The Analytical Overview of the Main Currency Pairs on 2024.01.04

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0942
• Prev. Close: 1.0920
• % chg. over the last day: -0.20%

The minutes of the FOMC meeting of December 12-13 showed no signs of a Fed rate cut and provided support to the USD. The minutes also showed that policymakers agreed that it is appropriate to maintain a restrictive policy for some time until inflation begins to decline steadily. The probability of a rate cut at the March 2024 meeting fell to 77% from 99% last week. The strengthening of the dollar on Wednesday harmed the euro. In addition, economic data showed that Germany’s unemployment rate for December rose to a 2-year high of 5.9%. Today, Germany will release inflation data, where there may be surprises in the form of growth, which may provide some support for the euro.

Trading recommendations

• Support levels: 1.0900,1.0888,1.0827
• Resistance levels: 1.0949,1.1010,1.1080,1.1097,1.1171

The trend on the EUR/USD currency pair on the hourly time frame has changed to a downtrend. The price has consolidated below the priority change level but has now reached an important support level. Buyers are showing a reaction to the 1.0900 level. Under such market conditions, with the condition of divergence on the MACD indicator, buying can be sought from this level with a target of 1.0949. A breakout of 1.0949 will open the way to 1.1010. A move below 1.0949 will give the price space to 1.0827. Selling can be sought from the resistance level of 1.1010 but with confirmation in the form of sellers’ reactions.

Alternative scenario:

if the price breaks the resistance level of 1.1080 and consolidates above it, the uptrend is likely to be resumed.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2613
• Prev. Close: 1.2663
• % chg. over the last day: +0.39%

The British pound resisted the dollar’s growth yesterday and rose by 0.39%. That said, business leaders in the UK are more pessimistic about the outlook for the economy and are pushing the Bank of England (BoE) to start cutting rates earlier this year. Money markets show traders expect about 140 basis points (bps) of rate cuts in 2024 from the BoE.

Trading recommendations

• Support levels: 1.2647,1.2611,1.2572,1.2548,1.2499
• Resistance levels: 1.2701,1.2727,1.2759,1.2787,1.2808,1.2881,1.2937

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price corrected to the resistance level of 1.2677, but sellers do not show activity, so there is a probability of testing the 1.2701 level. In general, the 1.2677-1.2701 area can be considered for selling, but we need confirmation in the form of price reaction. The nearest support level from which we can look for buying is 1.2647, but it is better with confirmation, as the price may sell.

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: 141.88
• Prev. Close: 143.29
• % chg. over the last day: +0.99%

The Japanese yen continued its decline on Wednesday and fell to a 2-week low against the dollar. Bank of Japan (BoJ) Governor Kazuo Ueda said on Thursday that he hopes the Japanese economy can balance wage growth and inflation. Balanced wage growth could encourage companies to invest in equipment, research, and development, increasing inflation and boosting GDP growth. This would allow the Bank of Japan almost painlessly to exit its negative rate policy. But Ueda’s comments had no impact on the yen exchange rate this time, suggesting that investors are tired of hoping for a policy change soon.

Trading recommendations

• Support levels: 143.29,142.18,141.12,140.78,140.25
• Resistance levels: 143.65,144.39,144.71,145.99

From the technical point of view, the medium-term trend on the currency pair USD/JPY has changed to an upward trend. The strengthening of the dollar did not leave its mark on the yen. The price has consolidated above the level of priority change and continues to grow. Divergence is starting to form on the MACD indicator, but it is weak in its structure. Under such market conditions, sell deals can be sought from the resistance level of 143.65 but with short targets. A move above 143.65 will open the way to 144.39. Buying should be considered from the support level of 143.29, but with confirmation, as the level has already been tested.

Alternative scenario:

If the price consolidates below the support level at 140.78, the downtrend is likely to resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2058
• Prev. Close: 2041
• % chg. over the last day: -0.83%

The dollar index rally on Wednesday to a 2-week high dragged down metals prices. Gold and silver retreated on Wednesday, with gold falling to a 2-week low and silver falling to a 3-week low. Bond yields have risen sharply over the past few sessions, with the 10-year bond approaching the psychological 4.0% level. Gold has an inverse correlation to bond yields, so it is under pressure. Although gold retains a bullish priority in the medium term, the upward trajectory will not be linear, leaving room for minor corrections within a broader uptrend.

Trading recommendations

• Support levels: 2036,2028,2015,2008,1997,1987,1973
• Resistance levels: 2055,2063,2072,2084,2090,2142

From the point of view of technical analysis, the trend on the XAU/USD is bullish. The price declined to the support level of 2036, where buyers showed a reaction. Now, the way is open to the resistance level 2055, so intraday, you can look for buying, but with short-stop losses. But if the price returns to the 2036 support level, the probability of a breakdown will increase sharply, which may change the medium-term priority. Selling can be sought from the resistance level of 2055 or 2063 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.