The Analytical Overview of the Main Currency Pairs on 2024.03.20

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0871
• Prev. Close: 1.0865
• % chg. over the last day: -0.06%

The Federal Open Market Committee (FOMC) will hold a monetary policy meeting today. The rate is expected to remain at 5.5% at the current meeting, but the real factor may be the press conference after the meeting. Investors will be paying attention to any clues about the prospects for a central bank rate cut, the strength of the US economy, and the possibility of an inflationary rebound. Powell’s softer stance and confidence in a rate cut in the summer or spring could trigger a sell-off in the US dollar and purchases of risk assets (euros, indices) and gold. Conversely, if Powell refuses to cut rates this summer, it may put additional pressure on the euro and other currencies.

Trading recommendations

• Support levels: 1.0840,1.0822,1.0796
• Resistance levels: 1.0875,1.0893,1.0905,1.0930,1.0953,1.1000

The trend on the EUR/USD currency pair on the hourly time frame has changed to a downtrend. The price has consolidated below the priority change level. As a result, the price reached the support level of 1.0840, where the technical correction occurred. The MACD indicator became inactive, and the price was corrected to the moving average levels. Under such market conditions, it is better to consider sell trades from 1.0875 or, in case of a deeper correction, from 1.0893. Profit targets are 1.0840 and 1.0822. There are no entry points for buying now.

Alternative scenario:

if the price breaks through the resistance level at 1.0905 and consolidates above it, the uptrend is likely to resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2727
• Prev. Close: 1.2721
• % chg. over the last day: -0.05%

Inflation data will be released in the UK today. On an annualized basis, consumer prices are expected to fall from 4.0% to 3.5%. Core inflation (excluding food and energy prices) is forecast at 4.6%, down from 5.1% last month. If the data comes out in line with the consensus forecast, it will increase the likelihood that the Bank of England will begin preparations to cut rates in mid to late summer. In turn, this could put additional pressure on the British currency. Any upside inflation surprise could provide fuel for GBP growth.

Trading recommendations

• Support levels: 1.2686,1.2634,1.2611,1.2560,1.2538,1.2499
• Resistance levels: :1.2757,1.2805,1.2829,1.2861,1.2885

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame has changed to a downtrend, as yesterday’s decline was not accompanied by a reaction from buyers, as a result, the quotes closed below the level of priority change. However, the situation may change dramatically if today’s inflation data provokes price growth above 1.2757. It is best to consider selling deals from 1.2740 or 1.2757 with a target of 1.2686 or 1.2634. There are no optimal entry points for buying now.

Alternative scenario:

if the price breaks the resistance level of 1.2757 and consolidates above it, the uptrend is likely to resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 149.12
• Prev. Close: 150.79
• % chg. over the last day: +1.12%

The Japanese yen fell to 150 per dollar on Tuesday, hitting its lowest level in four months, even after the Bank of Japan raised interest rates from 0.1% to 0% for the first time since 2007, ending eight years of negative rates amid rising wages and high inflation. The yen fell on Tuesday amid dovish comments from BoJ Governor Ueda, who said BoJ policy will remain accommodative even after the end of the negative interest rate campaign. In addition, the yen came under pressure on Tuesday as 10-year JGB yields fell to their lowest in a week after the BoJ said it would continue to buy long-term government bonds as needed. Swaps estimate the odds of a further 10 bps BoJ rate hike at 6% at the April 26 meeting and 23% at the June 14 meeting.

Trading recommendations

• Support levels: 151.12,149.91,149.35,148.58,148.01,147.06
• Resistance levels: 151.90

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bullish. USD/JPY quotes are “flying straight into space” without noticing any resistance levels or pockets of liquidity. Most likely, the price is trying to test the liquidity above 151.90. Despite being overbought, opening trend-following positions in such a market is better. Buying can be looked for from 151.12 or the moving averages. But don’t forget about stopping losses, as the price is approaching the levels where the Bank of Japan used to intervene earlier to support the currency. There are no optimal entry points for selling right now. Today is a bank holiday in Japan, so the US dollar will set the main dynamics of movement on the currency pair.

Alternative scenario:

if the price breaks and consolidates below the support level of 148.01, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2160
• Prev. Close: 2157
• % chg. over the last day: -0.14%

Gold is trading around the $2,160 per ounce mark. The dollar index rallied to a 2-week high on Tuesday, which put pressure on metal prices. Also, a bearish factor for precious metals was a rate hike by the Bank of Japan. Today, investors are awaiting the Federal Reserve’s decision. The central bank is forecast to keep interest rates current, while traders cut bets on a June cut amid strong US inflation data. If the probability of a June rate cut increases after the meeting and press conference, it would put pressure on the dollar, which would be positive for gold and silver. Conversely, any shift in the probability of a later rate cut will be negative for precious metals.

Trading recommendations

• Support levels: 2149,2157,2131,2110,2080,2057
• Resistance levels: 2200

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Gold still fails to consolidate above the downtrend line, but buyers do not let the price consolidate below 1.2150. The MACD indicator does not show qualitative signals in such consolidation. There will be an accumulation of liquidity before the FOMC meeting. Probably, an impulsive movement is waiting for us at the publication. A breakout of the descending trend line and price consolidation above 2160 will provoke a new wave of growth. And vice versa, a retest of 1.2150 is likely to trigger a wave of sell-offs.

Alternative scenario:

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