InvestMacro

The EUR/USD currency pair

• Prev Open: 1.1321
• Prev Close: 1.1368
• % chg. over the last day: +0.42%

The European currency lost more than 7% against the dollar in a year, while the ECB has adhered to its ultra-soft monetary policy all along. The head of the Association of Senior Hospital Physicians in Germany believes that the coronavirus will no longer threaten the health care system, as the dominant variant is becoming the Omicron strain, which in most cases is easily tolerated. Analysts agree, believing that restrictions across Europe will subside as we approach spring. But economic indicators for the largest European economies are expected to be weak in December due to the introduction of restrictions.

• Support levels: 1.1336, 1.1288, 1.1271
• Resistance levels: 1.1368, 1.1369, 1.1436, 1.1535, 1.1613, 1.1667, 1.1717

From the technical point of view, the EUR/USD on the hour time frame has changed to bullish. On the last day of the year, the price was able to break through the priority change level and close higher. The MACD indicator is inactive. The buyers need to keep the price above the moving average line. Otherwise, a false breakout of the higher timeframe will occur. It is better to consider sell deals from the 1.1368 resistance level, but with additional confirmation. Buy trades can be considered on the lower time frames from the support level 1.1336, but only with additional confirmation in the form of the buyers’ initiative.

Alternative scenario: if the price breaks down through the 1.1288 support level and fixes below, the mid-term uptrend will be broken.

• – German Manufacturing PMI (m/m) at 10:55 (GMT+2);
• – Eurozone Manufacturing PMI (m/m) at 11:00 (GMT+2);
• – US Manufacturing PMI (m/m) at 16:45 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.3491
• Prev Close: 1.3523
• % chg. over the last day: +0.23%

According to the year’s results, the British currency took second place in terms of stability. Over the year, the pound declined by just over 1% against the dollar, remaining at its highest level against the euro since February 2020. Analysts believe that the British pound will remain a stable currency this year as well, as it is fundamentally supported by the policy of the central bank of England and rising Brent oil prices.

• Support levels: 1.3492, 1.3443, 1.3362, 1.3301, 1.3277, 1.3220
• Resistance levels: 1.3549, 1.3575, 1.3685

On the hourly time frame, the trend on GBP/USD is still bullish. But the MACD indicator is showing divergence on several timeframes. A technical correction may occur soon. Under such market conditions, traders should consider buy positions from the 1.3443 support level but only with additional confirmation in the form of a buyers’ initiative. Sell trades can be considered from the resistance level of 1.3549, but it is better to wait for the sellers’ initiative or a false breakout for confirmation.

Alternative scenario: if the price breaks down through the 1.3362 support level and consolidates below, the bearish scenario will likely resume.

The USD/JPY currency pair

• Prev Open: 115.03
• Prev Close: 115.10
• % chg. over the last day: +0.06%

The Japanese yen performed the worst among the major currencies, losing about 10% against the US dollar in the year. This situation was caused by the opposite monetary policy of the central banks. The central Bank of Japan has been actively stimulating the economy all this time and will continue to do so, while the US Federal Reserve is already cutting QE. Such a policy of central banks will contribute to reducing the yen and strengthening the dollar index.

• Support levels: 115.15, 114.70, 114.50, 114.16, 113.76, 113.32, 112.62, 112.30
• Resistance levels: 115.50

The global trend on the USD/JPY currency pair is bullish. The MACD indicator signals a divergence at several timeframes, which means that a slight correction should be expected. It is already risky to consider buy trades. The price strongly deviated from the average values, so it is better to consider the buy deals either on the lower time frames or wait for the pullback to the support levels near the moving average. Sell positions are better to look at the lower time frames from the daily resistance level of 115.50.

Alternative scenario: if the price fixes below 114.50, the uptrend will likely be broken.

The USD/CAD currency pair

• Prev Open: 1.2746
• Prev Close: 1.2637
• % chg. over the last day: -0.86%

The best performing major currency against the dollar in 2021 was the Canadian dollar, which increased by 1% by the end of the year. The Canadian dollar is a commodity currency, so it was mainly supported by the rise in oil prices, which rose more than 50% over the year. The Canadian dollar is also supported by the monetary policy of the Canadian central bank, which will start tightening its monetary policy in January 2022.

• Support levels: 1.2638, 1.2597
• Resistance levels: 1.2718, 1.2770, 1.2903, 1.2951

From the technical point of view, the USD/CAD currency pair trend is bearish. The MACD indicator is in the negative zone with no signs of reversal. Under such market conditions, it is better to look for sell deals from the resistance levels near the moving average, from 1.2718 or 1.2770 levels. Buy trades can be considered from the support level of 1.2638, but with additional confirmation in the form of a buyers’ initiative.

