The Analytical Overview of the Main Currency Pairs on 2024.02.14

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0771
• Prev. Close: 1.0708
• % chg. over the last day: -0.58%

The Dollar Index gained 0.71% on Tuesday and reached a 3-month high. The US Consumer Price Index declined to 3.1% (2.9% expected) annually from 3.4%. The core CPI (excluding food and energy) for January was 3.9% y/y, unchanged from December’s low and above expectations of 3.7% y/y. The euro initially moved up yesterday after expectations for German economic growth in the February ZEW survey rose more than expected to a 1-year high. But then the euro moved to the downside as the dollar jumped on the back of a stronger-than-expected US CPI report for January. The probability of a rate cut in May from the US Fed fell sharply, and markets now estimate the odds of a 25 bps cut at 11% for the March 19-20 FOMC meeting and 41% for the April 30-May 1 meeting.

Trading recommendations

• Support levels: 1.0704,1.0684
• Resistance levels: 1.0721,.0741,1.0755,1.0789,1.0816,1.0860

The trend on the EUR/USD currency pair on the hourly time frame is a downtrend. Yesterday, the price tested the liquidity above 1.0789, after which an impulsive fall occurred. Now, the price has reached the support level of 1.0704. This level was tested earlier, the reaction of buyers is weak, so another wave of decline to 1.0694 is expected. The MACD indicator is starting to form a divergence, so the profit targets should be close. Selling can be looked for from 1.0721 or the moving average lines. There are no optimal entry points for buying right now.

Alternative scenario:

if the price breaks the resistance level of 1.0806 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2624
• Prev. Close: 1.2591
• % chg. over the last day: -0.26%

The British Pound fell below $1.26 after unexpectedly strong US inflation data lowered bets on Fed rate cuts in March and May, leading the dollar higher. Meanwhile, the UK wage growth slowed less than expected at the end of 2023, suggesting the labor market may take longer to cool, which argues in favor of a delayed interest rate cut by the Bank of England. Investors are now betting on a 69 bps reduction in borrowing costs by December, down from 78 bps before the labor market data was released. The UK inflation report will be released today. Inflation is expected to remain flat, which will only strengthen the BoE’s position to hold rates for longer.

Trading recommendations

• Support levels: 1.2571,1.2561,1.2499
• Resistance levels: 1.2606,1.2635,1.2643,1.2674,1.2750,1.2827,1.2881,1.2937.

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bearish. Yesterday, the price grew steadily on the news on the UK labor market and reached the resistance level of 1.2674, but then there was a sharp decline on the US inflation release. The price is now trading below the moving averages. There is weak intraday buying pressure, but the central bias remains bearish. Looking for selling from the resistance level at 1.2606 or the moving averages is best. There are no optimal entry points for buying right now.

Alternative scenario:

if the price breaks the resistance level at 1.2750 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 149.29
• Prev. Close: 150.77
• % chg. over the last day: +0.99%

The yen fell to a 2-month low against the dollar on Tuesday. The yen weakened after T-note yields rose on the back of a stronger-than-expected January US consumer price index report. Demand for the yen as a safe haven also declined after the Nikkei Stock Index (JP225) surged to a 34-year high on Tuesday. Swaps estimate the odds of a 10 bps BoJ rate hike at 32% at the next meeting on March 19 and 71% at the April 26 meeting. The Yen will continue under pressure until the BoJ starts taking real steps toward normalizing monetary policy.

Trading recommendations

• Support levels: 150.28,149.21,148.99,148.25,147.67,148.81
• Resistance levels: 150.91,151.90

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. Despite the formation of divergence on several time frames, the price continues to grow steadily. But it can be compared to the tension of the “spring”, so you should look to buy deals only with the nearest targets. It is best to buy in continuation of the uptrend from the support level of 150.28 or the moving average lines. There are no optimal entry points for selling right now.

Alternative scenario:

If the price consolidates below the support level at 149.27, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2020
• Prev. Close: 1993
• % chg. over the last day: -1.35%

A stronger-than-expected report on the January US CPI pushed back expectations of a Fed rate cut and is a negative factor for precious metals. As a result, gold fell to a 2-month low and silver to a 3-week low. Gold is also under pressure from the continued liquidation of long positions by funds after the volume of long positions in gold ETFs fell to a 4-year low on Monday. But in the medium term, a new rally in gold is expected before the end of the year, as central banks will start cutting rates in late spring/early summer.

Trading recommendations

• Support levels: 1987,1973
• Resistance levels: 1997,2001,2015,2027,2042,2062,2069,2084,2090

From the point of view of technical analysis, the trend on the XAU/USD is again downward. Yesterday, the price-tested liquidity was above 2030, followed by a sharp reversal on US CPI news. Price is trading below the moving averages, and the MACD indicator is profoundly negative, but there are the first signs of divergence. Another wave of decline to the 1987 support level is expected. For selling, it is best to use the resistance level 1997 or the moving average lines. For buying, there are no optimal entry points right now.

Alternative scenario:

if the price breaks above the resistance level on 2029, the uptrend will likely resume.