The Analytical Overview of the Main Currency Pairs on 2024.07.29

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0845
• Prev. Close: 1.0855
• % chg. over the last day: +0.09%

Friday’s PCE deflator report was close to expectations and supported the arguments favoring the FOMC rate cut in September. Every month, the June PCE deflator report came in at 0.1% mom (core) and 0.2% (core), which aligned with market expectations. On an annualized basis, the June PCE deflator came in at 2.5% y/y, which aligned with market expectations. Markets estimate the odds of a 25 bps rate cut at 5% for this week’s FOMC meeting and 100% for the next meeting on September 18.

Trading recommendations

• Support levels: 1.0850,1.0827,1.0807,1.0753,1.0727,1.0718
• Resistance levels: 1.0869,1.0884,1.0905,1.0953

Alternative scenario:

The EUR/USD currency pair’s hourly trend is bearish. On Friday, the price again tested the resistance level of 1.0869, where sellers took the initiative. The MACD indicator is in the positive zone, but buyers’ pressure is still inside the day as part of the correction. Under such market conditions, a breakout of 1.0869 will open the way for the price to 1.0884. A move below 1.0850 could take the price down to 1.0827.

Technical indicators of the currency pair:

Trading recommendations

The EUR/USD currency pair’s hourly trend is bearish. On Friday, the price again tested the resistance level of 1.0869, where sellers took the initiative. The MACD indicator is in the positive zone, but buyers’ pressure is still inside the day as part of the correction. Under such market conditions, a breakout of 1.0869 will open the way for the price to 1.0884. A move below 1.0850 could take the price down to 1.0827.

Alternative scenario:

if the price breaks the resistance level at 1.0897 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2849
• Prev. Close: 1.2865
• % chg. over the last day: +0.12%

The Bank of England will hold a monetary policy meeting this week. Investors are divided on whether policymakers will cut rates for the first time since 2020. The level of uncertainty ahead of the meeting is higher than usual as key central bank officials have not spoken publicly for more than two months. With inflation showing signs of slowing and the labor market weakening, the Bank of England could make a surprise and go for a rate cut as early as this week.

Trading recommendations

• Support levels: 1.2824,1.2801,1.2761,1.2741,1.2701
• Resistance levels: 1.2909,1.2941,1.2976,1.3012,1.3025.

From the point of view of technical analysis, the trend on the GBP/USD currency pair is bearish. The price is trading at the level of the moving averages, with the price consolidated above the trend line, but the pressure from the buyers has further disappeared. It is important for buyers not to let the price fall below the trend line again. Otherwise, the price may fall sharply to 1.2824. If the buyers retake the initiative from the opposite side of the trend line, the price could jump to 1.2909.

Alternative scenario:

if the price breaks through the resistance level at 1.2941 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 153.91
• Prev. Close: 153.79
• % chg. over the last day: -0.08%

The Japanese yen strengthened by nearly 153 per dollar on Monday after rising more than 2% last week amid growing speculation that the Bank of Japan will raise interest rates at its upcoming meeting to keep inflation under control and defend its currency. Markets are betting that the central bank will raise rates by 10 basis points to 0.1% this week and is expected to outline its plans for quantitative tightening.

Trading recommendations

• Support levels: 153.22,151.45,150.80,149.65
• Resistance levels: 154.22,155.84,156.86,1157.83,158.33

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bearish. Today, at the Asian session, sellers took the initiative from the resistance level of 154.22. The volume surge and the price reaction to these volumes evidence this. The MACD indicator became negative again. But now the price has once again reached the support level at 153.22. Inside the day, looking for buy deals here is possible, but only with confirmation. A move below 153.22 could open space for a fall to 151.45.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 157.18, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2364
• Prev. Close: 2387
• % chg. over the last day: +0.97%

Gold rose above $2,390 per ounce on Monday, extending gains from the previous session amid hopes of a rate cut by the Federal Reserve. Last week, the June US PCE, the Fed’s preferred measure of inflation, met forecasts, but the core rate rose 0.2%, slightly above the 0.1% expected. Nevertheless, rate cut expectations remained unchanged, with markets fully pricing in the possibility of a rate cut at the September meeting and expecting two more cuts before the end of the year. Meanwhile, rising geopolitical tensions in the Middle East also supported safe-haven assets such as gold following Israel’s pledge to take strong retaliatory measures against Hezbollah.

Trading recommendations

• Support levels: 2370,2400,2391,2370,2351,2339,2319,2295,2276
• Resistance levels: 2401,2434,2451,2471,2500

From the technical analysis point of view, the trend on the XAU/USD is bearish. The price has reached the 2401 resistance level, where the sellers showed a reaction. The MACD indicator is in the positive zone, but the momentum is already behind the sellers. Under such market conditions intraday, we should look for selling with a target up to 2370. There is no optimal entry point for buying now.

Alternative scenario:

if the price breaks and consolidates above the resistance level of 2432, the uptrend will likely resume.