The Analytical Overview of the Main Currency Pairs on 2024.02.22

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0804
• Prev. Close: 1.0817
• % chg. over the last day: +0.12%

The FOMC meeting minutes from January 30-31 turned out to be hawkish, but it had little impact on the dollar index. Most participants noted the risks of easing policy too quickly and emphasized the importance of carefully evaluating incoming data to judge whether inflation is on a sustainable path to 2%. Currently, markets are pricing in a 25 bps chance of a rate cut at 7% for the March 19-20 FOMC meeting and 33% for the April 30-May 1 meeting. Just a week ago, the probability of a rate cut in April was over 60%. In turn, swaps put the odds of a 25 bps ECB rate cut at 2% at the next meeting on March 7 and 38% at the April 11 meeting. As the probabilities have equaled, this could cause some parity in EUR/USD pricing in the coming days and weeks. Inflation data will be released in the Eurozone today. Consumer prices are expected to remain at the same levels. However, any deviations from the forecasts may cause a spike in volatility.

Trading recommendations

• Support levels: 1.0789,1.0761,1.0704,1.0684
• Resistance levels: 1.0838,1.0860

The trend on the EUR/USD currency pair on the hourly time frame has changed upward. The price trades above the moving averages and is perfectly supported by the liquidity void buy areas. The MACD indicator is in the positive zone but with signs of divergence. With these market conditions, the price will likely test liquidity above 1.0838. If sellers show a reaction here, it will create a flat accumulation. If sellers do not react, the road to 1.0860 will open for the price.

Alternative scenario:

if the price breaks the support level of 1.0761 and consolidates below, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2620
• Prev. Close: 1.2636
• % chg. over the last day: +0.12%

The British pound is trading above $1.26, reaching the strongest level since February 1, helped by the weakening dollar. At the same time, investors analyze mixed statements from Bank of England policymakers. Governor Andrew Bailey admitted that investors’ bets on lower interest rates this year were not unreasonable but also noted clear signs of economic recovery in the UK after the recession at the end of last year. Deputy Governor Ben Broadbent noted the possibility of a rate cut this year depending on economic developments. Swati Dhingra, the Monetary Policy Committee’s external representative, pointed to significant risks to the UK economy that could be exacerbated by tight monetary policy.

Trading recommendations

• Support levels: 1.2601,1.2560,1.2538,1.2499
• Resistance levels: 1.2660,1.2683,1.2750,1.2827

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is still bearish but is close to change. The price is slowly and steadily breaking through all the sell zones, aiming to test the liquidity above 1.2660. With these market conditions, buying can be sought intraday with short-stop losses. There are no optimal entry points for selling right now.

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: 149.95
• Prev. Close: 150.28
• % chg. over the last day: +0.22%

The Japanese yen is holding near 150 per dollar, reaching a level markets fear could prompt the authorities to intervene again in the currency markets. The yen weakened as Japan lost ground to Germany as the world’s third-largest economy and entered a technical recession. The recession data reinforced expectations that the Bank of Japan will maintain its ultra-loose monetary policy. Meanwhile, the sharp drop in the currency prompted Japan’s Finance Minister Shun’ichi Suzuki to warn last week that authorities were closely monitoring the market without confirming whether they would intervene again.

Trading recommendations

• Support levels: 149.68,148.92,148.25,147.67,148.81
• Resistance levels: 150.43,150.91,151.90

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price forms a flat accumulation, making it difficult to find good entry points. Pay attention to the rising trend line, which supports the price growth on intraday time frames. A price consolidation below this line may trigger a wave of sell-offs. But as long as it is not broken, it makes sense to look for buying in the continuation of the uptrend.

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: 2024
• Prev. Close: 2026
• % chg. over the last day: +0.09%

Gold rose to 2030 dollars per ounce, extending gains for the sixth consecutive session on the back of a weaker dollar amid growing uncertainty over the outlook for US interest rates. Gold also benefited from increased safe-haven demand amid rising geopolitical tensions in the Middle East. But the Federal Reserve’s latest meeting minutes showed that officials cautioned about cutting interest rates too quickly, which could delay the start of the easing cycle. This may lead to the strengthening of the dollar, which will hurt the “yellow metal”.

Trading recommendations

• Support levels: 2022,2013,2007,1995,1989
• Resistance levels: 2044,2062,2069,2084,2090

From the point of view of technical analysis, the trend on the XAU/USD is bullish. The price is trading above the moving averages. The MACD indicator is in the positive zone but with signs of divergence. The way is open to 2044, but the price will probably make a corrective wave. Under these market conditions, looking for intraday buying with a stop loss below 2022 is best. If the price consolidates below 2022, we can consider selling with a target of 2013.

Alternative scenario:

if the price breaks below the support on 1995, the downtrend will likely resume.