The Analytical Overview of the Main Currency Pairs on 2024.05.21

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0866
• Prev. Close: 1.0857
• % chg. over the last day: -0.08%

The ECB is almost 100% likely to reduce borrowing costs in June, but even after that, there is uncertainty, and many policymakers favor a cautious approach. Eurozone inflation currently stands at 2.4%, close to the ECB’s 2% target and well below the 7% a year ago. In addition, fresh Eurozone GDP estimates confirmed the economy’s exit from recession in the first quarter, and the European Commission’s new prognoses continue to point to a soft landing scenario.

Trading recommendations

• Support levels: 1.0854,1.0831,1.0803,1.0781,1.0750,1.0713,1.0688,1.0652
• Resistance levels: 1.0885,1.0903,1.0923

The trend on the EUR/USD currency pair on the hourly time frame is bullish. Yesterday, the price bounced from the supply zone above 1.0885 and was corrected to the nearest demand zone. There is a reaction of buyers, so it is safe to consider buy trades here. A price fixation below 1.0854 will be a negative signal, increasing the price to 1.0831.

Alternative scenario:

if the price breaks the support level at 1.0759 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2687
• Prev. Close: 1.2705
• % chg. over the last day: +0.14%

The British pound reached a two-month high of $1.27 against a weakening US dollar as expectations of an interest rate cut by the US Federal Reserve intensified due to lower US consumer inflation and stagnant retail sales. As early as tomorrow, the UK inflation data will be published, where a sharp decline in consumer prices is expected, likely to increase the likelihood of an earlier rate cut by the Bank of England.

Trading recommendations

• Support levels: 1.2647,1.2608,1.2567,1.2548,1.2487,1.2465,1.2446,1.2423
• Resistance levels: 1.2716,1.2762

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 reached the resistance zone at 1.2707–1.2716, where the price formed a narrow, flat accumulation. There is a sellers’ reaction, but it looks more like a buying fixation than an initiative. The MACD indicator shows a divergence, with a so-called SMT divergence formed, where the pound made a new high, and the euro did not. Typically, such conditions lead to a correction or reversal. Under such market conditions, sell deals can be seen from the resistance level of 1.2716, but with additional confirmation. A move above 1.2716 will open the price path to 1.2762.

Alternative scenario:

if the price breaks the support level of 1.2508 and consolidates below, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 155.53
• Prev. Close: 156.22
• % chg. over the last day: +0.44%

The Japanese yen weakened to 156 per dollar. It faced fresh pressure after the Bank of Japan kept bond purchases unchanged in its latest operation, opting not to repeat the unexpected cut in debt purchases on May 13. However, traders are still betting that the central bank will decide to reduce bond purchases at its June meeting.

Trading recommendations

• Support levels: 155.29,155.15,154.60,153.83,153.12,151.93,151.59
• Resistance levels: 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 still bearish, but the conditions for a trend change are beginning to form. The price has reached the next supply zone near the resistance level at 156.55. There is a reaction from sellers, but it is weak and looks more like a fixation on previously opened purchases. There is some pressure on sellers on intraday time frames, so it is better to look for sales on time frames below the H1 and only with confirmation. There are no optimal entry points for buying right now.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 157.59, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2420
• Prev. Close: 2425
• % chg. over the last day: +0.20%

Geopolitical uncertainty in Iran boosted gold demand on Monday after Iranian President Raisi died in a helicopter crash. A negative factor for metals that day was the strengthening of the dollar amid hawkish comments from FOMC officials. San Francisco Fed President Daly, Atlanta Fed President Bostic, Cleveland Fed President Mester, and Fed Vice Chairman Jefferson said they favored maintaining the Fed’s current restrictive policy until inflation falls to 2%.

Trading recommendations

• Support levels: 2395,2377,2343,2328,2307,2276,2249,2229,2206
• Resistance levels: 2450,2500

From the point of view of technical analysis, the trend on the XAU/USD is bullish. On Monday, gold updated the historical maximum, but it corrected sharply by the end of the day. The psychological mark of 2450 became a strong resistance level. Currently, the price is trading at moving average levels, with sellers forming two supply zones above. The MACD indicates bearish pressure intraday. Under these market conditions, we can look for selling with a target of 2395. There are no optimal entry points for buying right now.

Alternative scenario:

if the price breaks and consolidates below the 2370 support level, the downtrend will likely resume.