The Analytical Overview of the Main Currency Pairs on 2024.05.10

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0751
• Prev. Close: 1.0781
• % chg. over the last day: +0.28%

The European Central Bank is expected to start cutting rates at its upcoming meeting on June 6, and market predictions point to a potential 70 basis points rate cut for the year. In contrast, the US Federal Reserve is expected to make changes in September, and even then, a rate cut is uncertain. The probability of a rate cut in September was 69% after initial jobless claims unexpectedly soared to an 8-month high.

Trading recommendations

• Support levels: 1.0749,1.0713,1.0688,1.0652,1.0623,1.0590
• Resistance levels: 1.0795,1.0843,1.0865

The trend on the EUR/USD currency pair on the hourly time frame is bullish. Yesterday, the price formed a false breakdown zone below 1.0735, and now the demand zone in front of this level will act as support. The price trades above the moving averages, and the MACD indicator is positive. Under such market conditions, buying should be looked for from the support zone below 1.0749 or the moving averages, but with confirmation. Sell deals can be considered from 1.0795, but if the price sells this zone, the upside space to 1.0843 will be opened.

Alternative scenario:

if the price breaks the support level at 1.0673 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2488
• Prev. Close: 1.2523
• % chg. over the last day: +0.28%

Yesterday, the Bank of England kept its key rate at 5.25%, which is in line with expectations and the highest rate since 2008. However, the two MPC representatives opted for a 0.25 pp rate cut. BoE predictions call for the bank rate to fall from 5.25% to 3.75% by the end of the forecast period. The UK economy is expected to grow by 0.4% in Q1 2024 and 0.2% in Q2, but demand will likely remain weaker than potential supply growth, leading to sags in the economy.

Trading recommendations

• Support levels: 1.2487,1.2465,1.2446,1.2423
• Resistance levels: 1.2537,1.2562,1.2611,1.2634,1.2674,1.2707

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The British pound expectedly declined to the level of priority change at 1.2465 but failed to consolidate below the level. Buyers defended the level, although it should be noted that price tested liquidity below 1.2446. Currently, the price trades above the moving averages, with buyers forming another demand zone below 1.2487. With these market conditions, we should expect a rise to 1.2537 to distribute the accumulated liquidity. There are no optimal entry points for selling.

Alternative scenario:

if the price breaks the support level of 1.2465 and consolidates below, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 155.47
• Prev. Close: 155.43
• % chg. over the last day: -0.03%

The JPY settled at 155.6 per dollar as investors reacted to the summary of the April BoJ meeting, which highlighted the risks to inflation growth and discussed scenarios that could warrant further interest rate hikes. The report also cited the weakening yen as a major contributor to rising rates, prompting the central bank to take notice. Nevertheless, the Bank of Japan intends to maintain favorable financial conditions for the time being while assessing the prospects for economic activity and price growth.

Trading recommendations

• Support levels: 155.06,153.83,153.12,151.93,151.59
• Resistance levels: 155.79,156.29,156.57,157.12,158.20,160.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The quote growth has slowed down a bit. The price is trading at the levels of moving averages, while the MACD indicator has become inactive. The price will likely stand here for a while to accumulate liquidity. Under such market conditions, looking for sell deals from the area above 155.79 is possible, but subject to sellers’ reactions. Buying should be looked for from 155.05, but also with confirmation.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 158.00, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2309
• Prev. Close: 2346
• % chg. over the last day: +1.60%

The weakening of the dollar on Thursday supported metals prices. Precious metals prices closed higher on Thursday, with gold reaching a one-week high and silver reaching a two-week high. Precious metals also received support from Thursday’s US unemployment report, which showed that jobless claims rose to an 8-month high. This indicates weakness in the labor market and could prompt the Fed to cut interest rates sooner. In addition, ongoing tensions in the Middle East support demand for precious metals.

Trading recommendations

• Support levels: 2345,2328,2307,2276,2249,2229,2206
• Resistance levels: 2372,2418

From the point of view of technical analysis, the trend on the XAU/USD is bearish, but it is close to change. Currently, the price is testing the priority change level, and the sellers’ reaction is weak. The MACD indicator shows the pressure on buyers. Most likely, gold will continue to rise to 2372. Buying should be sought intraday but with a short stop. Also, the demand zone below 2344 can act as a support. But if the price rebounds sharply today and consolidates below 2344, we should expect a decline to 2328. But this scenario is unlikely.

Alternative scenario:

If the price breaks and consolidates above the resistance level of 2350, the uptrend will likely resume.