The Analytical Overview of the Main Currency Pairs on 2024.03.22

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0922
• Prev. Close: 1.0860
• % chg. over the last day: -0.57%

On Thursday, the euro gave up early gains and declined after an unexpected fall in the Mar S&P Eurozone Manufacturing PMI, which was dovish for the ECB policy. The March Eurozone Manufacturing PMI from S&P unexpectedly fell by 0.8 to 45.7, weaker than expectations of a rise to 47.0. The euro’s losses accelerated after stronger-than-expected economic reports from the US lent support to the dollar. Swaps estimate the odds of a 25 bps ECB rate cut at 3% at the next meeting on April 11 and 88% at the June 6 meeting.

Trading recommendations

• Support levels: 1.0834,1.0822,1.0796
• Resistance levels: 1.0864,1.0886,1.0923,1.0936,1.0953,1.1000

The trend on the EUR/USD currency pair on the hourly time frame is close to changing to a downtrend. Initially, the resistance level 1.0936 was expected to trigger a correction, but the price broke through all support levels and declined to 1.0834. Given the weak reaction of buyers, this level is likely to be broken, and the price will fall to 1.0822, below which there is a pocket of liquidity. It is possible to sell intraday but with short stops. There are no entry points for buying right now.

Alternative scenario:

if the price breaks the support level of 1.0834 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2785
• Prev. Close: 1.2656
• % chg. over the last day: -1.02%

As expected, the Bank of England kept the interest rate unchanged at 5.25% but calls for a rate hike diminished, fueling speculation that the central bank may be on the verge of lowering borrowing costs. However, policymakers have warned that they are not yet able to cut interest rates. Most investors believe the first cut will come in August.

Trading recommendations

• Support levels: 1.2634,1.2605,1.2585,1.2560
• Resistance levels: 1.2672,1.2709,1.2765,1.2803

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame has changed to a downtrend. It took only one day to turn everything upside down again. The price broke through the priority change level and consolidated below. The MACD indicator is in the negative zone with oversold signs but no signs of reversal. Under such market conditions, we should look for intraday sell trades with a target of 1.2605. There are no optimal entry points for buying now, as there is no buyer reaction at support levels.

Alternative scenario:

if the price breaks through the resistance level at 1.2803 and consolidates above it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 151.19
• Prev. Close: 151.58
• % chg. over the last day: +0.25%

Yesterday, Japanese trade news supported the JPY as February exports rose by 7.8% YoY, stronger than expectations of 5.1% YoY. February imports rose by 0.5% y/y, which aligned with expectations. The March Jibun Bank Japan Manufacturing PMI rose by 1.0 to a 4-month high of 48.2. The Jibun Bank Services PMI for March rose by 2.0 to a 10-month high of 54.9. Today’s latest data showed that Japan’s core CPI for February 2024 rose to an annualized 2.8%, accelerating from January’s 2% and the highest since October. Ideally, this should provide additional support for the Japanese currency. Swaps estimate the odds of a 10 bps BoJ rate hike at 1% at the April 26 meeting and 34% at the June 14 meeting.

Trading recommendations

• Support levels: 151.47,150.84,149.91,148.91,148.58,148.01,147.06
• Resistance levels: 151.90

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bullish. The yen is once again aiming to test the multi-year high of 151.90. The price trades above the moving averages, with a divergence forming. This suggests that buying should be extremely cautious, especially because politicians may intervene and conduct currency intervention to support the exchange rate. Selling should be sought only after testing liquidity above 151.90.

Alternative scenario:

if the price breaks and consolidates below the support level of 148.91, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2187
• Prev. Close: 2181
• % chg. over the last day: -0.27%

The Swiss National Bank unexpectedly cut its key rate by 25 basis points, becoming the first major bank to start the easing cycle. This should have spurred demand for gold, but it did not. Gold declined yesterday amid profit-taking by major participants. Fundamentally, the conditions for a further rally for precious metals remain, as central banks will start to reduce the cost of borrowing from late spring to early summer.

Trading recommendations

• Support levels: 2165,2149,2157,2131,2110,2080,2057
• Resistance levels: 2192,2200,2250

From the technical analysis point of view, the trend on the XAU/USD is bullish. But now the price is correcting, and intraday selling prevails. The MACD indicator has turned negative. Under such market conditions, intraday selling can be considered with a target of 2165. Buyers need to keep the price above this level; otherwise, the probability of priority change increases. Therefore, buy trades can be considered from 2165, subject to buyers’ reactions.

Alternative scenario:

if the price breaks below the support at 2149, the downtrend will likely resume.