The Analytical Overview of the Main Currency Pairs on 2024.09.09

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1101
• Prev. Close: 1.1085
• % chg. over the last day: -0.14 %

The recovery of the dollar on Friday had a negative impact on the euro. In addition, Eurozone economic news was weaker than expected and put pressure on the euro after Eurozone GDP for Q2 was revised lower and German and French industrial production for July fell more than expected. Eurozone Q2 GDP was revised lower to 0.2% Q/Q from the previously reported 0.3% Q/Q. German July industrial production fell by 2.4% m/m, weaker than expected at 0.5% m/m. French July industrial production fell by 0.5% m/m, weaker than expectations of 0.3% m/m. Swaps discount the odds of a 25bp ECB rate cut at the September 12 meeting at 100%.

Trading recommendations

• Support levels: 1.1065, 1.1028, 1.1017, 1.0950, 1.0905, 1.0884
• Resistance levels: 1.1140, 1.1191, 1.1275

The EUR/USD currency pair’s hourly trend is bearish. As expected, the price on the NFP news tested the priority shift level of 1.1140, but buyers managed to defend the level, which led to a sharp decline in the price. The surge in volume indicates that the bears are proactive intraday. Under such market conditions, we should further evaluate the price reaction to the support level at 1.1065. If the buyers can show initiative, we can look for buy trades. However, if the price consolidates below 1.1065, it is likely to see a sell-off to 1.1028.

Alternative scenario:

 if the price breaks through the resistance level of 1.1191 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3177
• Prev. Close: 1.3127
• % chg. over the last day: -0.38 %

The UK Labor Market data will be released tomorrow. A weak labor market on the back of falling inflation will increase the probability of a rate cut by the Bank of England (BoE) in September. This would be a negative scenario for the pound. However, the probability of such a scenario is low. The UK economy has recovered strongly in the first half of 2024, and as wage growth and service inflation remain high, the Bank of England can afford to pause after the first-rate cut in this cycle.

Trading recommendations

• Support levels: 1.3117, 1.3055, 1.2973, 1.2932, 1.2848, 1.2800
• Resistance levels: 1.3150, 1.3202, 1.3306

From the point of view of technical analysis, the trend on the GBP/USD currency pair is downward. The situation is similar to the euro. On Friday, on the news, the price tested the level of priority change but failed to consolidate above. Sellers took the initiative, which persisted throughout the day. Currently, we are evaluating the price reaction to the support level of 1.3117. If buyers show interest here, we can look for buy trades with a target of up to 1.3150. Price consolidation below 1.3117 will open the way to 1.3055.

Alternative scenario:

if the price breaks the resistance level of 1.3202 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 143.44
• Prev. Close: 142.26
• % chg. over the last day: -0.82 %

Speaking at an unusual parliamentary hearing after last month’s market turmoil, Bank Governor Kazuo Ueda said that the bank will continue to raise rates if its inflation estimate comes true. That thought was reinforced by remarks by Deputy Governor Ryozo Himino and board member Hajime Takata last week. All three officials also said they would not rush to raise rates, emphasizing the need to keep an eye on financial markets, which remain volatile. While almost none of the economists expect the BoJ to adjust its benchmark rate when the next two-day board meeting concludes on Sept. 20, many BoJ watchers expect another rate hike by January.

Trading recommendations

• Support levels: 141.93, 140.22, 137.26
• Resistance levels: 144.42, 147.17, 148.29, 150.88, 151.26, 153.80

From the technical point of view, the medium-term trend on the currency pair USD/JPY is a downtrend. The Japanese yen continues to strengthen, but now, it has reached the support level of 142.40. Considering the divergence, the price may bounce here, but the descending channel limits the upside potential. Intraday buying can be looked for, but only with confirmation. Selling should be considered from the upper boundary of the channel.

Alternative scenario:

if the price breaks through and consolidates above the resistance at 146.30, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2517
• Prev. Close: 2498
• % chg. over the last day: -0.76 %

The recovery of the Dollar Index on Friday from a weekly low to a higher level for the day caused the liquidation of long positions in precious metals. In addition, signs of continued wage pressures proved hawkish for Fed policy and bearish for gold after US average hourly earnings for August rose more than expected. Investor focus has now shifted to this week’s US inflation data, which will be released on Wednesday. A drop in inflation will increase the probability of a 0.5% rate cut, which would be a positive scenario for the precious metals.

Trading recommendations

• Support levels: 2488, 2471, 2451, 2440, 2416, 2367, 2343
• Resistance levels: 2504, 2526, 2532

From the point of view of technical analysis, the trend on the XAU/USD is bullish. On Friday, on the NFP news, the price reached the resistance level of 2526, where sellers showed strong initiative. The price corrected to 2488 when buyers started to stop the move, but the initiative was not enough to absorb the intraday selling pressure. Under these market conditions, it is worth considering selling from the resistance level of 2503, but with confirmation. A consolidation above 2503 will indicate the weakness of the sellers and open the price way to 2526 again.

Alternative scenario:

 if the price breaks down the support level of 2451, the downtrend will likely resume.