The Analytical Overview of the Main Currency Pairs on 2024.07.16

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0891
• Prev. Close: 1.0894
• % chg. over the last day: +0.03%

The euro continued to climb above $1.090, reaching its highest level in four months, as investors focused on the upcoming ECB meeting, which is likely to maintain the current monetary policy due to minimal macroeconomic changes, with the market expecting one to two rate cuts this year. As for economic data, the latest data showed that industrial activity in the Eurozone declined by a smaller-than-expected 0.6% in May.

Trading recommendations

• Support levels: 1.0875,1.0859,1.0807,1.0753,1.0727,1.0718,1.0685,1.0666
• Resistance levels: 1.0906,1.0923,1.0953

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price tested the resistance zone at 1.0923, where sellers reacted. There was a change of structure within the day. Volumes also point to selling near the resistance zone. Given the MACD divergence, the price may be correct for the 1.0875 area. Inside the day, we should look for sell deals from the resistance zone above 1.0906, but with confirmation. The most optimal levels for buying are 1.0875 and 1.0859. Evaluate the price reaction.

Alternative scenario:

if the price breaks the support level of 1.0806 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2959
• Prev. Close: 1.2966
• % chg. over the last day: +0.05%

The British pound held near $1.298, its highest level in a year. This week’s important reports to monitor in the UK are CPI, employment, and retail sales data. Annual inflation is expected to remain in line with the Bank of England’s 2% target, while core inflation is expected to fall to 3.4%. Unemployment will remain 4.4%, while wages may fall to 5.7%. Retail sales are forecast to fall for the fourth time in the last five months. GfK’s consumer confidence indicator is forecast to reach its highest level since August 2021.

Trading recommendations

• Support levels: 1.2878,1.2824,1.2801,1.2761,1.2741,1.2701,1.2681,1.2663
• Resistance levels: 1.2981

From the point of view of technical analysis, the trend on the GBP/USD currency pair is bullish. The price has reached the important resistance level of 1.2981. Profit-taking and bearish reactions are observed here. The MACD indicator has become negative, the price structure has changed intraday. In intraday time frames, it is worth looking for selling from the resistance level of 1.2981, but with confirmation. For buying, it is best to consider the resistance level of 1.2926.

Alternative scenario:

if the price breaks the support level of 1.2776 and consolidates below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 158.05
• Prev. Close: 158.04
• % chg. over the last day: -0.01%

The yen initially moved up on Monday on fears that any additional yen weakening would prompt the Japanese authorities to intervene again in the forex market to support the yen after last Thursday’s intervention. But the dollar’s rise on Monday hurt the yen. Traders await fresh money market data to gauge whether Tokyo will intervene again on Friday. On the monetary policy front, the Bank of Japan is expected to announce its plans to reduce bond purchases and possibly raise interest rates again at its meeting later this month.

Trading recommendations

• Support levels: 158.34,157.52,157.33,156.56
• Resistance levels: 15.43,160.20,161.81,162.00

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bearish. The price reached the 157.52 support zone, where active price buying started. Most likely, it was the closing of previously opened sales by large participants. Yesterday, the price formed a false breakdown, and there was a structure change in intraday time frames. Considering the divergence of MACD, there is a high probability of corrective movement. For buying, we can consider the support level to be 158.34, but with confirmation. For selling, it is better to use the resistance level 159.43, but only with confirmation in the form of the sellers’ reaction.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 161.78, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2408
• Prev. Close: 2422
• % chg. over the last day: +0.58%

Fed Chair Powell’s comments on Monday indicated that the Fed may be closer to lowering interest rates, which is bullish for precious metals. Gold is also getting support from fund buying after long gold positions in ETF funds rose to a 3-month high last Friday. In addition, gold is acting as an inflation hedge as the chances of former President Trump winning the election in November have increased, which could boost inflation if he pursues new tax cuts and stimulative fiscal policies.

Trading recommendations

• Support levels: 2426,2395,2370,2351,2339,2319,2295,2276
• Resistance levels: 2432,2450

From the technical analysis point of view, the trend on the XAU/USD is bullish. Yesterday’s liquidity contraction led to a triangle breakout. The price reached the resistance level of 2431, where sellers showed a reaction. But intraday, there was no change in price structure, and there is no confirmation, so the price may continue to rise. Under such market conditions intraday, we should look for buying with a target up to 2450. Selling is best considered if the price consolidates below 2426.

Alternative scenario:

if the price breaks below the 2351 support level, the downtrend will likely resume.