The Analytical Overview of the Main Currency Pairs on 2022.02.18

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1372
• Prev. Close: 1.1361
• % chg. over the last day: +0.10%

Geopolitics came out on top and displaced all other events and statistical data. In the backdrop of geopolitical risks, the dollar index strengthened yesterday, but not as much as the Japanese yen and the Swiss franc. The number of new jobless claims in the US was 248,000, while analysts expected 218,000. Fed representative Bullard insists on the faster tightening of the monetary policy and wants the Fed to raise the interest rate by 1% (100 basis points) already by mid-summer.

Trading recommendations

• Support levels: 1.1322,1.1283
• Resistance levels: 1.1392,1.1423,1.1481,1.1534

From the technical point of view, the EUR/USD on the hourly time frame is bearish. The price is trading in a narrow price range around the moving average. Under such market conditions, it is best to look for sell trades on intraday time frames from the resistance level of 1.1392 or 1.1423. Buy trades should be considered from the support level of 1.1322, but only with additional confirmation.

Alternative scenario:

if the price breaks out through the 1.1423 resistance level and fixes above, the mid-term uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3577
• Prev. Close: 1.3614
• % chg. over the last day: +0.27%

The GBP is getting stronger due to fundamental support from the Bank of England, which has already raised the interest rate twice and is planning a 3rd increase at its next meeting. The Fed will complete its asset purchase program and start to raise rates on March 11, so the pound has more time to get stronger. After that, both currencies will have support from the central banks, and the growth of quotes will at least stop.

Trading recommendations

• Support levels: 1.3594,1.3549,1.3506,1.3475,1.3457
• Resistance levels: 1.3639,1.3662

On the hourly time frame, the GBP/USD currency pair trend is still bullish. Unlike the euro, the British pound is more stable, as it has fundamental support. Under such market conditions, buy trades should be looked at from the support level 1.3594. A resistance level of 1.3639 may be considered for opening sell deals, but only with additional confirmation in the form of sellers’ initiative.

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

Technical indicators of the currency pair:

• Prev. Open: 115.46
• Prev. Close: 114.91
• % chg. over the last day: -0.47%

Forecasting the exchange rate of the Japanese yen is becoming more difficult, as geopolitical tensions in Eastern Europe are forcing investors to move into defensive assets, which also include the yen. But as soon as the situation cools down, the Japanese yen will get cheaper again (USD/JPY will grow) as the policies of the central banks in Japan and the US are now completely opposite. The Fed is already preparing for a tightening while the Bank of Japan actively stimulates the economy. The nationwide core CPI rose to 0.2% in annual terms, and the consumer inflation rate reached 0.5% in annual terms. Despite active economic stimulus, inflation in Japan remains at the lowest level in the world.

Trading recommendations

• Support levels: 114.94,114.76
• Resistance levels: 115.21,115.43,115.85,116.12,116.50

The global trend on the USD/JPY currency pair is bullish. Yesterday, the price fell below the priority change level but could not hold there. At the Asian session, there was a sharp return. A false breakdown zone was formed. Under such market conditions, it is best to look for buy deals on the lower time frames from the support level of 114.94, but with additional confirmation. Sell positions can be looked at from the resistance level 115.42 or 115.64, but only with short targets and additional confirmation.

Alternative scenario:

if the price fixes below 114.94, the uptrend will likely be broken.

The USD/CAD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2686
• Prev. Close: 1.2708
• % chg. over the last day: +0.17%

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. The dollar index was slightly stronger yesterday, while oil prices decreased on the background of the Iran negotiations, which can bring a million new Iranian barrels or more to the world market. As a result, the USD/CAD is trading without a single dynamic.

Trading recommendations

• Support levels: 1.2687,1.2664,1.2600,1.2506
• Resistance levels: 1.2741,1.2794

From a technical point of view, the USD/CAD currency pair is bullish. The price is in a wide flat with high volatility. It is worth trading only with short targets, as both oil and the dollar index are inclined to grow now. Under such market conditions, it is better to look for buy trades on the lower time frames from the support level of 1.2687. For sell deals, it is better to consider the resistance level of 1.2741, but with an additional confirmation in the form of an initiative of sellers.

Alternative scenario:

if the price breaks through the 1.2664 support level and fixes below, the downtrend will likely resume.