The Analytical Overview of the Main Currency Pairs on 2024.03.13

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0919
• Prev. Close: 1.0926
• % chg. over the last day: +0.06%

The dollar index gained support after markets slightly lowered expectations for Fed rate cuts over the next few meetings following Tuesday’s inflation report. Tuesday’s US CPI report for February at 0.4% m/m matched market expectations. Meanwhile, the year-over-year CPI reading of 3.2% y/y was slightly stronger than the market’s expectation of 3.1%. The core CPI annualized 3.8% y/y, below January’s 3.9% but slightly above market expectations of 3.7%. The strengthening dollar had a moderate impact on the euro. Markets estimate the odds of a 25 bps rate cut at 1% for next week’s FOMC meeting on March 20, 15% for the May 1 meeting, and 78% for the June 12 meeting. In turn, swaps estimate the chances of a 25 bps ECB rate cut at the next meeting on April 11 at 11% and 91% for the June 6 meeting.

Trading recommendations

• Support levels: 1.0907,1.0880,1.0867,1.0840,1.0822,1.0796
• Resistance levels: 1.0953,1.1000

Alternative scenario:

The EUR/USD currency pair’s trend on the hourly time frame is bullish. Yesterday, the price corrected to 1.0907, where the buyers took the initiative: the price managed to consolidate above the level, and the volumes indicated a bullish reaction. This level can be used for buying. Selling can be considered from the resistance level of 1.0953 but with a short-stop loss, as this would be selling against the main bias.

Technical indicators of the currency pair:

Trading recommendations

The EUR/USD currency pair’s trend on the hourly time frame is bullish. Yesterday, the price corrected to 1.0907, where the buyers took the initiative: the price managed to consolidate above the level, and the volumes indicated a bullish reaction. This level can be used for buying. Selling can be considered from the resistance level of 1.0953 but with a short-stop loss, as this would be selling against the main bias.

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: 1.2811
• Prev. Close: 1.2791
• % chg. over the last day: -0.15%

The British pound continued to fall below $1.28, moving away from the more than seven-month high reached last week. The latest data showed that wages excluding bonuses came in at 6.1% year-on-year, the slowest pace since October 2022 and slightly below the expected 6.2% growth. In addition, the unemployment rate rose to 3.9%, slightly above forecasts of 3.8%, and job openings declined for the 20th consecutive period. As for the outlook for monetary policy, traders expect that the first rate cut by the Bank of England will likely occur in August, while the European Central Bank and the Federal Reserve may cut rates as early as June.

Trading recommendations

• Support levels: 1.2783,1.2686,1.2634,1.2611,1.2560,1.2538,1.2499
• Resistance levels: 1.2829,1.2861,1.2885

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish. Yesterday, the price corrected below the support level of 1.2783, where buyers showed a reaction, after which the price regained its footing above the level. The MACD indicator remains negative, but momentum is behind the buyers. To buy, waiting for a breakout of the descending channel is best. The first profit target is 1.2829. If buyers fail to break out of the trend line, we can consider selling with a target to the support level of 1.2744.

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: 146.94
• Prev. Close: 147.61
• % chg. over the last day: +0.45%

The JPY declined after Bank of Japan (BoJ) Governor Ueda said that Japan’s durable goods consumption is weak, slightly reducing the chances of a rate hike at next week’s BoJ meeting. Swaps currently estimate the odds of a 10 bps BoJ rate hike at 69% for next week’s meeting on March 19 and 67% for the next meeting on April 26.

Trading recommendations

• Support levels: 147.20,145.87
• Resistance levels: 148.28,148.79,150.22,150.73,150.87,151.90.

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bearish. The temporary strengthening of the US dollar caused the price to correct but not reach the selling zone. With a high probability, the price will try to test liquidity above 148.29, but there may be another test of 147.20 before that. There are no optimal entry points for selling right now.

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: 2182
• Prev. Close: 2158
• % chg. over the last day: -1.11%

Gold is holding near $2,160 an ounce on Wednesday, having lost more than 1% in the previous session, amid stronger-than-expected US inflation data that further clouded the outlook for when the Federal Reserve will start cutting interest rates. Investors now await US retail sales and producer inflation data, which will be due later this week. Strong data will support the dollar and harm precious metals. However, given that the Fed and ECB will start a cycle of rate cuts in June, gold still has upside potential in the medium term.

Trading recommendations

• Support levels: 2131,2110,2080,2057
• Resistance levels: 2161,2200

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Gold continues to see closing profits. After a surge in volumes, the price formed a flat movement and started declining. The divergence on the MACD indicator is still visible in the higher time frames. The main target for gold is to test liquidity above 2200. But before that, the price may correct to the nearest support level. Buying can be considered intraday from the 2131 level but with confirmation. Selling can be looked for from the resistance level of 2261. But if the price consolidates above 2163, “big” buyers may bring the price back to rise to 2200.

Alternative scenario:

if the price breaks below the support at 2110, the downtrend will likely resume.