The Analytical Overview of the Main Currency Pairs on 2024.01.26

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0882
• Prev. Close: 1.0845
• % chg. over the last day: -0.34%

The US dollar rose moderately on Thursday after the US Q4 GDP grew more than expected, which may prompt the Fed to postpone interest rate cuts. Q4 US GDP rose by 3.3 % (y/y), exceeding expectations of 2.0%. The rise in the dollar index had a negative impact on the euro. Additional pressure on the euro was also exerted by data on the German business climate index from IFO, which unexpectedly fell to a 3-year low. EUR/USD losses accelerated after ECB President Lagarde said that the Eurozone economy “probably” stagnated in Q4, which increased the probability of ECB interest rate cuts. The probability of a rate cut in April jumped from 60% to 93%.

Trading recommendations

• Support levels: 1.0838,1.0827
• Resistance levels: 1.0860,1.0877,1.0915,1.0931,1.0985,1.1010,1.1037,1.1080.

The trend on the EUR/USD currency pair on the hourly time frame is a downtrend. Yesterday, the euro fell lower, and selling pressure intensified. The price retested the support level of 1.0827, where buyers showed a moderate reaction. At the same time, an additional support level of 1.0838 was formed, which is very important for buyers to hold. A breakdown and consolidation below 1.0838 will open the way for further declines. If 1.0838 holds the price, we should expect corrective rebounds to 1.0860 or 1.0877.

Alternative scenario:

if the price breaks the resistance level of 1.0915 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2719
• Prev. Close: 1.2706
• % chg. over the last day: -0.10%

The GfK UK Consumer Confidence Indicator rose to negative 19 in December 2024 from negative 22 in December, the highest reading since January 2022 and above market expectations of negative 21. It was the third consecutive monthly rise amid signs of improving economic activity. Nevertheless, the consumer confidence indicator remains negative, meaning that the majority of respondents remain pessimistic about the economy.

Trading recommendations

• Support levels: 1.2685,1.2667,1.2638,1.2611,1.2572,1.2548,1.2499
• Resistance levels: 1.2730,1.2764,1.2827,1.2881,1.2937.

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price of the British currency declined yesterday, but not as much as the euro. At the moment, the pound is more resistant to the growth of the dollar than the euro. The support level of 1.2685 managed to keep the price from further decline, but the pressure remains on the sellers. Under these market conditions, buy trades should be expected from the support level of 1.2685 or 1.2667, but subject to buyers’ reaction to these levels. Selling can be sought intraday from the moving averages.

Alternative scenario:

if the price breaks the resistance level at 1.2764 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 147.41
• Prev. Close: 147.65
• % chg. over the last day: +0.16%

On Thursday, the yen gave up early gains and moved to the downside after a stronger-than-expected US Q4 GDP report boosted the dollar and pressured the yen. On Thursday, the yen initially found support from rising Japanese government bond yields after the 10-year JGB yield rose to a 6-week high of 0.751%. New probabilities are beginning to form regarding further Bank of Japan (BoJ) meetings. Swaps estimate the odds of a 10 bps BoJ rate hike at the next meeting on March 19 at 18%, while at the April 26 meeting, this probability is 74%.

Trading recommendations

• Support levels: 147.50,146.97,146.39,145.45,144.33,143.41,142.18
• Resistance levels: 147.91,148.51,149.33.

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. At the moment, the price is forming a flat accumulation with the boundaries of 147.50-147.91. For the formation of signals, it is necessary to wait for the price breakout or breakdown of any of the boundaries. Market conditions indicate a higher probability of a breakout above. A move above 147.91 will open the way to 148.51. A consolidation below 147.50 will give room for the price to retest liquidity below 146.97

Alternative scenario:

if the price consolidates below the support at 144.33, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2012
• Prev. Close: 2020
• % chg. over the last day: +0.40%

Precious metals showed modest gains on Thursday. Silver was supported on Thursday after the US GDP for the 4th quarter grew stronger than expected, and new home sales in December rose more than expected, which is positive for industrial metals demand. Meanwhile, gold price gains were limited due to a stronger dollar. Gold also suffered from the continued liquidation of long positions by funds after long positions in gold ETFs fell to a 4-year low on Wednesday.

Trading recommendations

• Support levels: 2019,1997,1987,1973
• Resistance levels: 2025,2036,2044,2064,2072,2084,2090.

From the point of view of technical analysis, the trend on the XAU/USD has changed to a downtrend. Gold is now forming a broadly volatile flat, which makes it difficult to find good entry points. A liquidity void zone is formed above the resistance level of 2025. If the price after the test of this zone returns under 2025, it may cause a wave of sell-offs with targets to 2019 or even to the renewal of the lows of the week. If the price impulsively breaks this zone, it could conversely trigger a gold rally to 2036 and beyond. Therefore, we need to act here, depending on the price reaction to this or that zone.

Alternative scenario:

if the price breaks through and consolidates above the support level of 2049, the uptrend will likely resume.