Alternative scenario: if the price breaks out through the 1.2770 resistance level and fixes above, the downtrend will likely be broken.

The EUR/USD currency pair

• Prev Open: 1.1346
• Prev Close: 1.1325
• % chg. over the last day: -0.18%

According to the ECB officials, after the completion of the bond purchases programm the interest rate may rise in early 2023. Considering that the FED is planning 2-3 interest rate hikes as early as next year, the EUR/USD currency pair will have a downward trend in the long term. But in the short term, until March 2022, the Euro may strengthen a little due to the reduced pace of asset purchases by the ECB.

• Support levels: 1.1293, 1.1230, 1.1168
• Resistance levels: 1.1342, 1.1360, 1.1436, 1.1535, 1.1613, 1.1667, 1.1717

From a technical point of view, the EUR/USD on the hour time frame is still bearish. The price is trading in a corridor. The MACD indicator has become inactive. With a high probability, the price will stay in the balance until next year because volatility is declining in the run-up of the holiday. It is better to consider sell deals from the1.1342 resistance level, but with an additional confirmation, because the price already tested that level yesterday. Buy trades can be considered on the lower time frames from the support level of 1.1293, but only with additional confirmation in the form of the buyers’ initiative.

Alternative scenario: if the price breaks out through the 1.1360 resistance level and fixes above, the mid-term uptrend will likely resume.

The GBP/USD currency pair

• Prev Open: 1.3486
• Prev Close: 1.3502
• % chg. over the last day: +0.12%

COVID-19 continues to rise in the UK. The British rail operator was forced to suspend all departures to London Station until January 10. If the situation continues in such a way, Britain risks facing a partial economic shutdown, which will undoubtedly affect the Q4 economic performance.

• Support levels: 1.3443, 1.3362, 1.3301, 1.3277, 1.3220
• Resistance levels: 1.3507, 1.3575, 1.3685

On the hourly time frame, the GBP/USD trend is still bullish. But the MACD indicator is showing divergence on several timeframes; a technical correction may occur soon. Under such market conditions, traders should consider buy positions from the 1.3443 support level but only with additional confirmation in the form of a buyers’ initiative. Sell trades can be considered from the resistance level of 1.3507, but for confirmation, it is better to wait for the sellers’ initiative or a false breakout.

Alternative scenario: if the price breaks down through the 1.3362 support level and consolidates below, the bearish scenario will likely resume.

The USD/JPY currency pair

• Prev Open: 114.89
• Prev Close: 115.05
• % chg. over the last day: +0.14%

In terms of monetary policy analysis, Japan’s central bank is now actively stimulating the economy, while the US Federal Reserve is reducing its stimulus program. This central bank policy will contribute to a decline in the yen and a strengthening of the dollar index. USD/JPY is trading near its highest level in four and a half years.

• Support levels: 114.70, 114.50, 114.16, 113.76, 113.32, 112.62, 112.30
• Resistance levels: 115.15, 115.50

The global USD/JPY currency pair trend is bullish. The MACD indicator is signaling a divergence at several timeframes, which means that a slight correction should be expected. Buy positions should be considered from the 114.70 support level, but with additional confirmation in the form of a buyers’ initiative. For sell positions, it is better to look for the lower time frames from the resistance level of 115.15, but with short targets.

Alternative scenario: if the price fixes below 114.50, the uptrend will likely be broken.

The USD/CAD currency pair

• Prev Open: 1.2789
• Prev Close: 1.2737
• % chg. over the last day: -0.40%

The Canadian dollar is a commodity currency, which correlates strongly with oil prices and the dollar index. Oil prices continue to grow, which supports the Canadian dollar. The dollar index also increased yesterday, but the USD/CAD quotes are decreasing. This means that the Canadian dollar now looks more confident.

• Support levels: 1.2717, 1.2677, 1.2638
• Resistance levels: 1.2770, 1.2857, 1.2903, 1.2951

From a technical point of view, the USD/CAD currency pair trend has changed to bearish. The sellers managed to break down the priority change level and consolidated it below. The MACD indicator is in the negative zone, but it is still signaling a buy divergence. Under such market conditions, it is better to look for sell deals from the resistance levels near the moving average. Sell trades can be considered from the support level of 1.2718, but with short targets.

Alternative scenario: if the price breaks out through the 1.2857 resistance level and fixes above, the downtrend will likely be broken.

