The Analytical Overview of the Main Currency Pairs on 2024.01.10

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0952
• Prev. Close: 1.0930
• % chg. over the last day: -0.20%

The Eurozone unemployment rate fell to a new low of 6.4% in November. Compared to October 2023, the number of unemployed fell by 99,000. Even though the Eurozone is going through a bad time, the year-on-year GDP growth in the third quarter and probably in the fourth quarter was close to zero. This did not affect the unemployment rate, which fell over the year. Thus, a steady labor market will allow the ECB to keep the rate at the current level, which will support the Euro. Swaps estimate the chances of a 25 bps ECB rate cut at 2% at the next meeting on January 25 and 40% at the meeting on March 7.

Trading recommendations

• Support levels: 1.0922,1.0900,1.0888,1.0827
• Resistance levels: 1.0938,1.1010,1.1080,1.1097,1.1171

The trend on the EUR/USD currency pair on the hourly time frame is downtrend. At the moment, the price is forming a flat accumulation while the price is in the middle of this consolidation, which makes it difficult to find good entry points. Buying can be looked for after an impulsive breakout of the 1.0938 resistance level. It is better to enter with confirmation, as the bias is bearish. If the price consolidates below 1.0922, it will open the way to 1.0864.

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: 1.2745
• Prev. Close: 1.2706
• % chg. over the last day: -0.30%

Recently, the forecast for the first interest rate cut in the UK has been postponed: the May 9 meeting is now seen as the first opportunity for the Bank of England (BoE) to start easing monetary policy. Financial markets are now forecasting a total of 100 basis points of rate cuts this year, down from the 125 bps predicted at the end of last year when euphoria over rate cuts peaked. Lower expectations helped the British pound strengthen against the US dollar and the euro. Today, Bank of England Governor Andrew Bailey and other Bank officials will appear before the Treasury Committee to discuss the December Financial Stability Report.

Trading recommendations

• Support levels: 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. Sellers managed to push the price away from the level of priority change, while the support level at 1.2719 showed no signs of buyers. Under such market conditions, there is a high probability of a decline to 1.2670, where we can look for buying, but with confirmation. Sell deals can be looked for intraday with a target to the nearest support levels. The price return above 1.2719 will open the way to the priority change level.

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: 144.22
• Prev. Close: 144.47
• % chg. over the last day: +0.17%

The Tokyo Inflation data shows that inflation in the Japanese capital is not moving forward, having been declining for several months now. The price index for all goods, less fresh food (core CPI), fell to 2.1% from 2.3%. Tokyo’s price data helps determine broader national indicators, as Tokyo accounts for about 20% of Japan’s GDP and is an integral part of the economy. Although the national CPI has been above the 2% target for over a year now, the Bank of Japan is not yet convinced that price pressures will persist above target and is looking for convincing evidence that the inflation profile has shifted from a “cost” problem to a “demand” phenomenon. Sustained wage growth is also a prerequisite for the BoJ to change ultra-soft policy.

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. The price has returned to the supply zone, but there is no reaction from sellers. At the same time, the price has regained its position above the moving averages, and the MACD indicator indicates the strength of buyers. Under such market conditions, sell deals can be considered if the price consolidates below the marked selling area. Buying should be considered after the breakout of the 144.94 resistance level.

Alternative scenario:

if the price consolidates below the support at 141.29, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2027
• Prev. Close: 2030
• % chg. over the last day: +0.15%

Gold prices rose strongly in late December but declined in early January. Traders are reluctant to take new bullish positions, fearing a more serious bearish reversal if the deep interest rate cuts scheduled for 2024 do not materialize. If markets begin to roll back dovish monetary policy bets, precious metals could be hit hard in the first quarter of 2024. Gold is also under pressure from the liquidation of long positions — on Monday, the volume of long positions in gold ETFs fell to almost a 4-year low.

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 is downtrend. Yesterday, the price tested the resistance level of 2042, where sellers showed a reaction. At the same time, the reaction to the support level 2027 is weak, which increases the probability of a downside breakdown and continuation of the decline. There are no optimal entry points for buying now.

Alternative scenario:

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