The Analytical Overview of the Main Currency Pairs on 2024.02.27

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0827
• Prev. Close: 1.0850
• % chg. over the last day: +0.21%

The EUR/USD pair gained 0.21% on Monday. Hawkish comments from ECB President Lagarde and ECB Governing Council representatives Stournaras and Makhlouf boosted the euro when they said that the ECB should not rush into a decision to cut interest rates. Swaps put the odds of an ECB rate cut at 25 bps at 4% at the next meeting on March 7 and 27% at the next meeting on April 11. At the same time, the probability of a rate cut by the US Fed at the April meeting is 17%.

Trading recommendations

• Support levels: 1.0844,1.0789,1.0761,1.0704,1.0684
• Resistance levels: 1.0858,1.0908

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The sell-side void liquidity zone was successfully filled without any reaction from the sellers. At the same time, buyers built an additional support zone below 1.0844. Under such market conditions, traders should expect the price to continue rising within the uptrend. If the support zone fails to hold and the price consolidates below 1.0825, we can consider selling with a target of 1.0789.

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: 1.2669
• Prev. Close: 1.2684
• % chg. over the last day: +0.12%

The British pound continues to rise against the US dollar. Sterling received support thanks to improving news from the domestic economy: markets dared to hope that the recession, which the United Kingdom entered at the end of last year, would be short-lived. Investors also noted the lower interest rate hike bets in the US and believe that similar moves in the UK will likely come later, given the resilience of domestic inflation.

Trading recommendations

• Support levels: 1.2662,1.2638,1.2615,1.2560,1.2538,1.2499
• Resistance levels: 1.2695,1.2750,1.2827

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame has changed to an upward trend. Currently, the price is trading at the level of moving averages. The MACD indicator is in the positive zone, with weak buying pressure. Buyers broke the last sell side void liquidity zone at 1.2675. Therefore, we should expect the continuation of growth. The most optimal level for buying is the support at 1.2662. Selling should be considered only if sellers react to the liquidity test above 1.2695.

Alternative scenario:

if the price breaks through the support level 1.2611 and consolidates below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 150.46
• Prev. Close: 150.70
• % chg. over the last day: +0.16%

On Monday, the decline in Japanese government bond yields weakened the interest rate differential and pressured the yen. Japan’s core and core inflation slowed to 2.2% and 2% in January from 2.6% and 2.3% in December, respectively, the lowest since March 2022. However, the core inflation figure was above market expectations for a further slowdown to 1.8%. Weakening inflationary pressures in the country strengthen bets that the Bank of Japan will maintain ultra-soft monetary settings for the near term and push back the first rate hike by the BoJ in April.

Trading recommendations

• Support levels: 150.28,149.70,148.25,147.67,148.81
• Resistance levels: 150.55,150.87,151.90

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. Buyers failed to keep the price above 150.55, and now the price is trying to test the liquidity below 150.28. The MACD indicator became negative, while the momentum was behind the sellers. But with buyers reacting correctly to the 150.28 level, we can look for buy trades. If the price consolidates below 150.28, it could trigger a sharp, impulsive sell-off wave.

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: 2033
• Prev. Close: 2031
• % chg. over the last day: -0.09%

The rise in global bond yields on Monday put pressure on precious metals. Expectations of a Fed rate cut were postponed, which hurts precious metals as swap markets are now pricing in a realistic chance of a first Fed rate cut in June rather than May. This situation may temporarily increase the dollar index and government bond yields, which will be negative for gold. In the medium term, precious metals still have all the prerequisites for an upward rally, but short-term corrections are not excluded.

Trading recommendations

• Support levels: 2022,2016,2013,2007,1995,1989
• Resistance levels: 2035,2044,2062,2069,2084,2090

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Yesterday, the price tested the liquidity above 2035 and closed below the level, with the buy side void zone of liquidity not respected by the price. There is a high probability that the price will want to allocate 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 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.