The Analytical Overview of the Main Currency Pairs on 2024.01.05

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0912
• Prev. Close: 1.0943
• % chg. over the last day: +0.28%

The euro rose on Thursday as December’s upward revision of the Eurozone PMI composite index boosted European government bond yields and eased speculation of an ECB interest rate cut. German CPI for the decade (EU harmonized) rose by 0.2% m/m to 3.8% y/y, weaker than expectations of 0.3% m/m and 3.9% y/y growth. Nonfarm payrolls will be released in the US today. If the figures are worse than expected, the dollar’s decline may intensify, which will give confidence to risky assets (EUR, GBP). Conversely, if the Nonfarm data comes out better than expected, we may see a strengthening of the US dollar. The stronger the labor market, the more stable the economy is in a period of high interest rates.

Trading recommendations

• Support levels: 1.0929,1.0900,1.0888,1.0827
• Resistance levels: 1.0964,1.1010,1.1080,1.1097,1.1171

The trend on the EUR/USD currency pair on the hourly time frame is a downtrend. The price is currently trading in the range of 1.0929-1.0964, and with a high probability, the situation will mostly stay the same before the news publication. Under such market conditions, buying can be sought from the support level of 1.0929 with a target of 1.0964. A breakdown of 1.0964 will open the way to 1.1010. A move below 1.0900 will give 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 will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2656
• Prev. Close: 1.2680
• % chg. over the last day: +0.39%

The British pound rose above 1.27 against the US dollar as the latest data confirmed that the UK economy remains resilient to high interest rates. The final PMI showed that UK service output rose more strongly in December than originally estimated, with optimism hitting a seven-month-high.

Trading recommendations

• Support levels: 1.2646,1.2611,1.2572,1.2548,1.2499
• Resistance levels: 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 1.2727 resistance level, where sellers showed a reaction. Now, the price is forming a narrow flat; there is a little pressure from sellers intraday. With a high probability, the price will decline to the level of 1.2646. The nearest support level from which to look for buying is 1.2646, but it is better with confirmation, as the price may go lower.

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: 143.25
• Prev. Close: 144.61
• % chg. over the last day: +0.95%

The Japanese yen extended this week’s losses on Thursday and hit a 2-week low against the dollar. The rise in T-note yields on Thursday was a bearish factor for the yen. In addition, speculation that the economic fallout from the earthquake on the Noto Peninsula will delay the termination of negative interest rates by the Bank of Japan is weighing on the yen.

Trading recommendations

• Support levels: 143.29,142.18,141.12,140.78,140.25
• Resistance levels: 144.94,145.55,145.99

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The strengthening of the dollar and the economic consequences of the earthquake put pressure on the yen. Now, the price has reached the resistance level of 144.94. The MACD indicator is starting to form a divergence, but it is still weak in its structure, which means that with a high probability, the price will make at least one more update of the high. Under such market conditions, sell deals can be looked for after a false breakout of the 144.94 resistance level or if the price reaches the level of 145.55. Buying should be considered from the moving average lines, which perfectly hold the upward movement.

Alternative scenario:

If the price consolidates below the support level at 141.729, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2041
• Prev. Close: 2043
• % chg. over the last day: +0.10%

The weakening of the dollar on Thursday supported precious metals. In addition, rising inflation expectations boosted demand for gold as an inflation hedge after the 10-year inflation breakeven rate rose to a 3-week high on Thursday. Also, heightened geopolitical tensions in the Middle East boosted demand for precious metals.

Trading recommendations

• Support levels: 2036,2028,2015,2008,1997,1987,1973
• Resistance levels: 2056,2063,2072,2084,2090,2142

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.