The Analytical Overview of the Main Currency Pairs on 2024.01.30

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0842
• Prev. Close: 1.0832
• % chg. over the last day: -0.09%

The EUR/USD pair hit a 1.5-month low on Monday. On Monday, the euro came under pressure after dovish comments from ECB officials increased speculation that the ECB will start cutting interest rates as early as April. ECB Vice President Gindos said inflation risks are receding, and this will soon be reflected in monetary policy. His counterpart, ECB Governing Council representative Centeno, said the ECB should cut interest rates sooner rather than later as it sees plenty of evidence that inflation is falling steadily. Swaps estimate the odds of a 25 bps ECB rate cut at the next meeting on March 7 at 28% and fully discount (100%) the odds of the same rate cut at the April 11 meeting.

Trading recommendations

• Support levels: 1.0818,1.0807,1.0774
• Resistance levels: 1.0849,1.0877,1.0915,1.0931,1.0985,1.1010,1.1037,1.1080.

The trend on the EUR/USD currency pair on the hourly time frame is a downtrend. Yesterday, the price tested the liquidity below 1.0807, which was followed by a reverse reaction. Below 1.0807, a locked balance was formed, which can now act as support. At the same time, the MACD indicator indicates divergence. Therefore, the zone 1.0807-1.0818 can be considered for buying, subject to buyers’ reactions. Targets to the nearest resistance level 1.0849. A breakout of 1.0849 will open the way for the price to 1.0877. If the support fails to hold, the price could see a sell-off to 1.0774.

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: 1.2699
• Prev. Close: 1.2707
• % chg. over the last day: +0.08%

The British pound stabilized above $1.27 as traders await the Bank of England’s first policy meeting of 2024 later this week. Given the prevailing view that there will be no change in the bank rate, traders will closely monitor the vote distribution among policymakers and scrutinize the accompanying statement. Recent data showing that inflation is not in line with Bank of England forecasts and wage growth is on a downward trajectory suggests that the statement will be in a less hawkish tone. Currently, the probability of a rate cut in May is 42%, while for the June meeting, the probability of a rate cut is 74%.

Trading recommendations

• Support levels: 1.2698,1.2666,1.2638,1.2611,1.2572,1.2548,1.2499
• Resistance levels: 1.2728,1.2764,1.2827,1.2881,1.2937.

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The pound sterling tested the liquidity below 1.2666 yesterday, after which the price bounced sharply, forming a false breakdown area. Now, buyers need to hold the level of 1.2666 because, in case of its breakdown, it will open the way to 1.2638. Buy trades should be expected from the support level of 1.2698 but are subject to the reaction of buyers. The minimum profit target is 1.2728. Selling can be sought intraday from the resistance level of 1.2728, but also with confirmation.

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: 148.09
• Prev. Close: 147.49
• % chg. over the last day: -0.41%

The Japanese yen strengthened around 147 per USD as stronger-than-expected employment data supported bets on a change in the country’s monetary policy. The data showed that Japan’s unemployment rate fell to 2.4% in December, which was below economists’ forecasts that expected no change at 2.5%. Investors are now awaiting data on industrial production, retail sales, and consumer confidence in Japan, which will be released later this week.

Trading recommendations

• Support levels: 146.97,146.39,145.45,144.33,143.41,142.18
• Resistance levels: 147.50,147.74,148.26,148.81,149.33.

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish, with the preconditions for a priority reversal beginning to form. This is expressed in the fact that support levels cannot support the growth, and the price is forming more and more resistance levels. Now, the price is trading below 147.50, with 2 selling zones formed above, from which we can look for short-term sales. A price move above 147.74 will bring back the bullish rally.

Alternative scenario:

if the price consolidates below the support at 144.92, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2026
• Prev. Close: 2032
• % chg. over the last day: +0.30%

Gold held near the $2,030 per ounce mark on Tuesday, rising nearly 1% (including the price gap) in the previous session, as the widening conflict in the Middle East spurred demand for the metal. Analysts pointed to a missile attack by Houthi rebels on a Trafigura oil tanker off the coast of Yemen, as well as a drone attack by Iranian-backed militants on US troops stationed in northeast Jordan that killed three US servicemen. Meanwhile, investors remain cautious ahead of the US Federal Reserve’s monetary policy decision this week.

Trading recommendations

• Support levels: 2028,2021,2019,1997,1987,1973
• Resistance levels: 2037,2044,2064,2072,2084,2090.

From the point of view of technical analysis, the trend on the XAU/USD has changed to a downtrend, but all conditions for a change of priority are forming. Now, gold is forming a broadly volatile flat, which makes it difficult to find good entry points. But intraday gold is forming a support level in steps, increasing the probability of an impulsive exit from the broadly volatile flat. Buying can be sought intraday from the support level of 2028. The minimum profit target is 2037, but there are all prerequisites for growth to 2043 and higher. Price moves below 2028 will open the way for a decline to 2019-2021, and the price will be flat again.

Alternative scenario:

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