The Analytical Overview of the Main Currency Pairs on 2024.03.12

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0938
• Prev. Close: 1.0925
• % chg. over the last day: -0.12%

Yesterday, the euro felt bearish sentiment after dovish comments from ECB Governing Council representatives Nagel and Villeroy de Galhau last Friday, who said that the ECB may start cutting interest rates in the spring. The US consumer inflation report will be released today. On an annualized basis, overall inflation is expected to fall from 3.2% to 3.1%. Core inflation (excluding food and energy prices) will fall from 3.9% to 3.8% y/y. In monthly terms, inflationary pressures are expected to rise by 0.3%. If the data comes out in line with consensus, it will indicate that underlying inflationary trends are not intensifying. This situation would increase the likelihood of a rate cut at the June meeting, putting additional pressure on the US dollar. However, any surprise in the form of rising consumer prices may give temporary confidence to the dollar, which will not pressure the euro.

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. Compared to Friday, the situation has not changed much. Yesterday, the price was corrected and updated to Friday’s low, after which the buyers showed moderate initiative. But considering the divergence on the MACD indicator, there is a high probability of a corrective movement to 1.0907. Expect the price to test liquidity below 1.0907 today on or after the release of US inflation news. This level can be used for buying if there is an appropriate reaction from buyers. Selling can be considered from the resistance level of 1.0953 but with a short-stop loss, as this would be selling against the significant bias.

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: 1.2854
• Prev. Close: 1.2808
• % chg. over the last day: -0.35%

Labor market data will be released in the UK today. The Bank of England will focus on the average wage report. A decline in this indicator will weaken future inflationary pressures, which will give the Bank of England to consider a rate cut at the end of the summer. Such a situation will hurt the pound. On the other hand, the growth of wages, on the contrary, will shift the probability of the first rate cut to the fall or even winter.

Trading recommendations

• Support levels: 1.2783,1.2686,1.2634,1.2611,1.2560,1.2538,1.2499
• Resistance levels: 1.2829,1.2861,1.2885

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hour timeframe is bullish. Yesterday, the price corrected to the nearest support level at 1.2821, where buyers reacted moderately. The MACD indicator remains negative. At least one more wave of decline is expected. Selling can be sought from the resistance level of 1.2829 but with confirmation in the form of sellers’ reactions. If the price goes higher on the news, sell deals can also be considered after the test of 1.2861. For buying, the most optimal support level is 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: 147.04
• Prev. Close: 146.93
• % chg. over the last day: -0,07

Producer prices in Japan rose 0.6% year-on-year in February 2024, exceeding the 0.2% increase in the previous month and market forecasts of 0.5%. This was the highest producer inflation rate since last October, as prices rose across most components. Producer inflation is a preliminary measure of consumer inflation. Amid this news, the Japanese yen faced buying coverage as rising inflation may push back the Bank of Japan’s plans to raise rates this spring.

Trading recommendations

• Support levels: 146.48,145.87
• 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 price is corrected within the downward movement. The MACD indicator is positive, with buyers building a buy zone below. Under such market conditions, the correction may be deeper. Selling should be considered from 147.49 or 148.29, subject to sellers’ initiative. Buying is worth seeing buyers’ reactions to the liquidity void area below 147.30.

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: 2181
• Prev. Close: 2183
• % chg. over the last day: +0.09%

Gold dipped below the $2,180 per ounce mark on Tuesday as investors became more cautious about releasing key US inflation data that could affect the Federal Reserve’s monetary policy outlook. Markets are currently pricing in the Fed, not cutting rates in March and May, but are betting on a rate cut in June. The underlying sentiment for gold remains bullish.

Trading recommendations

• Support levels: 2161,2131,2110,2080,2057
• 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. 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 on all time frames above H1, while the price is clearly overbought on other indicators. A provocative move is expected on today’s CPI news. Gold’s main target is a liquidity test above 2200. But there is little fuel for another wave. Therefore, the price may correct to the nearest support level. Buying can be considered intraday from 2164 or 2131 but with confirmation. Selling can be looked for after a liquidity test above 2200. Selling at current prices is also possible, but there is a high probability of a stop-loss blowout on the news.

Alternative scenario:

if the price breaks below the support at 2057, the downtrend is likely to resume.