The Analytical Overview of the Main Currency Pairs on 2024.01.11

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0926
• Prev. Close: 1.0965
• % chg. over the last day: -0.36%

The monthly inflation report will be released today in the US. The overall consumer inflation rate is expected to rise to an annualized rate of 3.2% from 3.1%. The core rate, which excludes volatile food and energy prices, is expected to fall from 4% y/y to 3.8% y/y. Lower inflation will increase the probability that the Fed may start cutting interest rates as early as March. In such a scenario, the US dollar would come under pressure, which would give a boost to risky assets such as the euro. On the other hand, rising inflation, on the contrary, will reduce the likelihood of a rate cut this spring and reduce the number of basis points of rate cuts for the whole year. This will support the US dollar and put pressure on the euro.

Trading recommendations

• Support levels: 1.0951,1.0900,1.0888,1.0827
• Resistance levels: 1.0996,1.1080,1.1097,1.1171

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. Buy deals can be sought from the support level of 1.0951. It is better to enter with confirmation, as the bias is bearish now. Selling can be considered from 1.0996 but is subject to sellers’ reaction to the level. A breakout of 1.0996 will open the way to 1.1037.

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: 1.2700
• Prev. Close: 1.2741
• % chg. over the last day: +0.32%

Yesterday, Bank of England Governor Andrew Bailey and other Bank officials appeared before the Treasury Committee to discuss the December Financial Stability Report. Concerns about the stability of market funding dominated the report. The Bank of England is monitoring a number of issues, including attacks on ships in the Red Sea, as potential threats that could affect supply chains, inflation, and, as a result, monetary policy.

Trading recommendations

• Support levels: 1.2712,1.2672,1.2611,1.2572,1.2548,1.2499
• Resistance levels: 1.2770,1.2808,1.2881,1.2937

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 is again testing the priority change level of 1.2770. A breakout of this level will open the way to 1.2808 and higher. A false breakout of this level will lead to sharp sell-offs to 1.2712. Therefore, investors should focus on market participants’ reactions to the supply zone at the priority level.

Alternative scenario:

if the price breaks through the resistance level of 1.2770 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: 144.45
• Prev. Close: 145.75
• % chg. over the last day: +0.90%

The yen retreated on Wednesday after weaker-than-expected Japanese wage reports reinforced the possibility that the Bank of Japan will postpone its exit from the negative interest rate policy. According to official data, inflation-adjusted real wages for Japanese workers fell for the thirteenth consecutive month in November. In addition, the Nikkei stock index (JP225) rose to a 34-year high on Wednesday, limiting demand for the yen as a safe haven. The latest inflation and wage data seem to underscore the fact that bets on the Bank of Japan tightening policy at the beginning of the year are off the table.

Trading recommendations

• Support levels: 143.26,142.18,141.12,140.78,140.25
• Resistance levels: 145.97

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is steadily growing, confidently breaking through the resistance levels. At the same time, the moving average lines are perfectly supporting the trend. Under such market conditions, traders should expect the growth to continue until the liquidity test above 145.97.

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: 2030
• Prev. Close: 2024
• % chg. over the last day: -0.30%

The rise in global bond yields on Wednesday put pressure on the prices of precious metals. In addition, hawkish comments from ECB executive board spokesperson Schnabel weighed down precious metals prices on Wednesday when she stated that it was too early for the ECB to discuss interest rate cuts. Another negative for gold is the continued liquidation of long gold positions by ETF funds. But today, gold may get support if the US inflation report shows a decline in consumer prices.

Trading recommendations

• Support levels: 2015,2008,1997,1987,1973
• Resistance levels: 2040,2064,2072,2084,2090,2142

From the point of view of technical analysis, the trend on the XAU/USD is downtrend. The price is forming a wide flat ahead of the US inflation report. A breakout of the resistance level 2040 may trigger a sharp upward momentum. A false breakout of the level, on the contrary, will provoke a sell-off in gold to the support level of 2015.

Alternative scenario:

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