The Analytical Overview of the Main Currency Pairs on 2024.03.08

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0894
• Prev. Close: 1.0946
• % chg. over the last day: +0.48%

As expected, the ECB kept interest rates unchanged in March and confirmed that borrowing costs will remain elevated as long as necessary. During the regular press conference, President Lagarde said that policymakers did not discuss cutting rates at this meeting and needed more evidence that inflation was moving towards the target. Nevertheless, the central bank noted a decline in inflation and revised its forecasts downward. The first-rate cut is expected in June. Swaps estimate the odds of a 25 bps ECB rate cut at 14% at the next meeting on April 11 and 93% at the June 6 meeting.

Trading recommendations

• Support levels: 1.0908,1.0880,1.0867,1.0840,1.0822,1.0796
• Resistance levels: 1.0953,1.1000

The trend on the EUR/USD currency pair on the hourly time frame is bullish. As expected, the price tested liquidity below 1.0880 during the publication of the ECB interest rate decision. Then buyers took the initiative, after which the euro reached a 7-week high. Current market conditions point to the continuation of the upward movement. However, on the publication of the US labor market news, the price may make a sharp corrective test below 1.0907, after which it is likely to return to growth. Buying before the resistance level 1.0953 is undesirable, as the price is highly overbought here.

Alternative scenario:

if the price breaks the support level of 1.0867 and consolidates below, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2733
• Prev. Close: 1.2807
• % chg. over the last day: +0.58%

As no economic events are expected in the UK, the US dollar will contribute to the main dynamics in GBPUSD pricing. The monthly Nonfarm payrolls labor market report will be released in the US today. The economy is expected to have added 190,000 jobs in February after 353,000 in January. The unemployment rate will likely remain at 3.7%, and wage growth will slow from 4.5% to 4.3% year-over-year. If the data comes out in line with economists’ forecasts or worse, it would indicate a slight cooling of the labor market, increasing the probability of the FOMC rate cut in April. In this scenario, the dollar index will be under pressure, while risk assets (euro, pound) will be supported and will continue their upward rally.

Trading recommendations

• Support levels: 1.2783,1.2686,1.2634,1.2611,1.2560,1.2538,1.2499
• Resistance levels: 1.2827

From the technical analysis point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price is steadily growing, overcoming all resistance levels. Market conditions indicate the continuation of the rally. However, after the publication of Nonfarm Payrolls news, the price may make a quick liquidity test below 1.2783. The profit target is 1.2828. There are no optimal entry points for selling right now.

Alternative scenario:

if the price breaks through the support level 1.2670 and consolidates below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 149.31
• Prev. Close: 148.01
• % chg. over the last day: -0.87%

The Japanese yen rose to a 1-month high against the USD on Thursday after strong Japanese wage news and hawkish comments from the BoJ increased speculation that the BoJ may exit its negative interest rate policy as early as this month. Hawkish comments from BoJ board spokesman Nakagawa on Thursday also boosted the yen. Swaps currently estimate the odds of a 10 bps BoJ rate hike at 78% at the next meeting on March 19 and 85% at the April 26 meeting.

Trading recommendations

• Support levels: 147.51,145.87
• Resistance levels: 148.25,148.78,149.93,150.22,150.73,150.87,151.90

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bearish. The yen is strengthening on expectations of BoJ policy change this spring. Currently, the price has reached the support level of 147.51. On trading volumes, there is a coverage of profits here. But below this level is a huge accumulation of liquidity, and the price intends to test it. Considering the US labor market news publication, the price may make a quick test of liquidity above 148.25. In any case, it is worth waiting for a corrective pullback for selling, as the price is oversold. There are no optimal entry points for buying.

Alternative scenario:

if the price breaks and consolidates above the resistance level at 150.56, the upward trend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2149
• Prev. Close: 2160
• % chg. over the last day: +0.51%

The decline in the dollar index on Thursday to a 1-month low was a favorable factor for metals. As a result, the price of gold rose to a historical maximum. In addition, the decline in US and German bond yields on Thursday supported precious metals. In recent weeks, speculation that the Fed and ECB will soon move to cut interest rates has encouraged the purchase of gold as a store of value. And in terms of fundamentals, the stage is set for the rally to continue. However, a technical correction is expected shortly since the price cannot grow without pullbacks.

Trading recommendations

• Support levels: 2131,2110,2080,2057
• Resistance levels: 2160,2200

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Gold continues to see closing profits. The price grows uncertain after a surge in volumes or forms a flat sideways. At the same time, the price is tapering into a wedge, indicating liquidity accumulation. The MACD indicator indicates a technical correction. Sell trades should be considered only if the price is fixed below the channel lines. At the same time, it is necessary to see the sellers’ initiative in the lower time frames. There is no such initiative at the moment, and if the majority of participants are now selling gold at such highs, the price may make another wave of growth. Therefore, if the price breaks down the mentioned rising wedge, we can consider selling with a minimum target of 2131. There are no optimal entry points for buying now as the price is overbought. Until the publication of the US labor market news, it is recommended to refrain from positions.

Alternative scenario:

if the price breaks below the support at 2038, the downtrend is likely to resume.