The Analytical Overview of the Main Currency Pairs on 2022.03.07

The EUR/USD currency pair

• Prev Open: 1.1064
• Prev Close: 1.0926
• % chg. over the last day: -1.01%

The 4% plunge of the euro over the past two weeks and the sharp drop in European indices last week showed how much the European economy depends on Russian energy, and this is not the case when this dependence can be quickly changed or replaced. For now, analysts see a bleak outlook for European economic performance.

• Support levels: 1.0823, 1.0633
• Resistance levels: 1.0921, 1.1001, 1.1061, 1.1213

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. The MACD indicator is in the negative area, but there are signs of divergence towards purchases on several timeframes. The price has reached the support level of the higher time frame. Under such market conditions, it is best to look for sell trades on intraday time frames from the resistance level of 1.10921. Buy trades should be considered from the support level of 1.0823, but only after additional confirmation in the form of a buyers’ initiative.

Alternative scenario: if the price breaks out through the 1.1061 resistance level and fixes above, the mid-term uptrend will likely resume.

• – German Retail Sales (m/m) at 09:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.3346
• Prev Close: 1.3231
• % chg. over the last day: -0.87%

The war in Ukraine and harsh Western sanctions on Russia have caused Russian assets to fall and Russian export commodities such as precious metals, oil, and gas to spike. The global economy is already struggling with inflationary pressures. This is a negative factor for European countries. The UK economy is not so dependent on Russian energy. Nevertheless, Europe’s declining economic performance negatively affects the British currency as investors buy US dollars as a defensive asset.

• Support levels: 1.3175, 1.3091
• Resistance levels: 1.3274, 1.3315, 1.3418

On the hourly time frame, the trend on the GBP/USD currency pair is bearish. Volatility is high, sellers’ pressure is still there, but the MACD indicator shows a divergence towards long deals. Under such market conditions, buy trades should be considered from the support level of 1.3175, but it is better with confirmation. The resistance level of 1.3274 is good for sell deals, but only with additional confirmation in the form of the sellers’ initiative.

Alternative scenario: if the price breaks out through the 1.3418 resistance level and fixes above, the mid-term uptrend will likely resume.

The USD/JPY currency pair

• Prev Open: 115.45
• Prev Close: 114.82
• % chg. over the last day: -0.54%

The Japanese yen and the US dollar are safe-haven currencies. Since there are currently no prospects for ending the war in Ukraine, investors are buying the yen as a protective asset against inflationary risks. It should be noted that the policy of the central bank of Japan is now aimed at making the JPY cheaper (USD/JPY growth), so as soon as there are signs of a de-escalation of the conflict, the JPY will not get stronger.

• Support levels: 114.71, 114.41
• Resistance levels: 115.25, 115.69, 116.32

The medium-term trend on the USD/JPY currency pair is bullish, but the structure is flatter, as the price has no single dynamics and the price is trading in a wide corridor. The MACD indicator has become negative. Under such market conditions, it is best to look for buy deals on the lower time frames from the support level of 114.71, but with additional confirmation. For sell deals, traders should consider the resistance level of 115.25, but it is better to wait for the reaction of sellers.

Alternative scenario: if the price fixes below 114.71, the uptrend will likely be broken.

The USD/CAD currency pair

• Prev Open: 1.2672
• Prev Close: 1.2727
• % chg. over the last day: -0.43%

The Canadian dollar is a commodity currency, so it is highly dependent not only on the monetary policy of the Bank of Canada but also on the dynamics of oil prices and the dollar index. The fundamental picture now is that both the dollar index and oil prices will grow. Investors are buying the dollar index as a defensive asset during the war. This month, the Fed will tighten monetary policy, providing additional support to the US currency. Oil prices could rise even higher as investors continue to hold on to oil contracts fearing supply disruptions from Russia, delays in negotiations with Iran, and a potential return of Iranian oil to world markets.

• Support levels: 1.2653, 1.2555, 1.2517
• Resistance levels: 1.2797, 1.2820, 1.2877

From the technical point of view, the USD/CAD currency pair trend has changed to bullish. The price consolidated above the moving averages and broke through an important resistance level. The MACD indicator has become inactive. It is worth trading only with short targets because both oil and the dollar index are inclined to grow now. Under such market conditions, it is better to look for buy deals on the lower time frames from the support level of 1.2653, but it is better with additional confirmation. For sell deals, it is better to consider the resistance level of 1.2797.

Alternative scenario: if the price breaks through and consolidates below 1.2653, the downtrend will likely resume.