullish scenario will be broken.

The USD/JPY currency pair

• Prev Open: 114.97
• Prev Close: 115.18
• % chg. over the last day: +0.18%

The monetary policy of the Bank of Japan is now aimed at making the JPY cheaper because of the maximum stimulus, while the Fed is tightening monetary policy. The Japanese yen can get a boost only in 2 cases. The first is if the Bank of Japan tightens its monetary policy. The second one is that investors will buy the yen as a safe-haven asset in case of various panic moods in the financial markets like it happened earlier this year.

• Support levels: 115.15, 114.96, 114.59
• Resistance levels: 115.73, 116.08

The global trend on the USD/JPY currency pair is bullish. The price has once again started to show a growth dynamic. Under such market conditions, it is best to look for buy deals on the lower time frames from the support level of 114.96. Sell potions can be looked for at the nearest resistance levels, but only with short targets and with additional confirmation.

Alternative scenario: if the price fixes below 114.59, the uptrend will likely be broken.

The USD/CAD currency pair

• Prev Open: 1.2673
• Prev Close: 1.2763
• % chg. over the last day: +1.00%

The Canadian dollar is a commodity currency, so it depends not only on the monetary policy of the Bank of Canada but also on oil prices and the dollar index. Oil prices added another 2% on Friday, but at the same time, the dollar index strengthened, and the Canadian labor market statistical data turned out to be disappointing, which provoked the increase in USD/CAD quotes. Now the fundamental picture is that both the dollar index and the oil prices will rise. That is why it is not worth waiting for the USD/CAD to show a medium-term trend at the moment.

• Support levels: 1.2729, 1.2670, 1.2649, 1.2586, 1.2506
• Resistance levels: 1.2792

From a technical point of view, the USD/CAD currency pair is bullish. The price has been trading flat for more than three days, but on Friday, there was an upward impulse. Under such market conditions, it is better to look for buy trades on the lower time frames from the support levels of 1.2729. There are no optimal entry points to sell deals now.

Alternative scenario: if the price breaks through the 1.2649 support level and fixes below, the downtrend is likely to resume.