The Analytical Overview of the Main Currency Pairs on 2024.02.26

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0821
• Prev. Close: 1.0819
• % chg. over the last day: -0.02%

Friday’s rally of the S&P 500 (US500) to a new record high limited the liquidity demand for the US dollar. However, the euro did not capitalize on this opportunity, causing the price to flatline throughout the day. The euro suffered minor losses amid “dovish” comments from ECB President Lagarde and ECB Governing Council representative Centeno. Lagarde said the latest data in the Eurozone is encouraging, while Centeno said the ECB should be ready for an interest rate cut in March. The odds of a Fed rate cut at the April 30-May FOMC meeting have fallen to 23% from 75% a month ago. Meanwhile, swaps are priced at a -25 bps chance of an ECB rate cut at 34% at the April 11 meeting.

Trading recommendations

• Support levels: 1.0789,1.0761,1.0704,1.0684
• Resistance levels: 1.0839,1.0858,1.0908

The trend on the EUR/USD currency pair on the hourly time frame is bullish. Now, the price is trading at the level of moving averages. The MACD indicator has become inactive. The recent volume spikes indicate the weakness of the buyers, with a buy-side void zone of liquidity not accounted for by the price. With these market conditions, traders should expect a corrective decline in price. Sell deals can be sought intraday but with short stops. The minimum profit target is 1.0800. There are no optimal entry points for buying now, as the buyers have no initiative.

Alternative scenario:

if the price breaks the support level of 1.0789 and consolidates below, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2653
• Prev. Close: 1.2669
• % chg. over the last day: +0.12%

Consumer confidence in the UK fell again in February, suggesting that households are unwilling to spend money despite growing signs that the economy is emerging from a shallow recession. A key sentiment indicator fell 2 percentage points to minus 21, ending a three-month streak of improvement, according to GfK. Data on retail sales and private sector activity suggest the economy has chosen the right way. However, consumer spending is still being held back by high interest rates.

Trading recommendations

• Support levels: 1.2638,1.2615,1.2560,1.2538,1.2499
• Resistance levels: 1.2667,1.2689,1.2750,1.2827

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hour timeframe is still bearish, as the price failed to consolidate above the priority change level. Currently, the price is trading at the level of moving averages. The MACD indicator has become inactive. Recent volume spikes indicate weak selling pressure. Given that the buy side void areas of liquidity are not respected by price, the probability of a price decline is much higher. Under these market conditions, selling should be sought from the resistance level 1.2667 to test liquidity below 1.2638. There are no optimal entry points for buying right now.

Alternative scenario:

if the price breaks the resistance level at 1.2689 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 150.51
• Prev. Close: 150.53
• % chg. over the last day: +0.01%

There was little trading activity in the yen on Friday as Japanese markets were closed due to the Emperor’s birthday celebrations. The rise in stock indices on Friday reduced demand for the yen as a safe haven. As a result, the yen fell to a one-week low against the dollar. As early as tomorrow, Japan will release a nationwide inflation report. On an annualized basis, overall inflation is expected to fall from 2.3% to 1.9%. This will be a significant slowdown from the December figure, negating the need for BoJ policymakers to raise rates anytime soon. As a result, the yen could come under additional pressure. Also, it should not be overlooked that USD/JPY quotes are trading near early intervention levels.

Trading recommendations

• Support levels: 150.35,149.70,148.25,147.67,148.81
• Resistance levels: 150.64,150.87,151.90

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. Now, the price is trading between support and resistance zones, forming a balance condition. It is better to avoid trading inside such formations. The MACD indicator is inactive. Given that the euro and the pound are indicating corrective movements, the upward rally continuation on the USD/JPY pair is highly probable. Therefore, buying trades from the support level of 150.35 is better, but with a short stop. Price moves below 150.35 may cause a sharp wave of sell-offs.

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: 2024
• Prev. Close: 2035
• % chg. over the last day: +0.54%

The dollar weakness on Friday was a favorable factor for metals. Gold rose to a 2-week low on Friday. In addition, lower global bond yields on Friday supported precious metals. Remember that gold has an inverse correlation to government bond yields. The biggest influence on government bond yields is the monetary policy of the US Federal Reserve System. While the US Fed pushes back the first rate cut, gold may be under short-term pressure from the growth of the dollar index and government bond yields. But in the medium term, a rate cut this year is imminent, giving the green light for a rally in precious metals, both gold and silver.

Trading recommendations

• Support levels: 2022,2016,2013,2007,1995,1989
• Resistance levels: 2034,2044,2062,2069,2084,2090

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Now, the price has tested the liquidity above 2034 and closed below the level, while the price does not respect the buy side void liquidity zone. There is a high probability that the price wants to distribute this liquidity below 2022, so intraday selling can be looked for, but with a short-stop loss, as these will be positions against the major bias. Buying should be considered after the price consolidates above 2035 or after testing the support level on 2022 with confirmation in the form of buyers’ reactions.

Alternative scenario:

if the price breaks below the support level in 2016, the downtrend will likely resume.