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Analytics from ForexMart company (ForexMart) – Forecasts – January 21, 2021

Analytics from ForexMart company (ForexMart) – Forecasts – January 21, 2021


USD / CAD. 21.01 | Canadian dollar strengthens to 3-year highs

The USD / CAD currency pair during the trading session on Thursday dropped to the level of 1.2600. The Canadian dollar strengthened to a maximum of three years after the announcement of the results of the meeting of the Bank of Canada.

As market participants expected, the regulator kept the interest rate unchanged at 0.25%. At the same time, it was announced that the rate would be at near-zero mark until at least 2023. The program of quantitative easing remained unchanged, the volume of which currently amounts to 4 billion Canadian dollars per week.

The Central Bank also shared its forecasts for economic growth this year. Experts expect GDP growth in 2021 to be 4.0%, slightly below the previous forecast of 4.2%, while in 2022 and 2023 the economy will grow by 4.8% and 2.5%, respectively.

However, the loonie is showing growth, despite these expectations, as well as weak economic statistics. In particular, Canada’s core CPI fell 0.4% in December after rising 0.2% in November, while CPI declined 0.2% after rising 0.1% a month earlier.

Considering all of the above, the pressure on the Canadian dollar should have increased, but the loonie unexpectedly strengthened to the highs. Analysts regard such dynamics as a temporary phenomenon, and the pair’s growth may continue at any minute. An additional factor that could put pressure on the “Canadian” is one of Joe Biden’s first decrees to stop the construction of the Keystone XL oil pipeline, which was actively supported by the Canadian authorities.

EUR / JPY. 21.01 | “Rails” from the level 126.00

At the end of Wednesday’s trading, the EUR / JPY currency pair formed a “rails” candlestick pattern based on the resistance level of 127.00 on the daily chart, giving a signal to sell.

The price of EUR / JPY bounced off the level of 127.00, reinforced by the EMA 21 line, amid growing demand for safe assets on the day of Joe Biden’s official accession to the US presidency. Today’s meeting of the Bank of Japan did not help significantly strengthen the yen.

The pair is consolidating at the level of 125.50, near the EMA 60 line. We would like to see further downward trend development according to the specified pattern. The price movement of a trading instrument today may be driven by the ECB meeting and the subsequent press conference of the head of the European regulator.

EUR / USD. 21.01 | Between the lines EMA 21 and EMA 60

The EUR / USD currency pair during yesterday’s trading tested the resistance level of 1.2150, reinforced by the exponential moving average line for 21 days, but then rolled back to the level of 1.2100.

Today the price of EUR / USD is again heading towards the 1.2150 level amid the weakening of the US dollar, caused by expectations of economic stimulus from the new US government. Most likely, buyers will try to come to the level of 1.2200 in the near future.

At the same time, an increasing downtrend is visible on the daily chart, therefore it is risky to enter purchases with medium-term goals. Now the price is consolidating within the sideways channel 1.2150-1.2050, between the EMA 21 and EMA 60 lines. I will monitor the behavior of the pair relative to the indicated boundaries.

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