The Analytical Overview of the Main Currency Pairs on 2024.03.18

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0885
• Prev. Close: 1.0888
• % chg. over the last day: +0.03%

According to ECB Governing Council Representative Rehn, the projected inflation in the Eurozone this year and next will be close to the 2% target, allowing the ECB to gradually start taking its foot off the monetary policy brake as summer approaches. Swaps are pricing in a 25 bps chance of an ECB rate cut of 8% at the next meeting on April 11 and 85% at the June 6 meeting. The Eurozone will release its final inflation report today, but no changes are expected.

Trading recommendations

• Support levels: 1.0876,1.0867,1.0840,1.0822,1.0796
• Resistance levels: 1.0902,1.0930,1.0953,1.1000

The trend on the EUR/USD currency pair on the hourly time frame is bullish. Quotes approached the priority change level at 1.0867, but on Friday, buyers created an additional barrier for the price in the form of the support level at 1.0876. The MACD indicator is in the negative zone, but no initiative is now on either side. It is expected that the price will test the resistance level of 1.0902, after which it is necessary to evaluate the reaction of market participants. Buying can be looked for from the support level 1.0876 but with confirmation. Sell trades are best considered from 1.0902, but also subject to sellers’ initiative.

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: 1.2755
• Prev. Close: 1.2733
• % chg. over the last day: -0.15%

Like most currencies, sterling suffered from the unexpected rise in US producer prices and the inevitable rethinking of whether it is early enough to declare inflation defeated and cut interest rates. The market has already seen expectations of when the Federal Reserve will start to reduce borrowing costs pushed back to later this year. This week, the UK inflation report will be released on Wednesday, followed by the Bank of England’s monetary policy meeting on Thursday. The previous Monetary Policy Committee meeting ended with unchanged rates, and the same result is expected this week.

Trading recommendations

• Support levels: 1.2722,1.2686,1.2634,1.2611,1.2560,1.2538,1.2499
• Resistance levels: 1.2773,1.2805,1.2829,1.2861,1.2885

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish but close to change. Today, at the opening of trading, the price tested the level of the priority change, but buyers were able to take the initiative and bring the price back above the level. The MACD indicator is signaling a divergence. Under these market conditions, inside-the-day buying can be considered with a target of up to 1.2773. Selling can only be considered if the price consolidates below 1.2722 and changes priority.

Alternative scenario:

if the price breaks through the support level of 1.2722 and consolidates below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 148.32
• Prev. Close: 149.03
• % chg. over the last day: +0.49%

Tuesday’s BoJ meeting may be one of the most important in recent years. Swaps estimate the odds of a 10 bps BoJ rate hike at the current meeting at 56%. This event reflects the growing confidence among policymakers that after this year’s wage negotiations, average wages will jump to a 33-year high, and a cycle of rising wages and rising prices (higher inflation) will begin. Suppose the Bank of Japan decides to raise the interest rate. In that case, it may cause a resonant spike in volatility on currency pairs with the Japanese yen, with a bias towards strengthening the Japanese currency.

Trading recommendations

• Support levels: 148.58,147.06
• Resistance levels: 149.32,150.22,150.73,150.87,151.90.

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish, but the price has reached the level of priority change. The yen is under the pressure of temporary strengthening of the US dollar. Still, tomorrow, the Bank of Japan may change its multi-year policy toward tightening, which will sharpen the yen. Technically, the price is now in the selling zone, so most likely, after the formation of a small consolidation, the price will begin to decline. Selling can be sought intraday with a minimum target of 148.58. If the Bank of Japan raises the rate tomorrow, the yen may strengthen quickly to 147.06. However, if the price consolidates above 149.32, buyers can take the initiative in the mid-term.

Alternative scenario:

if the price breaks and consolidates above the resistance level at  149.32, the upward trend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2162
• Prev. Close: 2155
• % chg. over the last day: -0.32%

Gold’s rally has stalled in the last few trading days as there is little fundamental news and activity that could continue the precious metal’s rally. A rate cut in the US is likely in June, and the geopolitical backdrop remains turbulent. To move from current levels, a fundamental driver is needed, which may appear this week after the meetings of the leading central banks.

Trading recommendations

• Support levels: 2131,2110,2080,2057
• Resistance levels: 2152,2200

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Gold failed to consolidate above the downtrend line, and buyers failed to hold the support level 2152. Under such market conditions, we should expect a further price decline to 2131. In this case, looking for sell deals from the resistance level of 2152 is appropriate. However, if the price consolidates above 2156, a false breakdown will be formed below 2152, which can support further buying and resumption of the rally.

Alternative scenario:

if the price breaks below the support at 2123, the downtrend will likely resume.