The Analytical Overview of the Main Currency Pairs on 2024.02.19

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0763
• Prev. Close: 1.0775
• % chg. over the last day: +0.11%

The euro rose on Friday and pressured the dollar after German 10-year bond yields rose to a 2-month high, increasing the probability differential for an interest rate cut this spring. Markets estimate the odds of a 25 bps rate cut at 12% for the March 19-20 FOMC meeting and 37% for the April 30-May -1 meeting. Meanwhile, swaps rate the odds of a 25 bps ECB rate cut at 7% for the next meeting on March 7 and 44% for the April 11 meeting. The euro was also supported by Friday’s hawkish comments from ECB executive board spokesperson Schnabel, who said the ECB should not rush to cut interest rates.

Trading recommendations

• Support levels: 1.0766,1.0739,1.0704,1.0684
• Resistance levels: 1.0796,1.0816,1.0860

The trend on the EUR/USD currency pair on the hourly time frame is a downtrend. The price is slowly moving towards the level of priority change at 1.0796. Sellers react very weakly to resistance zones. The MACD indicator is positive, but the divergence indicates that the buyers also run out of strength. Given that today is a bank holiday in the US, the EUR/USD currency pair should be expected to move flat with a slight bullish bias intraday.

Alternative scenario:

if the price breaks the resistance level of 1.0796 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2588
• Prev. Close: 1.2599
• % chg. over the last day: +0.09%

In the UK, January retail sales rose by 3.4%, exceeding market forecasts of 1.5% growth, after a significant decline of 3.3% in December. This is the highest monthly increase since April 2021, with sales rising in almost all sectors (except clothing stores). Meanwhile, January’s strong jump in domestic retail sales had little impact on sterling. This could be because the latest quarterly GDP figures showed that the UK has suffered a technical recession. This week, observers of the British economy have almost no important events, so the dollar index will bring the main dynamics in the pricing of GBPUSD.

Trading recommendations

• Support levels: 1.2610,1.2560,1.2538,1.2499
• Resistance levels: 1.2635,1.2643,1.2683,1.2750,1.2827

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 has corrected to the empty liquidity zone for selling, but sellers have not reacted. Instead, buyers are building support zones step by step. Such market conditions increase the probability of a trend change on the current time frame. Buying can be sought intraday from the support level 1.2610 with a target of 1.2635. Selling can be looked for from the 1.2635 level, subject to sellers’ reactions.

Alternative scenario:

if the price breaks the resistance level at 1.2683 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 149.88
• Prev. Close: 150.18
• % chg. over the last day: +0.20%

The weakness of the consumer sector in the latest GDP data means that the termination of negative rates is now more likely at the Bank of Japan (BoJ) April meeting rather than the March meeting, giving the BoJ more time to assess the economy. But despite the weak GDP data, changes to various monetary easing measures, including negative rates, are still possible. The BoJ hopes that rising wages and easing cost pressures will support consumption and the broader economy, keeping inflation at 2% and normalizing monetary policy. Swaps estimate the odds of a 10 bps BoJ rate hike at 33% at the next meeting on March 19 and 69% at the April 26 meeting.

Trading recommendations

• Support levels: 149.95,149.21,148.99,148.25,147.67,148.81
• Resistance levels: 150.39,150.91,151.90

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price corrected to the support level of 149.95, where the buyers are trying to intercept the initiative. The MACD indicator is negative, but the sellers’ pressure is weakening. Under such market conditions, buying can be sought from the support level 149.95 with a minimum target of 150.39. There are no optimal entry points for selling 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: 2004
• Prev. Close: 2013
• % chg. over the last day: +0.44%

The dollar weakness on Friday supported precious metals. Silver rose to a 5-week high on Friday, while gold also found support as an inflation hedge after the US 10-year breakeven inflation rate rose to a 3-week high on Friday. According to analysts, gold will gain more fundamental support as we approach April, with a high probability of rate cuts from the US Fed and ECB.

Trading recommendations

• Support levels: 2017,1989,1973
• Resistance levels: 2024,2042,2062,2069,2084,2090

From the point of view of technical analysis, the trend on the XAU/USD is again downward but close to a shift. The price is approaching the priority change level. The MACD and EMA indicators are showing further price growth. The only selling zone that stands in the way of buyers is the area above 2024. Under these market conditions, buy trades should be sought intraday from the 2017 level, subject to buyer reaction. Sell trades should be considered from 2024 and subject to sellers’ reactions. By the word reaction, we mean initiative on the lower time frames.

Alternative scenario:

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