The Analytical Overview of the Main Currency Pairs on 2024.03.06

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0854
• Prev. Close: 1.0855
• % chg. over the last day: +0.01%

The dollar gave up early gains on Tuesday and fell to its lowest in 1 week amid weaker-than-expected economic news on factory orders for January and ISM services for February. In addition, lower bond yields weighed on the dollar on Tuesday as the 10-year T-note yield fell to a 3-week low. The euro initially rose on Tuesday amid a weaker dollar after the S&P Eurozone PMI composite index for February was revised upward. But by the end of the US session, the dollar recovered most of its losses as the decline in equities spurred demand for liquidity in dollars.

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. Yesterday, the price tested the liquidity above 1.0875, but after the test, the price corrected back to the moving averages. Note that after the increase in volume, the price reaction was bearish. At the moment, the buyers manage to keep the price above the support level of 1.0849, and consolidation of the price above 1.0855 is a signal to open buy trades to update yesterday’s high. If the price consolidates below 1.0849, with a high probability, we will decline to 1.0822. In this scenario, we can look for intraday selling with a target 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: 1.2689
• Prev. Close: 1.2703
• % chg. over the last day: +0.11%

The UK will announce the Spring Budget today. UK Chancellor Jeremy Hunt is expected to announce tax cuts. Sterling has the second-highest implied yield among G10 currencies and is the only G10 currency to have delivered a positive total return against the USD this year. Continued investor interest in the carry trade should, therefore, keep sterling relatively high. Medium-term fair value calculations show that GBP/USD is undervalued by around 7% and that the dollar will decline this year. Medium-term forecast for GBPUSD this year with a target of just above 1.30.

Trading recommendations

• Support levels: 1.2686,1.2634,1.2611,1.2560,1.2538,1.2499
• 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. Yesterday, the price broke through the resistance level of 1.2708 but failed to consolidate above it. The growth of volumes led to the price decline under the level, and considering the divergence on the MACD indicator, there is a high probability of a corrective movement below 1.2686. If the price consolidates below 1.2686, we can consider short-term intraday selling to the 1.2634-1.2650 zone. A price consolidation above 1.2708 will open the way for prices to update yesterday’s high.

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: 150.50
• Prev. Close: 150.03
• % chg. over the last day: -0.31%

The yen rose on Tuesday after economic news showed that the February Tokyo Consumer Price Index rose more than expected, reinforcing expectations that the Bank of Japan will stop holding negative interest rates. The upwardly revised Jibun Bank Services PMI for February also supported the yen. For the Japanese yen, the fundamental conditions are beginning to change.

Trading recommendations

• Support levels: 149.82,149.27,148.25,147.67,148.81
• Resistance levels: 150.17,150.73,150.87,151.90

From the technical point of view, the medium-term trend on the currency pair USD/JPY is still bullish. However, the conditions for interception of the initiative are beginning to form. Yesterday’s liquidity test below 149.82 led to a short-term rebound to the nearest liquidity sell-side void zone. If the price consolidates below 149.82, with a high probability, the price will go for an updated minimum of 149.27. If the buyers react again and the price closes above 149.82, we can look for short-term buying with a target of 150.17

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: 2115
• Prev. Close: 2128
• % chg. over the last day: +0.61%

The dollar’s decline to a one-week low on Tuesday was a favorable factor for metals. In addition, the weakness in equities on Tuesday encouraged some buying in precious metals. As a result, gold retraced its 3-month high. At the market open on Wednesday, gold fell to $2,120 an ounce as investors stayed on the sidelines ahead of Federal Reserve Chairman Jerome Powell’s speech to the US Congress on Wednesday and Thursday, where he may give clues about the timing and extent of interest rate cuts this year.

Trading recommendations

• Support levels: 2110,2089,2057
• Resistance levels: 2142

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Closing of profits is observed on gold. After a surge in volumes, the price is no longer rising but is flat, which is a sign of closing previously opened positions. The MACD indicator indicates a technical correction. Under such market conditions, the price may make one more liquidity test above 2142, after which a sharp sell-off wave may occur. Therefore, if the price makes a false breakout of 2142 and consolidates below, it is a sell signal. There are no optimal entry points for buying now, as the price is overbought.

Alternative scenario:

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