The Analytical Overview of the Main Currency Pairs on 2024.04.04

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0766
• Prev. Close: 1.0835
• % chg. over the last day: +0.64%

The US dollar retreated on Wednesday after an unexpected decline in the US services sector business activity index for March, a dovish factor for the Fed’s policy. As a result, EUR/USD jumped 0.64% yesterday. In addition, a bullish factor for the euro was the labor market report, according to which the unemployment rate in the Eurozone in February did not change and remained at a record low level. At the American session, the euro growth accelerated due to Fed Chairman Powell’s “dovish” comments. At the same time, the euro was practically unaffected by the weakening price pressure. The March Eurozone CPI declined to 2.4% y/y from 2.6% y/y in February, better than expectations of 2.5% y/y. The March core CPI declined to 2.9% y/y from 3.1% y/y in February, better than expectations of 3.0% y/y and the lowest reading in 2 years.

Trading recommendations

• Support levels: 1.0796,1.0759,1.0743
• Resistance levels: 1.0843,1.0867

The trend on the EUR/USD currency pair on the hourly time frame has changed to bullish. Yesterday, the price consolidated above the priority change level and is now confidently trading above the moving averages. The MACD indicator is overbought, but there are no signs of reversal. Under such market conditions, further price growth is expected up to the resistance level 1.0876. We can consider the resistance level of 1.0804 for sell deals, but only under the condition of the sellers’ reaction. At the moment, there is no reaction.

Alternative scenario:

if the price breaks the support level of 1.0743 and consolidates below it, the downtrend will be resumed with a high probability.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2575
• Prev. Close: 1.2651
• % chg. over the last day: +0.60%

The British pound regained some ground against the US dollar, but it should be noted that this is more due to the dollar’s weakness than the British currency’s strength. GBP/USD fell sharply in the second half of March after the Fed revised upward growth and inflation in its summary of economic projections but retained its December view on the number of rate cuts in 2024. Sustained growth and higher inflation in 2024 in the US have caused markets to downplay the likelihood of three rate cuts this year, and it now sits somewhere between two and three. This led to a decline in GBP/USD, but now, due to dollar weakness, quotes have found support.

Trading recommendations

• Support levels: 1.2640,1.2615,1.2594,1.2551
• Resistance levels: 1.2674,1.2709

From the point of view of technical analysis, the trend of the GBP/USD currency pair in the hourly time frame has changed to an upward trend. Similarly, with the euro, GBP/USD quotes have consolidated above the priority shift level and are trading above the moving averages. Intraday, the buying pressure remains. This is evidenced by bullish volumes and the unwillingness of the price to decline on the falling MACD. Under such market conditions, we should consider buying with a target of 1.2674. The price will probably make a pullback to 1.2640, but on such a strong movement, the growth may continue without a pullback. There are no optimal entry points for selling now.

Alternative scenario:

if the price breaks the support level of 1.2551 and consolidates below, the downtrend will be resumed with a high probability.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 151.54
• Prev. Close: 151.68
• % chg. over the last day: +0.09%

The Japanese yen fell to a one-week low against the dollar on Wednesday under the pressure of rising T-note yields. In addition, the downward revision of Japan Mar Jibun Bank’s Services PMI was a negative factor for the yen. The yen’s losses were tempered by speculation that the Japanese authorities may be close to intervening in the currency markets to support the yen, as several government officials reiterated earlier this week that the Japanese government would take appropriate action against any excessive exchange rate movements. The probability of an intervention is estimated to be very high.

Trading recommendations

• Support levels: 151.39,150.83,150.25,149.91,148.91,148.58,148.01,147.06
• Resistance levels: 151.90,152.50

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bullish. Yesterday, the Japanese price reached the resistance level of 151.90, and the sellers took the initiative. However, pay attention to the fact that, during the fall of the US dollar, the Japanese yen did not strengthen, unlike the euro and the pound. This indicates the weakness of the currency. Under such market conditions, USD/JPY quotes will grow above 151.90. Still, we should be very careful because the Japanese government can conduct a currency intervention at any moment, leading to a sharp strengthening of the Japanese currency.

Alternative scenario:

if the price breaks and consolidates below the support level of 150.25, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2281
• Prev. Close: 2300
• % chg. over the last day: +0.83%

The weakening of the US dollar on Wednesday was favorable for precious metals. Gold hit an all-time high, and silver prices hit a two-year high. In addition, geopolitical risks are boosting demand for precious metals after Iran threatened Israel with retaliation for airstrikes on Iranian military personnel in Syria last Friday. Fundamentally, all factors for further growth remain on gold, but it is worth remembering that the price cannot grow without corrections.

Trading recommendations

• Support levels: 2280,2265,2249,2229,2206
• Resistance levels: 2300,2350

From the point of view of technical analysis, the trend on the XAU/USD is bullish. It took gold just 3 trading sessions to get from 2200 to 2300. But technically, the price is now very overbought, and this is where big buyers can start unloading their portfolios. The MACD indicator on several time frames signals a divergence, and a corrective movement is coming. But there is no seller’s initiative yet. Under such market conditions, sell deals can be sought from 2300 or 2350 if this initiative is confirmed. There are no optimal entry points for buying now.

Alternative scenario:

if the price breaks below the support at 2228, the downtrend will likely resume.