The Analytical Overview of the Main Currency Pairs on 2024.02.28

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0845
• Prev. Close: 1.0843
• % chg. over the last day: -0.02%

On Tuesday, hawkish comments from Fed Representative Bowman and Kansas City Fed President Schmid pushed T-note bond yields up and supported the dollar. However, the dollar’s gains were weakened after the Conference Board’s US Consumer Confidence Index for February unexpectedly declined. It is now essential to watch the probabilities of rate cuts from the US Fed and ECB at the April meeting. Currently, the chance of a 25 bps rate cut in April from the US Fed is 19%, while for the ECB, the probability is 29%. And since the ECB tends to follow the US Fed, the dollar index may gain a temporary advantage over the euro.

Trading recommendations

• Support levels: 1.0826,1.0805,1.0789,1.0761,1.0704,1.0684
• Resistance levels: 1.0858,1.0908

The trend on the EUR/USD currency pair on the hourly time frame is bullish. Currently, the price is correcting. The MACD indicator is in the negative zone, there is seller pressure inside the day. The support level of 1.0826 can be considered for buying, provided that the price will close higher after the level test, i.e., buyers can stop the price fall. If 1.0826 does not hold, we can consider selling with a minimum target of 1.0805, with a high probability of falling to 1.0789.

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: 1.2675
• Prev. Close: 1.2684
• % chg. over the last day: -0.07%

Bank of England deputy governor Dave Ramsden, who oversees financial markets, said officials might continue to reduce the QE portfolio, which peaked at £895bn, even after reaching the “preferred minimum reserve range”. The remarks at a Financial Markets Association event in London shed light on how the UK central bank is winding down a stimulus program that has been in place for over a decade. This is important for the public finances as the Treasury takes a loss on asset sales. Preliminarily, the Bank of England is preparing for the upcoming crisis.

Trading recommendations

• Support levels: 1.2662,1.2638,1.2615,1.2560,1.2538,1.2499
• Resistance levels: 1.2695,1.2750,1.2827

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The situation is very similar to EUR/USD – the price is correcting, the MACD indicator is negative, and bearish pressure remains within the day. The support level of 1.2662 will likely not be able to hold the price, so today, we can consider selling up to 1.2638. If the price impulsively returns above 1.2662, traders should look for buy trades with a target above 1.2695.

Alternative scenario:

if the price breaks through the support level 1.2611 and consolidates below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 150.61
• Prev. Close: 150.50
• % chg. over the last day: -0.07%

Inflation in Japan is under more scrutiny than ever before now that the Bank of Japan (BoJ) is favoring a scenario where interest rates could move out of negative territory. The BoJ cited two preconditions that would necessitate a hike in lending rates. The first is that inflation remains stable and sustainable above 2%, and the second condition is that wage growth will follow a similar pattern. So far, neither the first nor the second point is being met, so the Japanese yen remains under pressure.

Trading recommendations

• Support levels: 150.28,149.70,148.25,147.67,148.81
• Resistance levels: 150.71,150.87,151.90

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. As expected, the price tested the liquidity below 150.28, after which the price returned above the level. A false breakdown zone was formed, with sellers failing to protect the liquidity void sell side area. Under these market conditions, it is worth looking to buy with a target of 150.71 or even higher – 150.87. There are no optimal entry points for selling right now. But we should not forget that the price is trading near the price levels of past interventions, where the government may intervene again at any time to support the exchange rate.

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: 2032
• Prev. Close: 2030
• % chg. over the last day: -0.09%

On Tuesday, hawkish comments from Fed Chair Bowman and Kansas City Fed President Schmid pushed bond yields higher and weakened precious metals when they said there was no need to cut interest rates at this point. Additional pressure on gold continues to be exerted by the long liquidation of gold funds after the volume of long gold positions in ETFs fell to a 4-year low on Monday.

Trading recommendations

• Support levels: 2031,2032,2016,2013,2007,1995,1989
• Resistance levels: 2044,2062,2069,2084,2090

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Yesterday, the price tested the liquidity below 2035 and closed above the level. Today, in the Asian session, the price again tested the level where the buyers took the initiative. In this scenario, we can look for buying with a target to renew yesterday’s high of 2038. But if the price consolidates below 2030, there could be a sharp wave of selling to 2022, and we should be ready for that.

Alternative scenario:

if the price breaks below the support level in 2016, the downtrend will likely resume.