The Analytical Overview of the Main Currency Pairs on 2024.04.18

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0618
• Prev. Close: 1.0671
• % chg. over the last day: +0.50%

The latest Eurozone inflation data showed no change. The overall inflation rate remained at 2.4% y/y, while core inflation remained at 2.9% y/y. However, EUR/USD quotes rose on Wednesday due to hawkish comments from the European Central Bank. ECB Governing Council spokesman Holzmann said he was not fully convinced that the ECB should start cutting interest rates in June, citing the results of the Eurozone wage debate and rising tensions in the Middle East that pose risks to inflation. This contrasts with statements from other peers who favor a rate cut in June. Swaps currently estimate the odds of a 25 bps ECB rate cut at the next meeting on June 6 at 86%.

Trading recommendations

• Support levels: 1.0646,1.0590
• Resistance levels: 1.0660,1.0722,1.0795,1.0816,1.0843,1.0865

Alternative scenario:

The EUR/USD currency pair’s hourly trend is bearish. Yesterday, the price managed to consolidate above 1.0646, and now it is aiming to test liquidity above 1.0686. Considering that the price has not reached the support zone of 1.0590, there is still a high probability of a decline. It is best to consider the resistance level of 1.0686 for selling, but this is subject to the sellers’ reaction. There are no optimal entry points for buying right now.

Technical indicators of the currency pair:

Trading recommendations

The EUR/USD currency pair’s hourly trend is bearish. Yesterday, the price managed to consolidate above 1.0646, and now it is aiming to test liquidity above 1.0686. Considering that the price has not reached the support zone of 1.0590, there is still a high probability of a decline. It is best to consider the resistance level of 1.0686 for selling, but this is subject to the sellers’ reaction. There are no optimal entry points for buying right now.

Alternative scenario:

if the price breaks the resistance level of 1.0756 and consolidates above it, the uptrend will likely be resumed.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2422
• Prev. Close: 1.2453
• % chg. over the last day: +0.25%

The latest CPI report showed that UK inflation fell to 3.2% y/y in March, the lowest since September 2021, but exceeded market expectations of 3.1% y/y. In addition, the core rate (excluding energy and food prices) slowed to a more than two-year low of 4.2% y/y, although it remained slightly above forecasts of 4.1% y/y. Such data contributed to strengthening the British currency, although, as a rule, the exchange rate declined on falling inflation.

Trading recommendations

• Support levels: 1.2425,1.2372
• Resistance levels: 1.2478,1.2520,1.2612,1.2634,1.2674,1.2707

From the technical analysis point of view, the trend on the hourly time frame for the GBP/USD currency pair is bearish. The price is forming a broadly volatile flat. Now, intraday buying pressure prevails, but the overall bias remains bearish. Under such market conditions, selling should be considered from the resistance level 1.2478 but subject to sellers’ reactions. In case of a deeper correction, 1.2520 should be considered for selling. There are no optimal entry points for buying right now.

Alternative scenario:

if the price breaks through the resistance level of 1.2578 and consolidates above it, the uptrend will likely be resumed.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 154.65
• Prev. Close: 154.37
• % chg. over the last day: -0.20%

The Japanese currency remains near the 34-year low reached earlier this week amid diverging monetary policies of the Bank of Japan and the US Federal Reserve. Bank of Japan board spokesman Asahi Noguchi said Thursday that the pace of future policy adjustments is expected to be slow and cannot match that of other major central banks during the recent tightening cycle. Although the eight-year period of negative rate policy ended this month, the BoJ is expected to maintain favorable monetary conditions for some time.

Trading recommendations

• Support levels: 153.95,153.31,152.38,151.93,151.52,151.14,150.80,150.25
• Resistance levels: 154.44,155.00

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bullish. Quotes have corrected a bit, but the support level at 153.95 for the third time prevents the price from going lower. The 154.50-155 zone is still where the Bank of Japan can intervene. Under such market conditions, sell trades are best considered from the 154.44 resistance level, subject to sellers’ reactions. There are no optimal entry points for buying right now, as the price is trading in front of the supply area.

Alternative scenario:

if the price breaks and consolidates below the support level of 152.58, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2383
• Prev. Close: 2361
• % chg. over the last day: -0.93%

The Federal Reserve officials’ hawkish tone is beginning to pressure precious metals. Fed officials have increasingly become inclined to keep interest rates high for an extended period due to persistent inflation and strong labor demand. Higher rates reduce the attractiveness of non-interest-earning assets such as gold. Nevertheless, bullish demand for gold persists as concerns about the spread of war in the Middle East to other regions boost safe haven demand, underpinned by active central bank purchases.

Trading recommendations

• Support levels: 2363,2319,2300,2267,2249,2229,2206
• Resistance levels: 2376,2400,2450,2500

From the point of view of technical analysis, the trend on the XAU/USD is bullish. But inside the day, the bears start to take the initiative. There are already 2 supply zones formed in front of the buyers - 2376 and 2400. Under such market conditions, acting according to the price reaction to these zones is necessary. If the price shows a bearish reaction to the zone above 2376, it is worth considering a sell trade. If the price ignores this zone, we will see the price rise to 2400.

Alternative scenario:

if the price breaks below the support at 2319, the downtrend will likely resume.