The Analytical Overview of the Main Currency Pairs on 2024.01.03

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1042
• Prev. Close: 1.0940
• % chg. over the last day: -0.93%

The escalation of geopolitical risks in the Middle East boosted the demand for the dollar as a safe haven. As a result, the US dollar rose to a one-week high on Tuesday, putting pressure on the euro and other risk assets. Additionally, traders were digesting the latest PMI data indicating that factory activity in the Eurozone contracted for the 18th consecutive month in December. Regarding monetary policy, markets indicate that the probability of a Fed funds rate cut from March is around 80%; for the ECB, the probability is 61%.

Trading recommendations

• Support levels: 1.0946,1.0928,1.0888,1.0827
• Resistance levels: 1.1010,1.1097,1.1097,1.1171

The trend on the EUR/USD currency pair on the hourly time frame is bullish. But amid the strengthening of the dollar, the price has declined sharply and approached the level of priority change. Buyers are showing a reaction to the support level of 1.0946. Under such market conditions, buy deals can be sought from the support levels of 1.0946 or 1.0928. A move below 1.0928 will change the bias to a bearish. Selling can be sought from the resistance level of 1.1010, but with confirmation and short targets, as these will be positions against the main trend.

Alternative scenario:

if the price breaks the support level at 1.0928 and consolidates above it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2720
• Prev. Close: 1.2615
• % chg. over the last day: -0.83%

Yesterday’s strengthening of the dollar also harmed GBP/USD quotes. The British pound fell to $1.26, down from the five-month peak of $1.2827 on December 28. In addition, the final PMI data showed that UK factory activity continued to contract for the 17th consecutive month in December. Traders anticipate a possible cut in interest rates by the Bank of England in 2024, even though the Governor of the Bank of England, Andrew Bailey, insists on maintaining high rates for a long period.

Trading recommendations

• Support levels: 1.2611,1.2572,1.2548,1.2499
• Resistance levels: 1.2647,1.2677,1.2701,1.2759,1.2787,1.2808,1.2881,1.2937

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame has changed to bearish. On the background of the dollar strengthening, the price broke through all the nearest support levels and consolidated below the priority line. The nearest support level from which we can look for buying is 1.2611, but it is better with confirmation, as the price may deepen to 1.2572. We can consider the level of 1.2647 for sell deals, but as a rule, the first resistance line is often broken. In this case, the zone of 1.2677-1.2707 will be suitable for selling.

Alternative scenario:

if the price breaks through the resistance level of 1.2759 and consolidates above it, the uptrend will be resumed with a high probability.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 140.82
• Prev. Close: 141.98
• % chg. over the last day: +0.82%

Even though Japan had a bank holiday yesterday and today, the activity on the USD/JPY currency pair is quite high due to the volatility of the US dollar. At the moment, Japan is assessing the damage from the powerful earthquake that occurred in the country’s central region on New Year’s Day.

Trading recommendations

• Support levels: 141.12,140.25,139.34
• Resistance levels: 142.45,142.85,143.38,143.98,144.71,145.99

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. After bouncing from the support zone, the price reached the resistance level of 141.59 and managed to break through it in the background of the dollar strengthening. Now, the way is open to the resistance level of 142.45. Under such market conditions, sell deals can be sought intraday from the resistance level of 142.45 or 142.85, provided sellers take the initiative. Buying should be sought from the moving average lines but with short-stop losses, as these will be trades against the main bias.

Alternative scenario:

if the price consolidates above the resistance level of 142.85, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2063
• Prev. Close: 2058
• % chg. over the last day: -0.25%

Yesterday’s rally of the dollar index was bearish for metal prices. Gold declined moderately, but investors started buying the yellow metal as a safe-haven asset amid the escalating conflict. Iran sent a warship to the Red Sea after the US Navy sank three Houthi boats. Today, investors are eagerly awaiting the minutes of the Federal Reserve’s latest meeting to get clues about the future direction of monetary policy.

Trading recommendations

• Support levels: 2060,2045,2028,2015,2008,1997,1987,1973
• Resistance levels: 2073,2084,2090,2142

From the point of view of technical analysis, the trend on the XAU/USD is bullish. The price declined to the support level of 2060, where buyers showed a moderate reaction. Now, the way is open to the resistance level 2072, so intraday, you can look for buying, but with short-stop losses. But if the price returns to the support of 2060, the probability of breaking this level will increase sharply, which may open the way to an open fall to 2042. Traders can also look for selling from the resistance level of 2073 if the price shows the appropriate reaction of sellers.

Alternative scenario:

if the price breaks below the support level of 2028, the downtrend is likely to resume.