The Analytical Overview of the Main Currency Pairs on 2024.08.29

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1176
• Prev. Close: 1.1120
• % chg. over the last day: -0.50%

The rising dollar and weak Eurozone economic data pressured the euro on Wednesday. Eurozone M3 Money Supply Growth in July rose fastest in 17 months, dovish for ECB policy. Eurozone M3 Money Supply rose by 2.3% y/y in July, unchanged from June and showing the largest growth in 17 months, albeit weaker than expectations of 2.7% y/y. Swaps discount the odds of a 25bp ECB rate cut at the September 12 meeting to 100%.

Trading recommendations

• Support levels: 1.1104,1.1060,1.1017,1.0950,1.0905,1.0884
• Resistance levels: 1.1172,1.1275

The trend on the EUR/USD currency pair in the hourly time frame is bullish. Yesterday, the price dropped to the level of priority change, where the buyers took the initiative. Such a sharp decline jeopardized the further uptrend of the euro. It is expected that the price can grow to 1.1172, but further, everything will depend on the price reaction to the resistance zone. During the day, you can look for buying, but with a short stop loss. Selling can be considered from 1.1172, subject to sellers’ reactions.

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: 1.3254
• Prev. Close: 1.3191
• % chg. over the last day: -0.48%

The British pound is trading near $1.32, the highest level in two years, and is on track for a 3.2% gain in August, the biggest monthly increase since November 2023. This rise is driven by expectations of a divergence in US and UK monetary policy. Weak US economic data and Federal Reserve Chairman Jerome Powell’s statements about possible rate cuts weakened the dollar, while stronger UK economic data and the Bank of England’s cautious approach to further rate cuts strengthened the pound.

Trading recommendations

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

From the point of view of technical analysis, the trend on the GBP/USD currency pair is bullish. The British currency looks more confident than the euro. The price corrected to the support level of 1.3175, where the buyers took the initiative. There are no strong resistances on the sellers’ side now, so the price can grow smoothly up to 1.3306. Going below 1.3137 is undesirable for buyers. There are no optimal entry points for selling now.

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: 143.91
• Prev. Close: 144.58
• % chg. over the last day: +0.46%

The Japanese yen is trading near 144.50 per dollar, near its strongest level in three weeks, as the prospect of the US Federal Reserve cutting interest rates continues to weigh on the dollar. Bank of Japan Governor Kazuo Ueda told parliament last week that the Central Bank may adjust monetary policy if its economic estimates prove correct, indicating a willingness to raise rates again. Bank of Japan Deputy Governor Ryozo Himino took the same view this week, saying the Central Bank would raise rates if the economy and prices continue on their current path.

Trading recommendations

• Support levels: 144.12,142.69,142.80,140.22,137.26
• 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 price starts to form flat accumulation and there is a high probability of testing the resistance level of 145.24, where we can look for sales. Going above 145.24 is not desirable for sellers. There is no optimal entry point for buying now, despite the intraday buying pressure.

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: 2525
• Prev. Close: 2505
• % chg. over the last day: -0.79%

Traders are currently pricing in a 71% probability of a 25bp FOMC rate cut and a 29% probability of a more substantial 50bp cut as part of a widely expected September rate cut, according to CME FedWatch Tool data. In addition, markets are factoring in a total of 100 bps of rate cuts before the end of the year, which would lower the opportunity cost of holding non-interest-bearing assets. These expectations are underpinned by dovish statements from Fed officials noting the growing risks in the labor market while expressing confidence that inflation will return to target. All these factors are positive for further growth of gold prices.

Trading recommendations

• Support levels: 2503,2494,2479,2451,2440,2416,2367,2343
• Resistance levels: 2522,2532

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Yesterday, the price slightly extended the traded range. Buyers took the initiative from the support level of 2494. And now the price is trying to test the resistance level of 2522. Inside the day, buying prevails. A move below 2494 is undesirable for buyers, as it will open the way to 2572. A move above 2521 will open the way to 2532 — this scenario is more likely now.

Alternative scenario:

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