The Analytical Overview of the Main Currency Pairs on 2024.07.02

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0736
• Prev. Close: 1.0740
• % chg. over the last day: +0.04%

The dollar initially declined on Monday after EUR/USD rose to a 2-week-high amid easing political concerns in France as the far-right party won by a smaller-than-expected margin in the first round of French parliamentary elections. This makes it less likely that the far-right party will achieve an outright majority, allowing it to pursue extreme policies. The dollar also came under pressure after an unexpected decline in the US ISM Manufacturing Index for June and May construction spending. The euro retreated from its best levels following a decline in German consumer prices, a dovish factor for ECB policy. The German Consumer Price Index for June (EU harmonized) fell to 2.5% y/y from 2.8% y/y in May, matching expectations. Swaps discount the odds of a 25bp ECB rate cut at the July 18 meeting at 8% and at the September 12 meeting at 63%.

Trading recommendations

• Support levels: 1.0718,1.0685,1.0666,1.0590
• Resistance levels: 1.0740,1.0773,1.0837

The trend on the EUR/USD currency pair on the hourly time frame is bearish. Yesterday, the price tested the priority change level, but sellers protected their positions, after which the price sharply corrected to the support level of 1.0718. Today there may be increased volatility on the euro, but the price will likely remain trading in a wide corridor. Intraday selling can be looked for from the resistance level of 1.0740, while buying can be looked for from the support level of 1.0718. A breakout of 1.0740 will open the way for the price to 1.0772. A breakdown of 1.0718 could trigger a sell-off to 1.0685.

Alternative scenario:

if the price breaks the resistance level of 1.0772 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2649
• Prev. Close: 1.2643
• % chg. over the last day: -0.05%

The UK is preparing for parliamentary elections. Opinion polls predict a significant defeat for the Conservative Party, which has been in power for 14 years. Although recent economic indicators show a recovery. The housing market still struggles with rising borrowing costs, which led to minimal price increases in June. Despite inflation falling to the Bank of England’s 2% target, the Bank of England decided to leave interest rates unchanged in June, leading to speculation of a possible rate cut in August.

Trading recommendations

• Support levels: 1.2623,1.2602,1.2566
• Resistance levels: 1.2656,1.2693,1.2735,1.2806

From the point of view of technical analysis, the trend on the GBP/USD currency pair is bearish. Yesterday, the price reached the priority change level of 1.2702 but failed to consolidate above. Sellers defended their positions, after which the price bounced sharply. Recent volume spikes confirm this. The MACD indicator became negative. Under such market conditions intraday, we can again look for buying from 1.2623, but there is a high probability that this level will be broken. For sell deals, it is best to consider the resistance level of 1.2656.

Alternative scenario:

if the price breaks the resistance level at 1.2701 and consolidates above, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 160.65
• Prev. Close: 161.43
• % chg. over the last day: +0.49%

The yen fell to a new 37-year low against the dollar on Monday. The yen came under pressure on Monday after Japan’s manufacturing PMI from Jun Jibun Bank was revised downward. The Tankan Index of business conditions in Japan’s large manufacturing industry for the second quarter rose by 2 to 13, stronger than expectations of no change at 11. Swaps estimate the odds of a 10 bps BOJ rate hike at 61% for the July 31 meeting and 54% for the September 20 meeting.

Trading recommendations

• Support levels: 160.80,160.00,159.00,158.23,157.59,157.33,156.56
• Resistance levels: 162.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The volumes still indicate the presence of a big buyer. The price managed to consolidate above the resistance at 161.50, and now this level has mirrored support. The presence of divergence on the MACD indicates a correction, but there is no confirmation from the sellers yet. For take profits, we should consider round levels — 162, 162.50, etc. For sell deals, we can consider 162, provided the sellers take the initiative. Also, do not forget that the Bank of Japan can intervene at any time to support the rate.

Alternative scenario:

if the price breaks below the support level of 160.26, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2325
• Prev. Close: 2332
• % chg. over the last day: +0.30%

On the upside for precious metals, rising inflation expectations in the US supported demand for gold as an inflation hedge after the 10-year breakeven inflation rate rose to a 3-week-high on Monday. In addition, ongoing tensions in the Middle East are helping to boost demand for precious metals. Traders are awaiting new economic data from the US and speeches from the Federal Reserve to get an idea of what the Fed’s interest rate path will be. The focus is on Fed Chairman Jerome Powell’s speech later in the day, as well as the publication of the FOMC meeting minutes on Wednesday and the Non-Farm Payrolls report on Friday.

Trading recommendations

• Support levels: 2319,2295,2276
• Resistance levels: 2330,2339,2351,2370,2387

From the point of view of technical analysis, the trend on the XAU/USD is still bearish. On higher time frames, gold is forming a flat accumulation at 2319–2338. There is buying pressure intraday, but recent volume spikes show a bearish reaction. The 2330 resistance level could be a problem for buyers. Under these market conditions, selling can be looked for from the 2330 or 2339 resistance level but with confirmation. For buying, support at 2319 can be considered.

Alternative scenario:

if the price breaks above the resistance level of 2387, the uptrend will likely resume.