The Analytical Overview of the Main Currency Pairs on 2024.03.11

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0946
• Prev. Close: 1.0937
• % chg. over the last day: -0.08%

The dollar came under pressure on Friday after the February US unemployment report reinforced expectations that the Fed will start cutting interest rates in time for the June FOMC meeting. US non-farm payrolls for February rose by 275,000, exceeding expectations of 200,000. However, January data was revised downward to 229,000 from the previously announced 353,000. The unemployment rate rose to a two-year high of 3.9% in February, indicating a weak labor market compared to expectations of no change at 3.7%. The US average hourly earnings for February fell to 4.3% y/y from 4.4% y/y in January, matching expectations. By the end of the trading day on Friday, the euro was also under pressure after the words of ECB representatives Nagel and de Galhau that the first ECB rate cut would take place this spring.

Trading recommendations

• Support levels: 1.0907,1.0880,1.0867,1.0840,1.0822,1.0796
• Resistance levels: 1.0953,1.1000

The trend on the EUR/USD currency pair on the hourly time frame is bullish. On Friday, the price retested the resistance level 1.0953 but failed to consolidate above it. At the same time, sellers took the initiative, which led to the price decline by the end of the day. Now, the price is trading into the buying zone, but buyers’ reactions are weak. The last volume spikes on the growth candle led to a flat condition, indicating that the purchases are covered. Considering the divergence on the MACD indicator, there is a high probability of corrective movement to 1.0907. Therefore, if the price consolidates below the buy zone, we can consider selling with the target up to the mentioned support level. If the price regains its holding above 1.0953, the rally will continue.

Alternative scenario:

if the price breaks the support level of 1.0867 and consolidates below, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2807
• Prev. Close: 1.2857
• % chg. over the last day: +0.39%

The latest US labor market data boosted GBP/USD quotes and most other major currencies against the USD, as the wage growth weakened a bit and the unemployment rate rose. The Pound also received support from the UK’s Spring Budget, but the GBP looks overbought now. This week, we will see the release of several economic indicators for the UK, ranging from labor market data to GDP and industrial production reports. Weak data could trigger the selling of the British currency.

Trading recommendations

• Support levels: 1.2821,1.2783,1.2686,1.2634,1.2611,1.2560,1.2538,1.2499
• Resistance levels: 1.2885

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price grew steadily during the previous week, but active sellers appeared at the resistance level of 1.2885 on Friday. These are the first signs of a long closing. Now, the price is trading in the buying zone, with no buyer reaction, and the last volume spike on the growth candle showed a flat condition. Under such market conditions, the probability of corrective movement increases, so intraday, it is worth looking to sell deals with a target of up to 1.2821. If this support level is broken, the price may fall to 1.2783.

Alternative scenario:

if the price breaks through the support level 1.2670 and consolidates below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 147.97
• Prev. Close: 147.05
• % chg. over the last day: -0.62%

On Friday, the yen rose to a 5-week high against the dollar on reports that a growing number of Bank of Japan (BoJ) policymakers are leaning toward abandoning a negative interest rate at this month’s meeting, given expectations of stronger wage growth this year. Swaps put the odds of a 10 bps BoJ rate hike at 67% at the next meeting on March 19 and 79% at the April 26 meeting. Revised data showed Japan’s economy returned to growth in Q4 2023, averting a technical recession.

Trading recommendations

• Support levels: 145.87
• Resistance levels: 147.49,148.28,148.79,150.22,150.73,150.87,151.90

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bearish. The yen is strengthening on expectations of BoJ policy change this spring. At the moment, the price has declined in the daily buying zone. On trading volumes, there is a covering of profits here. The price is technically oversold, and there is a divergence in the MACD indicator. Intraday corrective buying can be considered with a target to the nearest resistance levels.

Alternative scenario:

if the price breaks and consolidates above the resistance level at 150.56, the upward trend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2159
• Prev. Close: 2178
• % chg. over the last day: -0.88%

Friday’s dollar index drop to a 7-week low is a bullish metal factor. As a result, gold prices reached an all-time high on Friday. Speculation that the Fed and ECB will soon move to cut interest rates has fueled gold buying as a store of value in recent weeks. The first-rate cut from the US Fed is scheduled for June 12, while the ECB could cut rates as early as this spring. Recent comments from Fed officials suggest that the US central bank is happy with the current disinflationary trend, and it would take a strong advance in any of the year-over-year inflation numbers to alter or delay the Fed’s interest rate cut schedule.

Trading recommendations

• Support levels: 2131,2110,2080,2057
• Resistance levels: 2200

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Gold continues to see closing profits. After a surge in volumes, the price either grows uncertainty or forms a flat sideways. Divergence on the MACD indicator is visible in all timeframes above H1, while the price is overbought in other indicators. Sell trades should be considered only if the price is fixed below the channel lines. At the same time, it is necessary to see the sellers’ initiative on the lower time frames. Currently, there is no such initiative, and if the majority of participants now sell gold at such highs, the price can make one more wave. Buying can be considered intraday from the moving averages with a target of 2200 but with a short-stop loss.

Alternative scenario:

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