The Analytical Overview of the Main Currency Pairs on 2024.08.21

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1077
• Prev. Close: 1.1129
• % chg. over the last day: +0.47%

The euro strengthened above $1.106, reaching its highest level in almost eight months, as expectations of a Fed rate cut put pressure on the US dollar. Traders fully expect a 25bp rate cut in September, with a 24.5% chance of a larger 50bp cut and more than 90bp of easing by the end of the year. In Europe, markets are pricing in a 65bp ECB rate cut in 2024, which implies two 25bp rate cuts and a 60% probability of a third cut.

Trading recommendations

• Support levels: 1.1060,1.1017,1.0950,1.0905,1.0884,1.0841,1.0816
• Resistance levels: 1.1138

The trend on the EUR/USD currency pair in the hourly time frame is bullish. After the price consolidated above the resistance level of 1.1045, the way to 1.1138 was opened. The price has already maximally approached this level and now it is important to evaluate the price reaction to it. If sellers take the initiative, considering the MACD divergence on several time frames, the price may sharply correct to the support level of 1.1060. There are no optimal entry points for buying right now.

Alternative scenario:

if the price breaks through the support level of 1.0950 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2993
• Prev. Close: 1.3033
• % chg. over the last day: +0.31%

This week, there is a low news background in the UK, so the Dollar Index will determine the dynamics of GBP/USD quotes. Traders are waiting for the US Fed Head Jerome Powell’s speech at the annual economic symposium in Jackson Hole. Most market participants believe Powell will indicate or hint that the Fed will start cutting rates in September. Since this scenario has already been priced, the rate cut remains the main question. Currently, there is a 25% chance of a 50bp cut in the US Fed rate next month. The dollar is falling for the fourth week in a row and is near a one-month low.

Trading recommendations

• Support levels: 1.2973,1.2932,1.2848,1.2800,1.2726,1.2714,1.2665
• Resistance levels: 1.3043,1.3146

From the point of view of technical analysis, the trend on the GBP/USD currency pair is bullish. The price has reached the resistance level at 1.3043, where the buyers are fixing the position. This is confirmed by the surge in volume. Considering the divergence on the MACD, the price may be corrected in the next day or two to the support level of 1.2973. Therefore, in the presence of sellers’ initiative inside the day, we can look for sell trades, but with a short stop loss. There are no optimal entry points for buying now.

Alternative scenario:

if the price breaks down the support level of 1.2800 and consolidates below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 146.56
• Prev. Close: 145.25
• % chg. over the last day: -0.90%

The yen strengthened on Tuesday after the Bank of Japan released several research papers highlighting the persistence of inflationary pressures in the Japanese economy, indicating that the BoJ may continue to raise interest rates. The interest rate expectation differential is now working in favor of a stronger yen as the US Federal Reserve will soon start cutting rates and the Bank of Japan plans to raise rates further.

Trading recommendations

• Support levels: 145.40,142.80,140.22,137.26
• Resistance levels: 145.89,146.62,148.29,150.88,151.26,153.80.

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The yen continues to strengthen and is testing the support level of 145.42 again. This time, there is no buyers’ reaction, which increases the probability of further price decline. However, the divergence on the MACD indicates a possible correction, so the price may rise to 145.89 or even 146.62. Both of these resistance levels can be used for selling, but with confirmation.

Alternative scenario:

if the price breaks 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: 2503
• Prev. Close: 2514
• % chg. over the last day: +0.44%

Gold rose to $2,530 per ounce on Tuesday, hitting a new record high, as bets on monetary easing by major central banks boosted support for safe-haven assets amid lingering geopolitical concerns. Signs of ongoing disinflation in the US, as evidenced by a slowdown in core and core price growth in July, have reinforced expectations that the Fed should start cutting rates and responding to the slowing labor market. Markets are now leaning towards the US Central Bank cutting rates by 100bps in its three remaining decisions this year.

Trading recommendations

• Support levels: 2500,2477,2451,2440,2416,2367,2343
• Resistance levels: 2520

From the point of view of technical analysis, the trend on the XAU/USD is bullish. The price updated the historical high again, but sellers showed a sharp reaction above the 1.2520 level. This is confirmed by both price reaction and volume surge. Under such market conditions, we should expect a corrective move or balance environment formation. Selling can be sought from the 2520 level but with confirmation and short stops. The minimum profit target is 2500. There are no optimal entry points for buying now.

Alternative scenario:

if the price breaks down the support level of 2451, the downtrend will likely resume.