The Analytical Overview of the Main Currency Pairs on 2024.06.06

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0879
• Prev. Close: 1.0868
• % chg. over the last day: -0.10%

The dollar surged to a high on Wednesday after the May ISM Services Business Activity Index rose more than expected, a hawkish factor for the Fed’s policy. Meanwhile, the euro is declining amid expectations that the ECB will cut interest rates on Thursday. Almost 100% probability that the ECB will cut the rate by 0.25 percent. With a 25 basis point rate cut already virtually promised by policymakers, market watchers will focus on what ECB President Christine Lagarde says. However, in a news release, the euro may temporarily rise because the latest wage data may boost inflation going forward, and Lagarde will mention this.

Trading recommendations

• Support levels: 1.0882,1.0870,1.0845,1.0830,1.0803,1.0781,1.0750,1.0713
• Resistance levels: 1.0891,1.0923,1.1000

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The euro retested the demand zone at 1.0860-1.0870, where buyers took the initiative. Recent volume spikes indicate bullish interest. The MACD indicator turned positive, but the price reached the resistance at 1.0891. Under these market conditions, selling from this zone could be considered subject to buyer reaction. As a rule, a rate cut hurts the currency, so if sellers take the initiative, the euro could fall sharply to 1.0845. But if Lagarde says something hawkish, the euro could also reach the resistance level 1.0923.

Alternative scenario:

if the price breaks the support level at 1.0827 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2759
• Prev. Close: 1.2785
• % chg. over the last day: +0.20%

There are no major events in the UK this week that could affect the pound, so investors will mainly focus on the ECB decision today and the US jobs data tomorrow. The next Bank of England meeting is scheduled for June 20 and UK swaps indicate that a rate cut is unlikely until September.

Trading recommendations

• Support levels: 1.2749,1.2740,1.2725,1.2687,1,2668,1.2647,1.2608
• Resistance levels: 1.2804,1.2828

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The situation is very similar to the euro. The price reached the resistance level at 1.2804, where sellers showed weak initiative. However, the recent volume spikes indicate the continued bullish interest. The MACD indicator is in the positive zone but has no divergence sign. Under such market conditions, we should expect the formation of a wide corridor, but selling may prevail today intraday. The same support level of 1.2749 should be considered for buying. For selling, we can use 1.2804, but only with confirmation.

Alternative scenario:

if the price breaks the support level of 1.2693 and consolidates below, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 154.80
• Prev. Close: 156.06
• % chg. over the last day: +0.81%

The Japanese yen fell to 156 per dollar, retreating from weekly highs, as the country’s real wages fell for the 25th consecutive month in April and domestic inflation continues to outpace wage growth. The Bank of Japan will hold a monetary policy meeting next week. Swaps estimate the odds of a 10 bps BoJ rate hike at the June 14 meeting at 16%. Meanwhile, the BoJ is likely to discuss reducing bond purchases at its meeting next week. This could give confidence to the yen.

Trading recommendations

• Support levels: 155.22,154.60
• Resistance levels: 155.72,156.53,156.93,157.45,157.71,157.98

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. Yesterday, the price reached the priority change level, but sellers protected positions, which can be seen by the surge in volumes and price reaction to these volumes. The MACD indicator has become inactive, but sellers prevail intraday. Under such market conditions, we can consider selling from the resistance level of 155.72. Buying should be sought at the support level of 155.22, but only with confirmation.

Alternative scenario:

if the price breaks and consolidates above the resistance level at 156.49, it is very likely that the uptrend will resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2328
• Prev. Close: 2355
• % chg. over the last day: +1.16%

Precious metals found support amid weaker-than-expected US employment data for May from ADM, which was dovish for Fed policy. Also bullish for precious metals was the decline in T-Note bond yields on Wednesday. In addition, expectations that the ECB will cut interest rates on Thursday boosted demand for gold as a store of value. A negative factor for precious metals on Wednesday was the strengthening of the dollar.

Trading recommendations

• Support levels: 2347,2338,2328,2276,2249,2229,2206
• Resistance levels: 2375,2395,2432,2450,2500

From the technical analysis point of view, the trend on the XAU/USD has changed to a bullish one. The price has consolidated above the priority shift level, and the recent volumes point to growing bullish pressure. But now the price has deviated slightly from the average values, so it is worth waiting for a small correction before buying. It is best to consider buying from the moving averages or the 2347 support level. Resistance levels 2375 and 2395 are best used as take-profit targets.

Alternative scenario:

If the price breaks below the support level 2328, the downtrend is likely to resume.