The Analytical Overview of the Main Currency Pairs on 2024.03.21

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0865
• Prev. Close: 1.0920
• % chg. over the last day: +0.50%

The US dollar gave up early gains on Wednesday and moved lower after the results of the FOMC meeting showed that policymakers maintained their forecast of a 75 bps interest rate cut this year. The FOMC, as expected, kept the target range for the federal funds rate unchanged at 5.50% for the fifth consecutive meeting and said it expects greater confidence in inflation before cutting interest rates. The FOMC raised its 2024 GDP forecast to 2.1% from 1.4% in December and its 2024 PCE core inflation forecast to 2.6% from 2.4% in December. Markets estimate the odds of a 25 bps FOMC rate cut at 17% for the May 1 FOMC meeting and 82% for the subsequent June 12 meeting. The euro posted solid gains on Wednesday after the dollar weakened following the FOMC meeting. EUR/USD also found support after ECB President Lagarde said that the ECB could not commit to additional rate cuts after a likely rate cut in June.

Trading recommendations

• Support levels: 1.0901,1.0875,1.0840,1.0822,1.0796
• Resistance levels: 1.0936,1.0953,1.1000

The trend of the EUR/USD currency pair in the hourly time frame has changed upward. It took just one day for the EUR/USD quotes to return to the bullish trend. Currently, the price has reached the resistance level of 1.0936, where the buyers are likely to close some profits, which will provoke a correction. But this does not mean that the corrective movement will be deep. The rally will continue if the price reacts to the nearest support zone. Technically, the price is overbought, so buy trades are best sought from the support level of 1.0901 or lower. There are no optimal entry points for selling now.

Alternative scenario:

if the price breaks the support level of 1.0834 and consolidates below it, the downtrend is likely to resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2720
• Prev. Close: 1.2783
• % chg. over the last day: +0.49%

UK 10-year government bond yields fell to 4.0% after the country’s inflation was weaker than expected, fueling speculation that the Bank of England may cut interest rates sooner. According to the latest inflation report, the overall rate fell from 4.0% to 3.4% in February, the lowest reading since September 2021 and slightly below market expectations of 3.5%. The core inflation fell from 5.1% to 4.5%, below forecasts of 4.6%. Investors are eagerly awaiting the Bank of England’s interest rate decision today. The country’s central bank is expected to keep rates at 5.25%, with traders suggesting that British policymakers will likely make the first cut in borrowing costs in August.

Trading recommendations

• Support levels: 1.2765,1.2720,1.2684,1.2634,1.2611,1.2560,1.2538,1.2499
• Resistance levels: 1.2796,1.2829,1.2861,1.2885

From the point of view of technical analysis, the trend of the GBP/USD currency pair in the hourly time frame has changed to an upward trend. As with the euro, it took only one day to reverse the price. Now, the price has reached the resistance level of 1.2796, where it is possible to take profits from previously opened positions. Here, you can look for sell deals, but with a short-stop and the nearest targets, as the bullish bias remains. Looking for buy trades from the support level of 1.2765 or lower is better.

Alternative scenario:

if the price breaks the support level of 1.2684 and consolidates below it, the downtrend is likely to resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 150.83
• Prev. Close: 151.20
• % chg. over the last day: +0.24%

The yen on Wednesday continued sharp losses and hit a new 4-month low against the dollar, approaching a new 32-year low. The yen is pressured by Tuesday’s negative impact, with BoJ Governor Ueda stating that BoJ policy will remain accommodative even after the interest rate cut campaign ends. Yen trading activity was low on Wednesday as markets in Japan were closed due to the Spring Equinox Day holiday. For today, swaps estimate the odds of a 10 bps BoJ rate hike at 6% at the April 26 meeting and 18% at the next meeting on June 14.

Trading recommendations

• Support levels: 149.91,148.91,148.58,148.01,147.06
• Resistance levels: 150.93,151.39,151.90

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bullish. The yen strengthened moderately on the dollar’s weakness, but unlike the euro and the British pound, the Japanese yen failed to reverse the trend. The MACD indicator has become negative, but the selling pressure is weak. Under such market conditions, one can look for selling as part of a correction. Resistance levels of 150.93 and 151.39 are suitable for sell deals but with confirmation. Buying is best considered not before the support level of 149.92. Because the price did not test the liquidity above 151.90, there is a high probability that the upward movement will recover after the correction is over.

Alternative scenario:

if the price breaks and consolidates below the support level of 148.91, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2157
• Prev. Close: 2188
• % chg. over the last day: +0.43%

Gold prices jumped more than $15 per ounce on Wednesday after the FOMC meeting results showed that policymakers maintained their forecast to cut interest rates this year by 75 bps. A decline in global bond yields on Wednesday also supported precious metals. At the open on Thursday, gold continued its rally and hit an all-time high. In general, in the medium term, gold is still a favorable backdrop for further growth.

Trading recommendations

• Support levels: 2178,2149,2157,2131,2110,2080,2057
• Resistance levels: 2200,2250

From the point of view of technical analysis, the trend on the XAU/USD is bullish. The buyers did not let the price consolidate below 1.2150. A new rally started from this level. At the moment, the price has been overbought, and there are no prerequisites for a reversal. The only thing is that buyers can fix part of the profits at historical highs, which will lead to consolidation or corrective movement. Buying now is high, ideally waiting for a technical correction, but the price may not give it. There are no optimal entry points for selling now.

Alternative scenario:

if the price breaks below the support at 2149, the downtrend will likely resume.