The Analytical Overview of the Main Currency Pairs on 2024.07.17

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0896
• Prev. Close: 1.0899
• % chg. over the last day: +0.03%

The euro received some support on Tuesday after expectations for economic growth in Germany fell less than expected in the July ZEW survey. But a strengthening dollar amid a stronger-than-expected retail sales report limited the euro’s gains. Expectations for German economic growth in the July ZEW survey fell by 5.7 to a 4-month low of 41.8 but were stronger than expectations of 41.0. Swaps discount the odds of an ECB rate cut by 25 bps at 4% for the July 18 meeting and 80% for the September 12 meeting.

Trading recommendations

• Support levels: 1.0890,1.0875,1.0859,1.0807,1.0753,1.0727,1.0718,1.0685,1.0666
• Resistance levels: 1.0906,1.0923,1.0953

The trend on the EUR/USD currency pair on the hourly time frame is bullish. Yesterday, the price tested the 1.0875 support level, where buyers showed a reaction. A surge in volume activity also confirms this. Now, the price is testing the resistance level of 1.0906 again, but the reaction of sellers this time is weak. Under such market conditions, buy trades are best considered from the support level of 1.0890 or after the breakout of 1.0906. For selling, only 1.0923 should be considered now.

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: 1.2966
• Prev. Close: 1.2972
• % chg. over the last day: +0.05%

Inflation data will be released in the UK today. Price pressures are expected to continue to ease and fall below 2% in annualized terms. Last week, expectations for a Bank of England rate cut in August diminished after Bank of England Chief Economist Huw Pill emphasized that service price inflation and wage growth remain strong. On the other hand, lower US inflation data strengthened the case for a possible rate cut by the Federal Reserve in September.

Trading recommendations

• Support levels: 1.2926,1.2878,1.2824,1.2801,1.2761,1.2741,1.2701,1.2681,1.2663
• Resistance levels: 1.2981

From the point of view of technical analysis, the trend on the GBP/USD currency pair is bullish. The price was corrected but failed to reach the support level. The MACD indicator became inactive. Therefore, the intraday selling scenario remains. We should look for selling from the resistance level of 1.2981 on intraday time frames but with confirmation. For buying, it is best to consider the support level of 1.2926 or wait for a breakout of 1.2981.

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: 158.00
• Prev. Close: 158.32
• % chg. over the last day: +0.20%

On Tuesday, the yen was pressured by the strengthening dollar. The unexpected decline in Japan’s Tertiary Industry Activity Index for May also hurt the yen. In addition, the divergence in government bond yields is bearish for the yen as Japanese government bond yields are significantly lower than other G-7 countries. Swaps estimate the odds of a 10bp BoJ rate hike at 43% for the July 31 meeting and 35% for the September 20 meeting.

Trading recommendations

• Support levels: 157.91,158.34,157.52,157.33,156.56
• Resistance levels: 159.43,160.20,161.81,162.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. Yesterday, the price corrected a bit but did not reach the resistance point. The MACD indicator became inactive. The scenario with buy deals and continuation of correction remains. For buying, we can consider the support level to be 157.91, but with confirmation. For selling it is better to use the resistance level 159.43, but also 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: 2422
• Prev. Close: 2468
• % chg. over the last day: +1.90%

Gold rose above $2,470 per ounce on Wednesday, reaching a new record high, amid increased optimism that the US Federal Reserve will cut rates as early as September. Fed Chairman Jerome Powell noted on Monday that lower-than-expected inflation in June boosted confidence in achieving the target level of price growth. Gold is also rising amid increased demand for it as an inflation hedge after the chances of former President Trump winning the election in November increased, which could boost inflation if he pursues new tax cuts and stimulative fiscal policies. Gold also received support from fund buying after long gold ETF positions rose to a 3-month high on Monday.

Trading recommendations

• Support levels: 2457,2426,2395,2370,2351,2339,2319,2295,2276
• Resistance levels: 2432,2450,2500

From the point of view of technical analysis, the trend on the XAU/USD is bullish. The price is aiming at the psychological mark of 2500. There are no counter-resistances now, so any correction should be considered as an opportunity to join the uptrend. The nearest support levels are 2457 and 2426. The second level is preferable, but the price does not make deep corrections on a strong trend. There are no optimal entry points for selling now.

Alternative scenario:

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