The Analytical Overview of the Main Currency Pairs on 2024.04.12

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0740
• Prev. Close: 1.0725
• % chg. over the last day: -0.14%

On Thursday, the euro came under pressure after the ECB kept the interest rate unchanged but signaled that it will soon start cutting interest rates if inflation continues to fall. The accompanying statement indicated that if the Governing Council’s updated assessment of the inflation outlook further strengthens confidence that inflation is steadily converging towards the 2% target, reducing the current level of monetary policy tightening would be appropriate. ECB President Lagarde has said that risks to growth prospects are tilted to the downside, and inflation will fall to the ECB’s target level. Swaps estimate the odds of a 25 bps ECB rate cut at the next meeting on June 6 at 88% and at the next meeting on July 18 at 100%.

Trading recommendations

• Support levels: 1.0684
• Resistance levels: 1.0725,1.0795,1.0816,1.0843,1.0865

Alternative scenario:

The EUR/USD currency pair’s hourly trend is bearish. Yesterday, the euro declined amid the ECB’s dovish bias. The price tested liquidity below the support level of 1.0725 but failed to consolidate above it, which increases the probability of further decline to 1.0684. Under such market conditions, intraday selling can be considered, but with short stops. Buying can be considered if the price consolidates above 1.0725.

Technical indicators of the currency pair:

Trading recommendations

The EUR/USD currency pair’s hourly trend is bearish. Yesterday, the euro declined amid the ECB’s dovish bias. The price tested liquidity below the support level of 1.0725 but failed to consolidate above it, which increases the probability of further decline to 1.0684. Under such market conditions, intraday selling can be considered, but with short stops. Buying can be considered if the price consolidates above 1.0725.

Alternative scenario:

if the price breaks the resistance level of 1.0865 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2532
• Prev. Close: 1.2549
• % chg. over the last day: +0.14%

The British pound stabilized just below $1.26 as investors took a hawkish view of remarks from a Bank of England official. Policymaker Megan Greene said that a rate cut in the UK should still be a distant possibility, citing the greater threat of persistent inflation in the UK compared to the US. Traders have adjusted their interest rate cut forecasts and expect the Bank of England to cut rates by just two-quarters of a point. The bank rate will likely fall to 4.75% by the end of 2024 from today’s 5.25%, down from a previous forecast that suggested a cut to 4.5% by December.

Trading recommendations

• Support levels: 1.2540,1.2501,1.2446
• Resistance levels: 1.2612,1.2634,1.2674,1.2707

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price is trading below the moving averages, and the price growth does not accompany the growth of MACD values. Currently, the price is trading at 1.2539, but the reaction of buyers is weak. With a high probability, the price will continue to decline with a target of 1.2501. Under such market conditions, looking for sell trades in intraday time frames is best, but with a short stop. The support level of 1.2501 should be considered for buying. Buy deals can also be considered if the price on the news today consolidates above 1.2560.

Alternative scenario:

if the price breaks through the resistance level of 1.2707 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 153.12
• Prev. Close: 153.19
• % chg. over the last day: +0.05%

The yen fell to a new 33-year low against the dollar on Thursday. However, yen weakness was limited by speculation that Japanese authorities may soon intervene in the currency market to support the yen. Japan’s top currency official, Deputy Finance Minister for International Affairs Kanda, said authorities would consider “all their options in the currency market” and were ready to respond to any event. The probability of an intervention is assessed as very high.

Trading recommendations

• Support levels: 152.38,151.93,151.52,151.14,150.80,150.25
• Resistance levels: 153.31,153.5,154.00

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bullish. The Japanese price tested liquidity above 153, where sellers did not react properly. The price is trading at intervention levels, so buying here is risky as the Bank of Japan may intervene at any time to support the rate. However, since the price does not show the sellers’ reaction, we can consider buying with a short-stop intraday with a target of 153.50. Before the intervention, the price may update the current week’s high to capture more liquidity.

Alternative scenario:

if the price breaks and consolidates below the support level of 151.55, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2333
• Prev. Close: 2373
• % chg. over the last day: +1.74%

Gold climbed above $2,390 per ounce on Friday, hitting a new record high. This was helped by a safe-haven demand for gold amid risks of geopolitical tensions and strong demand for physical assets from central banks. Another bullish factor for precious metals was the ECB’s announcement on Thursday after its meeting that it would soon start cutting interest rates. The attractiveness of bullion remains despite strong economic data.

Trading recommendations

• Support levels: 2334,2322,2300,2267,2249,2229,2206
• Resistance levels: 2400,2450,2500

From the technical analysis point of view, the trend on the XAU/USD is bullish. Gold is once again hitting price highs. The price has confidently consolidated above 2350, and there are no signs of reversal. Gold will likely reach the 2400 mark. Under such market conditions, buy trades are best-sought intraday, but with confirmation. There are no optimal entry points for selling, and we need to see the sellers’ initiative.

Alternative scenario:

if the price breaks below the support at 2326, the downtrend will likely resume.