The Analytical Overview of the Main Currency Pairs on 2024.01.09

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0945
• Prev. Close: 1.0949
• % chg. over the last day: +0.03%

The euro rose slightly on Monday on hawkish comments from ECB Governing Council representative Vujcic, who said that the ECB will probably not cut interest rates until the summer. Also bullish for the euro was a report that showed a larger-than-expected rise in Eurozone economic confidence to an 8-month-high. The Eurozone economic confidence indicator rose by 2.4 to 96.4, exceeding expectations of 94.2. The Eurozone Sentix investor confidence index for January rose by 1.0 to an 8-month high of a negative 15.8, which was in line with expectations.

Trading recommendations

• Support levels: 1.0933,1.0900,1.0888,1.0827
• 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 downtrend. On Friday, the price-tested liquidity was below Wednesday’s low at 1.0982, followed by a sharp bullish momentum. However, the price failed to consolidate above 1.0964, forming a new false breakout. Under such market conditions, buying can be sought from the support level of 1.0933 with a target of 1.1010. It is better to enter with confirmation, as the bias is bearish now. If the price consolidates below 1.0933, it will open the way to 1.0864. Sell deals can be sought from the resistance level of 1.1010 or after a breakdown of the support level of 1.0933.

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: 1.2711
• Prev. Close: 1.2747
• % chg. over the last day: +0.28%

British employers raised wages and regained some of their hiring appetite in December, according to a survey, and the Bank of England may see it as another sign of lingering inflationary pressures in the labor market. Wages for new hires in permanent and temporary roles grew faster in December than in November, although growth for permanent staff was the second weakest since March 2021. The Central Bank is particularly concerned about excessive wage growth, which rose by just over 7% year-on-year in the three months to the end of October, according to official figures. The Bank of England is expected to leave interest rates unchanged on February 1.

Trading recommendations

• Support levels: 1.2719,1.2670,1.2611,1.2572,1.2548,1.2499
• Resistance levels: 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, but close to change. For the incomplete two trading days of this week, the price is testing the level of priority change for the third time, with each subsequent bounce weaker than the previous one. Buying can be looked for from the support levels of 1.2719 or 1.2670, but with confirmation. Selling can be looked for intraday with a target to the nearest support levels.

Alternative scenario:

if the price breaks through the resistance level of 1.2759 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 144.52
• Prev. Close: 144.22
• % chg. over the last day: -0.20%

The Bank of Japan is unlikely to make any policy changes shortly unless there are clear signs of domestic inflation. Currently, there are few, and it will take more than one quarter to prompt the BOJ to act. Yen traders should focus on speeches from Fed officials in early 2024 as well as Japan’s monthly inflation data, with a particular focus on domestic price growth. Markets are increasingly convinced that US interest rates have peaked and that a cut will come this year. This thesis will lead to a weaker dollar, and the yen could benefit from this, even if the Bank of Japan leaves policy unchanged until the end of 2024.

Trading recommendations

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

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. On Friday, the price reached the resistance level of 145.99, which was followed by a sharp reaction from sellers. The change in price structure and divergence on MACD triggered a corrective movement. Under such market conditions, sell deals can be looked for from moving average lines, but with confirmation. Buying should be considered after the reaction of buyers to the support level of 143.29. A breakdown of this level will open the way to 142.18, and the movement may accelerate.

Alternative scenario:

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

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2043
• Prev. Close: 2028
• % chg. over the last day: -0.74%

Precious metals suffered moderate losses on Monday, while gold fell to its lowest in 3 weeks. Doubts about interest rate cuts by the Fed and ECB are weighing on precious metals, especially after Friday’s stronger-than-expected US December payrolls report and after comments by ECB Governing Council spokesman Vujcic on Monday, who said that the ECB will not cut interest rates until the summer. In addition, the volume of long positions in gold ETFs fell to almost a 4-year low, which also puts additional pressure on the yellow metal.

Trading recommendations

• Support levels: 2027,2015,2008,1997,1987,1973
• Resistance levels: 2042,2063,2072,2084,2090,2142

From the point of view of technical analysis, the trend on the XAU/USD has changed to a downtrend. Yesterday, the price broke through the priority change level and continued to trade below the moving averages. Sell deals can be looked for from the resistance level of 2042 but with confirmation. For buying, the most optimal level will be the 2027 support level, but it is important to see the reaction of buyers. A breakdown of 2027 will open the way for the price to 2015 or even lower.

Alternative scenario:

if the price breaks and consolidates above the resistance level of 2063, the uptrend will likely resume.