The Analytical Overview of the Main Currency Pairs on 2024.03.04

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0801
• Prev. Close: 1.0838
• % chg. over the last day: +0.34%

The Euro rose moderately on Friday, supported by stronger-than-expected economic news from the Eurozone. January’s unemployment rate fell to a record low, a hawkish factor for ECB policy. February’s manufacturing PMI was also revised upward. In addition, the euro rose on hawkish comments from ECB Governing Council member Holtzmann, who warned against cutting interest rates too early. On the other hand, inflation in the Eurozone continues to decline. The February Eurozone CPI declined to 2.6% y/y from 2.8% y/y in January. The core CPI for February fell to 3.1% y/y from 3.3% y/y in January, the slowest growth rate in almost two years.

Trading recommendations

• Support levels: 1.0822,1.0796,1.0761,1.0704,1.0684
• Resistance levels: 1.0858,1.0908

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The support level at 1.0796 has become a stumbling block for sellers. The level was tested 3 times, and the price failed to go lower, although initially, it was expected to test below 1.0789. At the moment, the price is testing the descending trend line. Indicators, volumes, and price structure point to the continuation of the upward movement. It is best to look for buy deals after correction to moving average levels near the support level of 1.0822. An impulsive breakout and price consolidation above the trend line will also open up intraday buying opportunities. There is no entry point for selling now as sellers must take the initiative even intraday.

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: 1.2613
• Prev. Close: 1.2650
• % chg. over the last day: +0.29%

The British Pound held above $1.26 thanks to encouraging data showing a recovery in the housing market, albeit amid lingering concerns over inflation and Bank of England policy. The latest data showed a 1.2% year-on-year rise in UK house prices for February, the first annualized increase in more than a year, helped by recent lower borrowing costs and gradually easing the financial burden on households. Currently, investors are waiting for the possibility of the first rate cut by the Bank of England in August and, at the same time, taking into account similar steps of the Federal Reserve and the European Central Bank in June. At the same time, market participants are waiting for Finance Minister Jeremy Hunt’s Budget announcement, due on Wednesday.

Trading recommendations

• Support levels: 1.2635,1.2611,1.2560,1.2538,1.2499
• Resistance levels: 1.2681,1.2750,1.2827

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish. On Friday, the price tried to consolidate below the priority change level but failed to do so. At the same time, buyers showed a sharp rejection of the price. Also note that the British pound updated Thursday’s low, while the euro failed to update this extreme. In trading circles, this situation is called SMT divergence and is usually a harbinger of a reversal. Currently, the volumes and the market structure point to the continuation of the uptrend. Buying from the moving average lines or the support level 1.2635 is best. There are no optimal entry points for selling right now, but it may appear if sellers show initiative intraday from the trend line.

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: 149.93
• Prev. Close: 150.11
• % chg. over the last day: +0.12%

On Friday, the yen weakened on comments from Bank of Japan (BoJ) Governor Ueda, who said the BoJ price target was not yet reached. But in the US session, the yen recovered from its worst levels due to lower T-note yields. The yen was also supported by better-than-expected economic news on Japan’s consumer confidence and Japan’s labor market after the unemployment rate fell to a near 4-year low. Tomorrow, Japan will release the Tokyo inflation report, which is considered a preliminary inflation gauge across the country. Inflation in the capital is expected to jump sharply from 1.6% to 2.5% y/y, which could further support the yen as it further increases the likelihood of the first rate hike for April.

Trading recommendations

• Support levels: 150.22,149.82,149.27,148.25,147.67,148.81
• Resistance levels: 150.65,150.87,151.90

From the technical point of view, the medium-term trend on the currency pair USD/JPY is still bullish. On Thursday, the price declined sharply to the priority change level. After a liquidity test, the price rebounded sharply on bullish volumes. On Friday, the price corrected slightly on profit-taking. Today, at the opening of the Asian session, the price-tested liquidity was below 149.83, followed by another bullish reaction. At the same time, the price is not reacting to the liquidity void on the sell side. With these market conditions, it is worth looking to buy towards continuing the uptrend. 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: 2044
• Prev. Close: 2083
• % chg. over the last day: +1.90%

Precious metals rose sharply on Friday, with gold rising to a 9-week high and silver to a one-week high. The decline in the dollar on Friday supported the metals. In addition, the decline in global bond yields on Friday was a favorable factor for precious metals. Gold’s rise accelerated after Friday’s weaker-than-expected US economic reports on February ISM manufacturing and February consumer sentiment from the University of Michigan intensified speculation that the Federal Reserve will soon begin cutting interest rates. Markets are pricing in a 25 bps chance of a rate cut of 5% at the March 19-20 FOMC meeting and 30% at the April 30-May 1 meeting. Fundamentally, the bullish picture of gold remains.

Trading recommendations

• Support levels: 2057,2039,2021
• Resistance levels: 2088,2090

From the point of view of technical analysis, the trend on the XAU/USD is bullish. On Friday, the price rose sharply without noticing any resistance level. Currently, the price has reached the resistance level of 2088, above which there is liquidity. The price will likely test this liquidity, and then it is necessary to watch the reaction. We should likely expect a technical correction soon, as the price has deviated from the average values and is overbought. If the price impulsively drops below 2080, it will be possible to look for sell deals within the day, but with short targets, as these will be positions against the main trend.

Alternative scenario:

if the price breaks below the support at 2038, the downtrend is likely to resume.