The Analytical Overview of the Main Currency Pairs on 2024.08.23

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1144
• Prev. Close: 1.1112
• % chg. over the last day: -0.28%

Eurozone wage growth fell to 3.55% in the second quarter from 4.74%, mainly due to a significant slowdown in Germany. This easing of wage pressures supports expectations of an ECB rate cut in September, especially as the bank emphasizes wage growth as a key factor in its policy decisions. The probability of a rate cut in September is over 90%, with additional rate cuts possible before the end of the year due to weak economic conditions. Meanwhile, business activity in the Eurozone shows mixed signals: strong growth in France contrasts with a decline in Germany.

Trading recommendations

• Support levels: 1.1060,1.1017,1.0950,1.0905,1.0884,1.0841,1.0816
• Resistance levels: 1.1120,1.1156

The trend on the EUR/USD currency pair in the hourly time frame is bullish. Sellers yesterday reacted to the resistance level of 1.1156. The price corrected, but has not yet reached the 1.1093 support level. Under such market conditions, intraday we can look for selling from 1.1120, but with confirmation. For buying we can consider 1.1093, but also with confirmation.

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: 1.3085
• Prev. Close: 1.3088
• % chg. over the last day: +0.02%

The British pound rose above $1.31, the highest level since July 2023, after the UK manufacturing and services activity growth for August came in better than expected. The S&P Global Flash UK PMI composite business activity index rose to 53.4, hitting a four-month high. Manufacturing output rose strongly, just short of July’s two-and-a-half year high. The service sector also saw the strongest growth in business activity in four months.

Trading recommendations

• Support levels: 1.3055,1.2973,1.2932,1.2848,1.2800,1.2726,1.2714,1.2665
• Resistance levels: 1.3140

From the point of view of technical analysis, the trend on the GBP/USD currency pair is bullish. The price broke through the 1.3043 resistance level and rushed higher. Considering the divergence on MACD, the price may be correct in the coming days, but with a high probability, the price will try to test the liquidity above 1.3140. Therefore, in the presence of sellers’ initiative, we can look for sell trades, but with a short-stop loss from this level. There are no optimal entry points for buying right now.

Alternative scenario:

if the price breakdown 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: 145.01
• Prev. Close: 146.28
• % chg. over the last day: +0.87%

Japan’s overall inflation rate accelerated for the third consecutive month to 2.7% in July, supporting the BoJ’s hawkish bias this year. Core inflation remained unchanged at 2.8% for the third consecutive month. Meanwhile, BoJ Governor Kazuo Ueda said in a speech to parliament that the central bank may adjust monetary policy if the economic outlook proves correct, indicating a willingness to raise rates again if growth is strong and inflation remains stable. Ueda also blamed the recent sell-off in Japanese stocks on fears of a US recession.

Trading recommendations

• Support levels: 145.54,144.50,142.80,140.22,137.26
• Resistance levels: 146.62,148.29,150.88,151.26,153.80.

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bearish. Yesterday, the price corrected to 146, where sellers reacted again. This time, buyers are trying to show a reaction from the 145.54 level, but the reaction is weak. Intraday buying can be looked for here but with confirmation. Selling can be considered if the price consolidates below 145.54.

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: 2512
• Prev. Close: 2484
• % chg. over the last day: -1.13%

Precious metals closed sharply lower on Thursday. Precious metals prices declined on Thursday due to a stronger dollar and rising global bond yields. In addition, hawkish comments from Kansas City Fed President Schmid impacted gold when he said he wanted to see more economic data before supporting any decision to start cutting interest rates. Investor focus today is directed toward Jerome Powell’s speech at Jackson Hole. Markets will be focused on what Jerome Powell has to say about the pace and timing of rate cuts in the coming months. Most market participants believe that the Fed will cut rates at the upcoming September meeting, with the main debate being over the size of the cut – by a quarter percentage point or half a point.

Trading recommendations

• Support levels: 2479,2451,2440,2416,2367,2343
• Resistance levels: 2500,2520

From the point of view of technical analysis, the trend on the XAU/USD is bullish. The price is forming a new balance environment in the range of 2479-2500. The trading rules in the balance phase suggest that you should buy from the lower boundary and sell from the upper boundary. Price is now trading in the middle of the range and is considered balanced. A consolidation above 2500 will open the way to the 2520. Consolidation below 2479 will open the way for the price to renew the low of the week.

Alternative scenario:

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