The Analytical Overview of the Main Currency Pairs on 2024.05.20

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0863
• Prev. Close: 1.0867
• % chg. over the last day: +0.04%

The ECB prefers to follow Fed policy, but the contrasting economic conditions and inflation profiles mean that the ECB will likely have to go it alone this time. Many ECB officials have repeatedly mentioned June as a suitable month for an interest rate cut, and it is now virtually guaranteed. However, the representatives are somewhat hawkish, cautioning against expecting a rate cut after June to avoid weakening financial conditions and a new round of rising inflation.

Trading recommendations

• Support levels: 1.0863,1.0831,1.0803,1.0781,1.0750,1.0713,1.0688,1.0652
• Resistance levels: 1.0885,1.0903,1.0923

The trend on the EUR/USD currency pair on the hourly time frame is bullish. On Friday, the price was corrected from the supply zone above 1.0885 but did not reach the support level of 1.0831. Buyers entered the game earlier. The price rose impulsively and is now trading near the 1.0885–1.0903 supply zone again. Under such market conditions, we should expect further growth intraday, but watch closely the price reaction to the supply zone. We can consider sell deals if sellers become active and push the price below 1.0085.

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: 1.2662
• Prev. Close: 1.2699
• % chg. over the last day: +0.29%

The pound sterling is close to five-week highs against the US dollar. Of course, much of this vigor is due to the general weakness of the dollar. However, there are also some domestic factors: the latest GDP data showed the country’s exit from recession. Moreover, the apparent resilience of wage growth in the UK has made markets a little less confident that the Bank of England (BoE) will be able to cut its interest rates in the next couple of months. But things could change this week after the inflation data for April.

Trading recommendations

• Support levels: 1.2647,1.2608,1.2567,1.2548,1.2487,1.2465,1.2446,1.2423
• Resistance levels: 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 has reached the resistance zone at 1.2707. There is a reaction from sellers, but it is more like a fixation on purchases rather than an initiative. The MACD indicator shows a divergence, with a so-called SMT divergence formed when the pound made a new high, and the euro did not. Typically, such conditions lead to a correction or reversal. Under such market conditions, selling can be viewed from the resistance level 1.2707, but with additional confirmation.

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: 155.36
• Prev. Close: 155.60
• % chg. over the last day: +0.15%

According to economists, given the Fed’s intention to cut borrowing costs later this year and the apparent resumption of the disinflationary trend, USD/JPY may decline in the medium term. Inflation data will be released in Japan later this week, where a sharp decline is expected, increasing the likelihood of another rate hike from the BoJ. At the same time, the general weakness of the dollar may also give some confidence to the Japanese currency in the coming weeks.

Trading recommendations

• Support levels: 155.29,155.15,154.60,153.83,153.12,151.93,151.59
• Resistance levels: 155.86,156.57,157.12,158.20,160.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price can still not pass the supply zone above 155.86, forming liquidity at the moving average levels. There is some selling pressure inside the day, so selling is best sought on time frames below 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 158.00, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2377
• Prev. Close: 2414
• % chg. over the last day: +1.55%

Gold rose to a record high of $2,440 an ounce on Monday after recent US economic data reinforced speculation that the Federal Reserve may go for at least two rate cuts this year. Last week, data showing a slowdown in US consumer inflation and declining retail sales gave the Fed more leeway to begin easing monetary policy. Lower interest rates are making unsecured assets such as gold more attractive. Strong buying by central banks, especially from China, which is looking to reduce its reliance on the US dollar, further supports this trend.

Trading recommendations

• Support levels: 2428,2395,2377,2343,2328,2307,2276,2249,2229,2206
• Resistance levels: 2450,2500

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Gold hit an all-time high on Monday. Recent volume spikes point to big buyers. It is difficult to answer where the ceiling is. Now we should focus on the price reaction to the psychological levels of 2450 or 2500. If sellers will be active from 2450, we can consider sell deals with short targets. But so far there are no prerequisites for price decline.

Alternative scenario:

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