The Analytical Overview of the Main Currency Pairs on 2024.03.19

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0888
• Prev. Close: 1.0871
• % chg. over the last day: -0.15%

On Monday, the euro initially moved up on the back of rising German bond yields, with the 10-year German bond yield rising to a two-week high. But then the euro gave up early gains and moved lower on dovish comments from ECB Governing Council spokesman de Cos, who said the ECB would likely start cutting interest rates in June. Swaps estimate the odds of a 25 bps ECB rate cut at 7% at the next meeting on April 11 and 80% at the June 6 meeting.

Trading recommendations

• Support levels: 1.0867,1.0840,1.0822,1.0796
• Resistance levels: 1.0875,1.0902,1.0930,1.0953,1.1000

The trend on the EUR/USD currency pair on the hourly time frame is bullish, but close to change. Quotes have approached the priority change level at 1.0867, and sellers continue to pressure it. The MACD indicator is in the negative zone and indicates divergence. Under such market conditions, it is necessary to wait for the reaction of the market participants. We can consider buying trades if buyers show initiatives from the demand zone below 1.0867. There are no optimal entry points for selling right now.

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: 1.2726
• Prev. Close: 1.2717
• % chg. over the last day: -0.07%

Investors are in no hurry to trade the British currency ahead of the US Federal Reserve and Bank of England meetings this week. The latest data showed that the UK economy grew by 0.2% in January compared to the previous month, driven by a rebound in retail sales and housing construction. In addition, the latest employment report showed that British regular wages fell to 6.1% y/y, the slowest pace since October 2022. The Bank of England is expected to keep the rate at 5.25% on Thursday. At the same time, the first rate cut is not expected until August at the earliest.

Trading recommendations

• Support levels: 1.2708,1.2686,1.2634,1.2611,1.2560,1.2538,1.2499
• Resistance levels: 1.2757,1.2805,1.2829,1.2861,1.2885

From the technical analysis point of view, the trend on the GBP/USD currency pair in the hourly time frame is bullish but close to change. The price is approaching the priority change level, and sellers continue to exert pressure intraday. But the MACD indicator is signaling a divergence and is getting stronger. Under such market conditions, intraday buying from 1.2708 with a target of 1.2757 can be considered. There are no optimal entry points for selling right now.

Alternative scenario:

if the price breaks through the support level of 1.2708 and consolidates below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 148.95
• Prev. Close: 149.09
• % chg. over the last day: +0.09%

On Tuesday, Japan’s central bank raised the benchmark interest rate for the first time in 17 years, ending years of negative interest rate policy aimed at stimulating the economy. The short-term rate was raised to 0.1% from 0.1% at a meeting that confirmed expectations of a shift away from ultra-soft monetary policy. The bank set a 2% inflation target to indicate that Japan has finally avoided deflationary tendencies. However, the BoJ remained cautious about “normalizing” monetary policy and said it would continue to inject money into the economy by buying Japanese government bonds and other assets. This is what led to further weakness in the Japanese currency.

Trading recommendations

• Support levels: 149.35,148.58,148.01,147.06
• Resistance levels: 150.22,150.87,151.90

From the technical point of view, the medium-term trend on the currency pair USD/JPY has changed to an upward trend. Despite the interest rate increase by the Bank of Japan for the first time since 2007, the price of the Japanese yen was under a strong sell-off following the meeting results. First of all, this is because this scenario was already priced in. In the second turn, the Bank of Japan will continue stimulating the economy. However, despite the yen’s decline against the dollar, the fundamental consensus will gradually shift towards strengthening the Japanese currency. Now, the price is technically overbought, and it is not advisable to look for buy deals. But the price is testing the selling zone, and if sellers react properly, we can consider selling, but with a short-stop loss.

Alternative scenario:

if the price breaks and consolidates below the support level of 148.01, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2153
• Prev. Close: 2160
• % chg. over the last day: +0.32%

Demand for gold as an inflation hedge rose Monday after the 10-year breakeven inflation rate rose to its highest in a week. However, investors are avoiding making big bets ahead of the US Federal Reserve’s policy decision this week. The Fed is expected to leave interest rates unchanged on Wednesday, and traders have lowered expectations for a June rate cut due to strong inflation data.

Trading recommendations

• Support levels: 2155,2131,2110,2080,2057
• Resistance levels: 2200

From the technical analysis point of view, the trend on the XAU/USD is bullish. Gold still fails to consolidate above the downtrend line, but buyers keep the price below 1.2150. The MACD indicator does not show qualitative signals in such consolidation. A false breakdown is formed below 2155, which can be used as a support area for buying. The price below 1.2150 will sharply increase the probability of falling to 2131.

Alternative scenario:

if the price breaks below the support at 2123, the downtrend will likely resume.