The Analytical Overview of the Main Currency Pairs on 2024.08.12

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0914
• Prev. Close: 1.0916
• % chg. over the last day: +0.02%

Friday’s dovish comments from Fed President Boston Collins put pressure on the USD when she said the Fed Funds rate soon if inflation continues to decline. Markets put the odds of a 25 bps rate cut at the September 18 FOMC meeting at 100% and a 50 bps rate cut at that meeting at 56%. The dollar’s weakening on Friday provided support for the euro. But Friday’s increase in European natural gas prices to an 8-month high could weigh on the Eurozone’s economic outlook and put pressure on the euro in the coming weeks. Swaps estimate the probability of a 25 bps ECB rate cut at the September 12 meeting at 97%.

Trading recommendations

• Support levels: 1.0884,1.0841,1.0816
• Resistance levels: 1.0941,1.1000

The trend on the EUR/USD currency pair in the hourly time frame is bullish. Last Thursday, the price tested the liquidity zone below 1.0884, where buyers showed activity. Price is now trading at moving average levels, forming a balanced environment. Volatility has decreased and given the lack of important economic events today, the price is likely to trade between 1.0884 and 1.0941. There are no optimal entry points.

Alternative scenario:

if the price breaks through the support level of 1.0786 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2744
• Prev. Close: 1.2758
• % chg. over the last day: +0.11%

The British pound climbed above $1.2770, but its decline continued for the fourth consecutive week, marking the longest losing streak since September last year. The pound has been pressured by the Bank of England’s recent interest rate cut and the possibility of further cuts this year, as the Central Bank moved quickly to ease monetary policy in response to falling inflation. This change has led to mixed signals for currency traders as they focus on both global economic pressures and the UK’s domestic issues.

Trading recommendations

• Support levels: 1.2726,1.2714,1.2665
• Resistance levels: 1.2839,1.2879,1.2909,1.2950

From the point of view of technical analysis, the trend on the GBP/USD currency pair has changed to an upward trend. The price has consolidated above the priority change level and is trading above the moving averages. Currently, the price has reached the resistance level of 1.2772, but the level has already been tested for the third time in the last 2 trading days, which increases the probability of further growth. Buying should be looked for after the breakout of the 1.2772 resistance level. Selling can be considered only if there is a reverse initiative from this level.

Alternative scenario:

if the price breaks down the support level of 1.2726 and consolidates below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 147.19
• Prev. Close: 146.62
• % chg. over the last day: -0.39%

The yen rose against the USD on Friday as T-note yields fell, which is bullish for the yen. In addition, the continued unwinding of yen swaps is helping the yen rise as yen short positions are covered after the Bank of Japan (BoJ) unexpectedly raised interest rates. Swaps estimate the odds of a BoJ rate hike at 10 bps at 0% at the September 20 meeting and 17% at the October 31 meeting.

Trading recommendations

• Support levels: 146.40,142.80,140.22,137.26
• Resistance levels: 148.13,150.88,151.26,153.80

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price has not reached the resistance level at 148.13, so there is a high probability that the price will make one more growth attempt before it starts to decline. For buying, we can consider the moving average lines or the area below 146.33. Selling can be considered if the price shows a bearish reaction from 148.13.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 150.88, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2424
• Prev. Close: 2431
• % chg. over the last day: +0.29%

Precious metals traded mixed on Friday. The weakening of the dollar on Friday supported metals. In addition, the decline in global bond yields on Friday was favorable for precious metals. Gold also found support on Friday as a store of value after Boston Fed President Collins said the Fed would soon cut interest rates if inflation continues to decline. The medium-term outlook for gold remains bullish.

Trading recommendations

• Support levels: 2367,2343
• Resistance levels: 2414,2445,2459,2471,2500

From the point of view of technical analysis, the trend on the XAU/USD is bearish. However, intraday buyers continue to feel pressure, and the price is approaching the priority change level. Currently, the price is trading above the moving averages, but the MACD is indicating a divergence. Under such market conditions, we can look for selling from 2445 with a target of 2403. There are no optimal entry points for buying now, as the divergence, together with the price deviation, increases the probability of price decline.

Alternative scenario:

if the price breaks and consolidates above the resistance level of 2459, the uptrend will likely resume.