The Analytical Overview of the Main Currency Pairs on 2024.02.08

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0752
• Prev. Close: 1.0771
• % chg. over the last day: +0.17%

Wednesday’s US economic reports were negative for the USD. The trade deficit for December widened to $62.2 bln, more than the expected $62.0 bln. In addition, consumer credit for December increased by $1.561 bln, which was weaker than expectations of $16.000 bln and was the smallest increase in the last 4 months. A weaker dollar on Wednesday and hawkish comments from the ECB supported a moderate rise in the euro. ECB executive board spokesperson Schnabel warned yesterday against cutting interest rates too soon. After the statement, the probability of a rate cut in March dropped from 72% to 64%.

Trading recommendations

• Support levels: 1.0756,1.0721,1.0724
• Resistance levels: 1.0785,1.0816,1.0860,1.0885,1.0931,1.0985,1.1010.

The trend on the EUR/USD currency pair on the hourly time frame is a downtrend. Now, the price has tested liquidity above the resistance level of 1.0785, but the reaction of sellers is weak at the moment. Here, traders can already look for sales with short stops. If the price reaches 1.0796, the corrective wave will likely continue to 1.0816. There are no optimal entry points for buying.

Alternative scenario:

if the price breaks the resistance level of 1.0885 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2595
• Prev. Close: 1.2624
• % chg. over the last day: +0.23%

On Wednesday, UK house price data from Halifax for January rose by 2.5%, the most vital reading in a year. Bank of England Deputy Governor Sarah Breeden said Wednesday that the UK central bank is in no rush to cut interest rates. In addition, investors eased their expectations of an imminent rate cut by the Bank of England after remarks by chief economist Huw Pill, who said the first rate cut would not come soon. Economists believe the first rate cut is realistic at the earliest June meeting.

Trading recommendations

• Support levels: 1.2615,1.2586,1.2561,1.2499
• Resistance levels: 1.2643,1.2674,1.2750,1.2827,1.2881,1.2937.

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price seeks to test the liquidity above 1.2643. However, the buyers managed to form an additional support zone near 1.2615, and this zone can keep the price from going down. The MACD indicator indicates moderate buying pressure intraday. There are no optimal entry points for buying now. Selling can be looked for after the sellers’ reaction at 1.2643.

Alternative scenario:

if the price breaks the resistance level at 1.2750 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 147.91
• Prev. Close: 148.17
• % chg. over the last day: +0.17%

The fundamental picture of the Japanese yen remains the same. The interest rate differential exerts pressure on the yen, as the US Fed, ECB, and the Bank of England raised interest rates while the Bank of Japan maintained its negative interest rate policy. This situation will continue until the Bank of Japan starts moving towards policy normalisation or until other central banks begin cutting rates. Swaps estimate the odds of a 10 bps BoJ rate hike at 16% at the next meeting on March 19 and 77% at the conference on April 26.

Trading recommendations

• Support levels: 148.25,147.67,148.81,146.45,145.87
• Resistance levels: 148.81,149.33.

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. Now, the price is trading above the moving averages and aims to test the liquidity above 148.81. Yesterday, the price-tested liquidity was below 147.67, where buyers took the initiative. Buying continuing the upward movement is best to look for from 148.25. But the price may not give such a deep correction, so buying can also be looked for on intraday time frames. Selling can be considered only after a bearish initiative after a test of 148.81.

Alternative scenario:

if the price consolidates below the support level at 146.45, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2035
• Prev. Close: 2034
• % chg. over the last day: -0.05%

Gold was in demand yesterday as a safe haven amid concerns over the health of US regional bank stocks after Moody’s Investors Service downgraded the credit rating of New York Community Bancorp. But precious metals gains were limited by hawkish comments from central bankers. Minneapolis Fed President Kashkari and Boston Fed President Collins said the Fed may be quick to cut interest rates, with ECB Executive Board spokeswoman Schnabel also cautioning against cutting rates too quickly.

Trading recommendations

• Support levels: 2031,2023,1997,1987,1973
• Resistance levels: 2042,2062,2069,2084,2090

From the point of view of technical analysis, the trend on the XAU/USD is again downward. Yesterday, the price-tested liquidity was above the resistance level 2042, where sellers took the initiative. With a high probability, given the lack of significant news until the end of the week, gold will be flat. Therefore, it is best to look for trades on intraday time frames. Buying can be considered if the buyers react to the level of 2031. If no such reaction exists, the price may slowly and steadily decline to 2023.

Alternative scenario:

if the price breaks above the resistance level of 2057, the uptrend will likely resume.