The EUR/USD currency pair

• Prev Open: 1.1308
• Prev Close: 1.1343
• % chg. over the last day: +0.31%

Investors have now returned to riskier assets amid declining concerns over the Omicron strain, which has led to a small sell-off in the dollar index and a rise in the European currency (inverse correlation). The decrease in the growth rate of the money supply in the Eurozone is also a positive factor for the strengthening of the Euro.

• Support levels: 1.1293, 1.1230, 1.1168
• Resistance levels: 1.1342, 1.1360, 1.1436, 1.1535, 1.1613, 1.1667, 1.1717

From a technical point of view, the EUR/USD on the hour timeframe is still bearish. Yesterday, the buyers tried to break out through the priority change level, but the sellers protected their positions. The price is back in the corridor again, but the buyers’ pressure remains high. The MACD indicator is positive. It is better to consider sell deals from the 1.1342 resistance level. Buy trades can be considered on the lower timeframes from the support level of 1.1293, but only with additional confirmation.

Alternative scenario: if the price breaks out through the 1.1360 resistance level and fixes above, the mid-term uptrend will likely resume.

• – US Initial Jobless Claims (w/w) at 15:30 (GMT+2);
• – US Chicago PMI (m/m) at 16:45 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.3429
• Prev Close: 1.3486
• % chg. over the last day: +0.42%

Great Britain reports a record 183,037 cases of COVID in a 24-hour period. But despite the increase in cases, hospitalizations are not increasing as rapidly; the health care system is coping. The UK has no plans to impose additional restrictions ahead of the holidays, and the Central Bank of England policy is now aimed at strengthening the pound sterling.

• Support levels: 1.3443, 1.3362, 1.3301, 1.3277, 1.3220
• Resistance levels: 1.3507, 1.3575, 1.3685

On the hourly timeframe, the GBP/USD trend is still bullish. But the MACD indicator is showing divergence on several timeframes; a technical correction may occur soon. Under such market conditions, traders should consider buy positions from the 1.3443 support level but only with additional confirmation in the form of a buyers’ initiative. Sell trades can be considered from the resistance level of 1.3507, but it is also better to wait for the sellers’ initiative.

Alternative scenario: if the price breaks down through the 1.3362 support level and consolidates below, the bearish scenario will likely resume.

The USD/JPY currency pair

• Prev Open: 114.74
• Prev Close: 114.96
• % chg. over the last day: +0.19%

In terms of monetary policy analysis, Japan’s central bank is now actively stimulating the economy, while the US Federal Reserve is reducing its stimulus program. This central bank policy will contribute to a decline in the yen and a strengthening of the dollar index. Yesterday, USD/JPY reached a one-month high and was close to a four-and-a-half-year high.

• Support levels: 114.50, 114.16, 113.76, 113.32, 112.62, 112.30
• Resistance levels: 115.15, 115.50

The global trend on the USD/JPY currency pair is bullish. The MACD indicator is signaling a divergence at several timeframes, which means that a slight correction should be expected. Buy positions should be considered from the 114.50 support level, but with additional confirmation in the form of a buyers’ initiative. For sell positions, it is necessary to analyze the price reaction to the resistance level of 115.15. If there is a sellers’ initiative here, it is possible to look for sales on lower timeframes but with short targets.

Alternative scenario: if the price fixes below 114.16, the uptrend will likely be broken.

The USD/CAD currency pair

• Prev Open: 1.2815
• Prev Close: 1.2788
• % chg. over the last day: -0.21%

The Canadian dollar is a commodity currency, so it correlates strongly with oil prices and the dollar index. Crude oil inventories showed another sharp decline yesterday. In the medium term, oil prices will rise slightly, while the dollar index will also strengthen. As a result, both the Canadian dollar and the dollar index will have fundamental support, so the USD/CAD currency pair should not expect medium-term trends and trade only on the lower timeframes.

• Support levels: 1.2783, 1.2721, 1.2677, 1.2638
• Resistance levels: 1.2903, 1.2951

From a technical point of view, the USD/CAD currency pair trend is bullish. Buyers again were able to defend the priority change level, the price failed to consolidate below, forming a false breakdown zone. The MACD indicator is signaling a buy divergence. Under such market conditions, it is better to look for buy deals on the lower timeframes with the target of 1.2903. Sell deals should be considered from the resistance level of 1.2903 or after breakdown and fixation below the priority change level.

Alternative scenario: if the price breaks down through the 1.2783 support level and fixes below, the downtrend will likely resume.