The Analytical Overview of the Main Currency Pairs on 2024.03.05

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0836
• Prev. Close: 1.0855
• % chg. over the last day: +0.17%

The weakening dollar supported the euro’s moderate growth on Monday. In addition, Monday’s economic news that the Mar Sentix Eurozone Investor Confidence Index rose more than expected to an 11-month high supported the euro. Swaps currently estimate the odds of a 25 bps ECB rate cut at 4% at the next meeting on March 7 and 17% at the April 11 meeting. At the same time, markets are pricing the odds of a 25 bps rate cut at 2% at the March 19-20 FOMC meeting and 21% at the April 30-May 1 meeting. The parity of probabilities will be accompanied by parity on the price chart.

Trading recommendations

• Support levels: 1.0849,1.0822,1.0796,1.0761,1.0704,1.0684
• Resistance levels: 1.0877,1.0908

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price consolidated above the downtrend line, and the support level at 1.0849 should hold the price if buyers want to see the price rise. Intraday buying can be looked at here but with a short-stop loss. If the price consolidates below 1.0849, we will likely decline to 1.0822. In this scenario, we can look for intraday selling with a target up to this level.

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: 1.2641
• Prev. Close: 1.2691
• % chg. over the last day: +0.39%

UK retail sales in February 2024 rose ин 1% y/y, slowing from January’s 1.4% growth and below forecasts for 1.5% growth, as bad weather and persistent cost of living pressures dampened consumption. The February figure was also the lowest since August 2022 and was below January’s consumer inflation rate of 4%. Market participants are now awaiting Treasury Secretary Jeremy Hunt’s Budget announcement, which is due on Wednesday.

Trading recommendations

• Support levels: 1.2681,1.2635,1.2611,1.2560,1.2538,1.2499
• Resistance levels: 1.2708,1.2750,1.2827

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The situation is very similar to the EUR/USD. The price has consolidated above the downtrend line, and now the buyers need to keep the price above 1.2681. The main target of buyers is a liquidity test above 1.2708. If the price consolidates below 1.2681, short-term intraday selling to the 1.2634-1.2650 zone can be considered.

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: 149.98
• Prev. Close: 150.51
• % chg. over the last day: +0.35%

Tokyo’s core inflation rate, a leading indicator of price dynamics in the country, accelerated to 2.5% in February from 1.8% in the previous month and once again surpassed the Central Bank’s 2% target. BoJ board spokesman Takata recently urged the central bank to start discussing details of a potential end to ultra-loose monetary policy, including abandoning negative interest rates and controlling bond yields. However, BoJ Governor Kazuo Ueda said it is too early to conclude whether the central bank’s 2% target is sustainable, emphasizing that more data on the wage outlook needs to be scrutinized. Currently, swaps estimate the odds of a 10 bps BoJ rate hike at the next meeting on March 19 at 37% and at the April 26 meeting at 75%.

Trading recommendations

• Support levels: 150.22,149.82,149.27,148.25,147.67,148.81
• Resistance levels: 150.55,150.73,150.87,151.90

From the technical point of view, the medium-term trend on the currency pair USD/JPY is still bullish. Currently, the price has reached the supply zone, where sellers are trying to keep the price above 150.55. Considering that at the Asian session, the yen practically did not react to the sharp surge of inflation in Tokyo, there is a high probability that the reaction will follow at more active trading sessions. In general, we can consider careful selling with a target of 150.22. A breakout of 150.55 and consolidation of the price above will open the way to 150.73.

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: 2082
• Prev. Close: 2114
• % chg. over the last day: +1.53%

Gold continues its rally. Yesterday, the price of the yellow metal reached a 3-month high. The decline in the dollar index and rising inflation expectations have increased demand for gold as an inflation hedge. The 10-year breakeven inflation rate rose to a 1-week high of 2.345% on Monday. Expectations of a Fed rate cut also support gold. From the fundamental point of view for gold, all conditions for growth remain, but any, even the smallest negative, can cause profit covering, leading to a technical correction.

Trading recommendations

• Support levels: 2100,2080,2057
• Resistance levels: 2142

From the point of view of technical analysis, the trend on the XAU/USD is bullish. The price is flying into space. Resistances are being broken almost without stopping. On such a strong bullish trend, one should not look for selling as it is the source of growth continuation. The price has deviated from the moving averages, so buying so high is also the risk of sitting out the drawdown. Ideally, for buy deals, wait for the price to correct to the 38%-61% Fibonacci zone or the moving average lines. There are no points for selling right now. And since there are no reverse triggers, the price could continue to rally to 2142 and renew the historical high.

Alternative scenario:

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