The Analytical Overview of the Main Currency Pairs on 2024.02.16

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0723
• Prev. Close: 1.0771
• % chg. over the last day: +0.44%

The dollar retreated on Thursday after the US retail sales for January and manufacturing production for January fell more than expected, which increased the probability of Fed interest rate cuts. In addition, a strengthening euro weighed on the dollar after ECB President Lagarde warned against cutting interest rates too quickly. Today, the US will release the PPI report, which shows the inflation rate between factories and plants and is a leading indicator of consumer inflation. A rise in PPI may again reduce the likelihood of an interest rate cut this spring, leading to a stronger US dollar.

Trading recommendations

• Support levels: 1.0758,1.0739,1.0704,1.0684
• Resistance levels: 1.0796,1.0816,1.0860

The trend on the EUR/USD currency pair on the hourly time frame is a downtrend. Now, the price is correcting and trading above moving averages. At the same time, buyers are forming conditions for the trend change. There is buying pressure inside the day. Under such market conditions, buy trades can be sought intraday from the support level of 1.0758, and it is very important for buyers to pass the marked selling zone. If the price fails to pass 1.0770 and dives back under 1.0758, it could lead to a new wave of selling.

Alternative scenario:

if the price breaks the resistance level of 1.0796 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2557
• Prev. Close: 1.2595
• % chg. over the last day: +0.30%

The British pound declined to $1.25 amid investors’ close attention to several economic indicators and their potential implications for the Bank of England policy. Preliminary data showed the UK economy contracted by 0.3% in the final quarter of 2023, worse than market expectations and marking the country’s first technical recession since the COVID-19 outbreak in 2020. At the same time, other economic data signaled an increase in manufacturing output along with a marked decline in exports and imports.

Trading recommendations

• Support levels: 1.2560,1.2538,1.2499
• Resistance levels: 1.2610,1.2635,1.2643,1.2683,1.2750,1.28277

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 has corrected to the moving average lines. Buyers are trying to test the liquidity above 1.2610, but sellers are already starting to be active. Given the bearish bias, the price will likely decline towards 1.2560. Selling could be sought intraday from the resistance level at 1.2588 or after a liquidity test above 1.2610, provided an appropriate reaction exists.

Alternative scenario:

if the price breaks the resistance level at 1.2683 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 150.53
• Prev. Close: 149.89
• % chg. over the last day: -0.42%

The Japanese yen strengthened on Thursday, supported by the decline in T-note yields. In addition, the yen has been supported since Wednesday when Japan’s chief currency strategist, Kanda, and Finance Minister Suzuki raised the threat of Japanese intervention in currency markets, saying they are watching developments with great scrutiny. Swaps estimate the odds of a 10 bps BoJ rate hike at the next meeting on March 19 at 31% and 69% at the April 26 meeting. Currently, the dollar index contributes to the main dynamics of pricing on the USD/JPY currency pair.

Trading recommendations

• Support levels: 150.28,149.21,148.99,148.25,147.67,148.81
• Resistance levels: 150.91,151.90

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price corrected to the liquidity void zone below 150.28 and even reached the support level of 149.68, where the buyers took the initiative. The MACD indicator became inactive. The price is expected to impulsively return above 150.28, after which it will continue to rise to 150.91. But while there is no buyer’s reaction, being patient and out of position is worth it. For selling, we can consider the area above 150.28 if sellers do not let the price close higher.

Alternative scenario:

If the price consolidates below the support level at 149.27, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1992
• Prev. Close: 2004
• % chg. over the last day: +0.60%

Precious metals closed moderately higher on Thursday. A weaker dollar on Thursday provided support for metals prices. Also, weaker-than-expected reports on US retail sales for January and manufacturing production for January were dovish for Fed policy and favorable for precious metals. In addition, the decline in T-note bond yields on Thursday supported precious metals. Many investors use every decline in gold as an opportunity to buy gold at lower prices because once global central banks start cutting rates, gold will get the green light.

Trading recommendations

• Support levels: 1989,1973
• Resistance levels: 2006,2015,2027,2042,2062,2069,2084,2090

From the point of view of technical analysis, the trend on the XAU/USD is again downward. Yesterday, the price tested liquidity below 1997, where the buyers’ reaction continued. In such situations, the price moves to the next liquidity zone of interest. The price has tested the zone above 2006, but the selling pressure is weak. In such market conditions, orienting the price reaction to empty liquidity zones is necessary. If sellers take the initiative to retest 2006, it could trigger a sharp wave of selling to 1989. Buyers may impulsively raise the price above 2017 if sellers do not react. In liquidity-void areas, the price usually accelerates.

Alternative scenario:

if the price breaks above the resistance level in 2029, the uptrend will likely resume.