The Analytical Overview of the Main Currency Pairs on 2024.08.27

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1184
• Prev. Close: 1.1161
• % chg. over the last day: -0.20%

Growing geopolitical risks in the Middle East supported the demand for the dollar yesterday. The strengthening of the dollar put pressure on the euro. Weak German economic data was also a negative factor for the euro. The IFO German Business Confidence Index for August fell by 0.4 to 86.6, stronger than expectations of 86.0. Swaps discount the odds of a 25bp ECB rate cut at the September 12 meeting at 97%, while the odds of a 25bp rate cut at the September 17–18 FOMC meeting are 100% and the odds of a 50bp rate cut at that meeting are at 36%.

Trading recommendations

• Support levels: 1.1164,1.1132,1.1104,1.1060,1.1017,1.0950,1.0905,1.0884
• Resistance levels: 1.1275

The trend on the EUR/USD currency pair in the hourly time frame is bullish. Compared to yesterday, the situation has not changed. The sharp price growth on Friday allowed the price to consolidate above the resistance level of 1.1164, and now the way to 1.1275 is open for the price. It is possible to join the uptrend from the support levels of 1.1164 or 1.1132. Going below 1.1132 is highly undesirable for buyers. There are no optimal entry points for selling now. Despite the divergence in the MACD indicator, there is no sellers’ initiative.

Alternative scenario:

if the price breaks through the support level of 1.1104 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3203
• Prev. Close: 1.3187
• % chg. over the last day: -0.12%

Earlier this month, the Bank of England (BoE) cut rates from their highest level in 16 years for the first time since 2020 and signaled that there are more cuts to come. The pace and timing of those cuts will depend on the performance of the economy in the coming months. Traders are expecting at least one more rate cut this year, but at present it won’t happen until November at the earliest. On Friday, the pound jumped to its highest level against the dollar in more than two years after Federal Reserve Chairman Jerome Powell seemed to confirm that US rates will be cut in September.

Trading recommendations

• Support levels: 1.3175,1.3137,1.3075,1.2973,1.2932,1.2848,1.2800,1.2726
• Resistance levels: 1.3306

From the point of view of technical analysis, the trend on the GBP/USD currency pair is bullish. The situation has not changed compared to yesterday. The price is trading above the resistance level of 1.3137. Currently, the road to 1.3306 is open for the price unless new information comes to the market. Buying should be considered from 1.3175 and 1.3137. Going below 1.3137 is undesirable for buyers. There are no optimal entry points for selling now despite the MACD divergence on the higher time frames.

Alternative scenario:

if the price breaks down the support level of 1.3075 and consolidates below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 144.24
• Prev. Close: 144.51
• % chg. over the last day: +0.18%

The yen yesterday continued last Friday’s sharp rally and reached a 3-week high against the dollar. The yen was supported by an upward revision of Japan’s Leading Index for June. Japan’s Index of Leading Indicators for June was revised upward by 0.4 to 109.0 from the previously reported 108.6. Escalating geopolitical tensions in the Middle East also sparked demand for the Japanese currency. Swaps estimate the odds of a BoJ rate hike at 10 bps at 0% at the September 20 meeting and at 9% at the October 30–31 meeting.

Trading recommendations

• Support levels: 142.69,144.50,142.80,140.22,137.26
• Resistance levels: 145.24,146.62,148.29,150.88,151.26,153.80

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The resistance level of 144.40 could not oppose the price. Now, intraday, the price is open to the resistance at 145.24, where we can consider selling, but with confirmation. The profit target is 142.69. The price going above 145.24 is undesirable for sellers. Despite the intraday buying pressure, there is no optimal entry point for buying now.

Alternative scenario:

if the price breaks above the resistance level of 146.48, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2512
• Prev. Close: 2518
• % chg. over the last day: +0.24%

Gold fell below $2,510 per ounce on Tuesday despite strengthening expectations of a US rate cut this year and rising geopolitical risks. San Francisco Fed President Mary Daly supported Powell’s dovish stance on Monday, saying that “the time for policy adjustment is now.” Similarly, Richmond FRB President Barkin said that while he still sees upside risks to inflation, he supports “lower” interest rates in response to a cooling labor market. The fundamental picture indicates that gold will continue to rally.

Trading recommendations

• Support levels: 2503,2494,2479,2451,2440,2416,2367,2343
• Resistance levels: 2520

From the point of view of technical analysis, the trend on the XAU/USD is bullish. The price is still trading in a wide range of 2479–2520. Yesterday, the price tested the resistance level of 2520, where sellers showed a moderate reaction. Buying should be looked for from the 2503 support level or moving average lines. Selling from 2520 is unlikely as the level has been tested several times. A breakout of 2520 will open the way for the price to new all-time highs.

Alternative scenario:

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