The Analytical Overview of the Main Currency Pairs on 2024.01.24

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0882
• Prev. Close: 1.0853
• % chg. over the last day: -0.26%

On Tuesday, the US dollar recovered from the losses of the last few days and went up on the back of rising T bond yields. A recalculation of the probability of a Fed rate cut is helping to boost the dollar as swap markets now estimate the odds of a Fed rate cut at the March FOMC meeting at 48%, down from the 60% the market estimated earlier this month. The dollar’s rebound on Tuesday put pressure on the euro. Meanwhile, the euro’s losses accelerated after the Eurozone consumer confidence index unexpectedly declined in January. Today, we will see the release of manufacturing PMI and services PMI statistics for many European countries. These data will show how business activity, which was in contraction territory in most countries at the beginning of the year.

Trading recommendations

• Support levels: 1.0843,1.0851,1.0827
• Resistance levels: 1.0875,1.0906,1.0931,1.0985,1.1010,1.1037,1.1080.

The trend on the EUR/USD currency pair on the hourly time frame is a downtrend. The euro declined yesterday to a one-month low and reached the support level of 1.0827, where buyers took the initiative. Also, pay attention to the formed divergence on the MACD indicator. At the moment, the price is trying to test the liquidity above 1.0875, and how exactly the test happens will determine the further price dynamics. If the price closes below 1.0875 after the test, we can consider selling with a target of 1.0843. A breakout and consolidation above 1.0875 will open the way to 1.0915, which may eventually change the priority.

Alternative scenario:

if the price breaks the resistance level of 1.0915 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2702
• Prev. Close: 1.2685
• % chg. over the last day: -0.13%

Manufacturing PMI and Services PMI data will be released in the UK today. The Manufacturing PMI is expected to rise from 44.4 to 44.8, while the Services PMI is expected to jump from 48.8 to 49.1. If the actual data comes out worse than expected, it is likely to put downward pressure on the GBP.

Trading recommendations

• Support levels: 1.2667,1.2638,1.2611,1.2572,1.2548,1.2499
• Resistance levels: 1.2717,1.2764,1.2827,1.2881,1.2937.

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bearish. Yesterday, the price impulsively declined, consolidating below the flat accumulation. It is very important to watch what reaction will be at the resistance level of 1.2717. If, after the test, the price consolidates below, there may be a sharp wave of sell-offs up to 1.2667. A breakout and consolidation above 1.2717 will open the way to 1.2764 and probably will eventually change the priority of this time frame.

Alternative scenario:

if the price breaks the resistance level at 1.2764 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 148.01
• Prev. Close: 148.34
• % chg. over the last day: +0.22%

After the Bank of Japan (BoJ) kept all its monetary policy settings, the JPY was expected to be under pressure, even though BoJ Governor Ueda said in a press conference that the BoJ would raise the interest rate if its inflation and wage targets were met. This indicates that the markets no longer believe the words of politicians and rely only on actual data, which, in turn, does not show anything good for the Japanese yen so far.

Trading recommendations

• Support levels: 147.75,146.97,146.39,145.45,144.33,143.41,142.18
• Resistance levels: 148.51,149.33.

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. Yesterday, the price tested the support level at 146.97, where the buyers showed initiative. The price quickly returned to 148.51, and this is the 4th test of the level. This time, the sellers’ reaction was much weaker. Under such market conditions, buying should be sought from the support level of 147.55, but only with confirmation. Targets are 148.51 and 149.33. Sell deals can be considered if the price consolidates below 147.75, in this case a liquidity test below 146.97 is inevitable.

Alternative scenario:

if the price consolidates below the support at 144.33, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2021
• Prev. Close: 2028
• % chg. over the last day: +0.34%

Precious metals showed moderate gains on Tuesday. Gold found support on Tuesday amid increased demand as a store of value. Note that gold rose against the rise in the dollar index and government bond yields. This indicates that gold has found fundamental support, it is being bought actively, and further price growth can be expected in the coming days.

Trading recommendations

• Support levels: 2024,2018,1997,1987,1973
• Resistance levels: 2044,2064,2072,2084,2090.

From the point of view of technical analysis, the trend on the XAU/USD has changed to a downtrend. But at the moment, there are already 2 support zones formed at the levels of 2018 and 2024, which just keep the price from going down. A flat accumulation is formed above these levels, and with a high probability, we should expect price growth in the coming days. Buying can be sought from the support levels of 2024 or 2018, with a stop loss below 2018. A price consolidation below 2018 is likely to trigger a wave of sell-offs to renew the low of the month.

Alternative scenario:

if the price breaks through and consolidates above the support level of 2049, the uptrend will likely resume.