The Analytical Overview of the Main Currency Pairs on 2024.02.23

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0816
• Prev. Close: 1.0822
• % chg. over the last day: +0.05%

The euro found support on Thursday on Eurozone economic news. The Eurozone Composite PMI for February rose by 1.0 to an 8-month high of 48.9, stronger than expectations of 48.4. Stabilizing output in the services sector offset a further sharp decline in manufacturing. Meanwhile, the latest ECB meeting minutes showed that policymakers have reached a consensus that it is premature to discuss interest rate cuts at this stage despite signs of weakening inflationary pressures and looming recession risks. Investors expect fewer than four quarter-point rate cuts before the end of 2024, down from as many as seven at the end of last year. Swaps put the odds of a 25 bps ECB rate cut at 3% at the next meeting on March 7 and 29% at the April 11 meeting. Investors have tempered their expectations for an interest rate cut by the ECB, which is positive for the euro.

Trading recommendations

• Support levels: 1.0789,1.0761,1.0704,1.0684
• Resistance levels: 1.0877,1.0908

The trend on the EUR/USD currency pair on the hourly time frame is bullish. Yesterday, the price tested the 1.0877 resistance level, where sellers showed a reaction. The test occurred on increased volume (effort), after which the price impulsively fell (result). The price then corrected to the lower boundary of the ascending channel, where buyers tried to stop the decline. However, on the increased volume, the price flattened, indicating that the selling pressure remained intraday. The MACD indicator is now inactive. Under such market conditions, we can look for selling from the liquidity sell void area with a target of 1.0789. Sell deals can also be considered on an impulsive trend line breakdown. There are no optimal entry points for buying right now.

Alternative scenario:

if the price breaks the support level of 1.0789 and consolidates below, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2636
• Prev. Close: 1.2659
• % chg. over the last day: +0.18%

Investors overestimated the Bank of England’s policy outlook after releasing the UK PMI data. The survey showed that activity in the country’s private sector expanded in February at the fastest pace since May last year and more than expected, thanks to a marked acceleration in the services sector. In addition, intensifying inflationary pressures caused by strong wage growth in service sector companies and disruptions to factory supplies as a result of the Red Sea tensions are likely to make the Bank of England cautious about lowering borrowing costs.

Trading recommendations

• Support levels: 1.2638,1.2615,1.2560,1.2538,1.2499
• Resistance levels: 1.2667,1.2689,1.2750,1.2827

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is still bearish, as the price failed to consolidate above the priority change level. There was a sharp rejection, resulting in the price declining to the lower boundary of the expanding channel. It can be seen that the pound is trading more swingy, and volatility is higher than on the EUR/USD. At the same time, the volume result shows that the buyers will not give up their positions. Now, the price is trading near the resistance level of 1.2667, where it is possible to look for selling deals if sellers react. Buying should not be sought before testing the liquidity below 1.2638.

Alternative scenario:

if the price breaks the resistance level at 1.2689 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 150.28
• Prev. Close: 150.52
• % chg. over the last day: +0.16%

The Japanese yen fell to 150 per US dollar, near the lowest level against the USD in the last three months. The Japanese yen is under pressure from other major currencies as investors sell the yen to invest in higher-yielding assets in other currencies. The yen also weakened on disappointing economic data from Japan as the country fell into a technical recession in the fourth quarter. Moreover, manufacturing activity contracted in February by the most in 3.5 years, and service sector growth slowed. Nevertheless, the currency has reached levels that the markets fear may prompt the authorities to intervene again to support the exchange rate.

Trading recommendations

• Support levels: 150.35,149.70,148.25,147.67,148.81
• Resistance levels: 150.64,150.87,151.90

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is now at the resistance level 150.64, while the intraday buying pressure is still in place. The latest volume spike also points to buying. Under such market conditions, buy trades to continue the uptrend should be sought from the 150.35 support level. Moving averages can also be considered as an additional factor of price support. There are no optimal entry points for selling right now.

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

Precious metals gave up early gains and moved lower on Thursday, with gold retreating from a 1-week high. Precious metals came under pressure following Thursday’s release of better-than-expected US economic reports that proved hawkish for Fed policy. In addition, a sharp rally in global stock markets on Thursday reduced demand for precious metals.

Trading recommendations

• Support levels: 2013,2007,1995,1989
• Resistance levels: 2027,2044,2062,2069,2084,2090

From the point of view of technical analysis, the trend on the XAU/USD is bullish. But the price is again trading below the moving averages, with sellers’ pressure intraday, confirmed by the latest volume spike with a downside result. Selling can be sought from sell void liquidity zones, but with short targets, as in the absence of news triggers, gold will likely continue to flat and form a broadly volatile balance.

Alternative scenario:

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