The Analytical Overview of the Main Currency Pairs on 2024.03.14

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0927
• Prev. Close: 1.0948
• % chg. over the last day: +0.19%

On Wednesday, the US dollar gave up Tuesday’s small rally, triggered by a slightly hawkish US CPI report. The US retail sales and producer price index reports will be released today. February retail sales are expected to rise by 0.8% m/m, reversing January’s 0.8% decline. The producer price index for final demand is forecast to rise to 1.2% y/y from 0.9% in January, but the core producer price index will decline to 1.9% y/y from 2.0% in January. A jump in retail sales and a rise in producer inflation could support the dollar, which would be negative for the euro.

Trading recommendations

• Support levels: 1.0930,1.0907,1.0880,1.0867,1.0840,1.0822,1.0796
• Resistance levels: 1.0953,1.1000

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The resistance level at 1.0953 keeps the price from further rallying. The price is expected to correct to the support zone near 1.0930. Then, we need to evaluate the reaction of market participants. The initiative of buyers from this zone will be a trigger to open buy trades. If 1.0930 does not hold, the price will test 1.0907 again.

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: 1.2794
• Prev. Close: 1.2797
• % chg. over the last day: +0.02%

The latest data from the ONS showed that the UK GDP grew by 0.2% month-on-month in January, helped by a rebound in retail sales and house building. At the same time, data released earlier showed that UK regular wage growth in the three months to the end of January was 6.1% year-on-year, the slowest pace since the three months to October 2022 and slightly below the expected 6.2% rise. Traders expect that the Bank of England (BoE) will likely make its first rate cut in August, while the European Central Bank and the Federal Reserve may cut rates as early as June.

Trading recommendations

• Support levels: 1.2783,1.2686,1.2634,1.2611,1.2560,1.2538,1.2499
• Resistance levels: 1.2808,1.2829,1.2861,1.2885

From the technical analysis point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. However, the fact that the price cannot overcome the nearest resistance level indicates that buyers are not interested in a further rally. With a high probability, the price will make another wave of decline to 1.2744. There are no optimal entry points for buying now. Selling can be considered from 1.2829 or the moving average lines intraday, but with confirmation.

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: 147.61
• Prev. Close: 147.61
• % chg. over the last day: 0.0%

There has been increasing speculation recently that the Bank of Japan may start raising interest rates this month due to rising wages, inflation, and a strong economy. However, a decline in durable goods consumption in Japan has reduced the chances of a rate hike at next week’s Bank of Japan (BoJ) meeting. The probability of a BoJ rate hike next week fell to 55% on Wednesday from 69% on Tuesday, putting pressure on the Japanese currency.

Trading recommendations

• Support levels: 147.06,145.87
• Resistance levels: 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. Against the background of the temporary dollar strengthening, the price is correcting. Further growth of quotes is expected up to the zone above 148.29, where there is a significant accumulation of liquidity. Therefore, up to this zone, we can confidently look for intraday buying from moving averages and trend lines or indicators. Selling can be considered after the sellers’ initiative to test 148.29.

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: 2158
• Prev. Close: 2174
• % chg. over the last day: +0.74%

Gold prices were supported by a slight decline in the dollar index and weakness in equities. Gold shrugged off the bearish effect caused by the decline in 10-year bond yields. Gold is also supported by market expectations that the Fed and ECB will start cutting interest rates in June. The reduction of interest rates is accompanied by a decline in the yields of government bonds, and since gold has an inverse correlation to bond yields, it is a growth factor for the yellow metal.

Trading recommendations

• Support levels: 2161,2150,2131,2110,2080,2057
• Resistance levels: 2200

From the technical analysis point of view, the trend on the XAU/USD is bullish. There is renewed buying interest in gold. The support level 2161 is a good place to look for buy trades, but with confirmation. If the price falls back to 2150, there is a high probability that this level will not hold for the third time, leading to a sell-off to 2131.

Alternative scenario:

if the price breaks below the support at 2110, the downtrend will likely resume.