The Analytical Overview of the Main Currency Pairs on 2024.04.11

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0855
• Prev. Close: 1.0741
• % chg. over the last day: -1.06%

The US dollar rose sharply on Wednesday after the US inflation report for March was stronger than expected, which raised T bond yields and reduced the probability of a Fed rate cut. Fed swap markets are now pricing in a 50 bps rate cut for 2024, down from the 75 bps rate cut that was priced last week. Markets estimate the odds of a 25 bps rate cut at 3% at the next FOMC meeting on May 1 and just 19% at the next meeting on June 12. The dollar’s rise on Wednesday weakened the euro. Investor caution is also weighing on the euro ahead of the ECB meeting today, where the ECB is expected to leave the interest rate unchanged at 4.5%. Swaps estimate the odds of a 25 bps ECB rate cut at 5% at the next meeting on April 11 and 82% at the next meeting on June 6.

Trading recommendations

• Support levels: 1.0725,1.0684
• Resistance levels: 1.0795,1.0816,1.0843,1.0865

Alternative scenario:

The EUR/USD currency pair’s hourly trend has changed to a downtrend. Yesterday, the euro saw a sell-off amid a sharp rise in the dollar. The price relentlessly broke through all support levels and consolidated below the priority change level. The target is to test liquidity below 1.0725. Under these market conditions, intraday selling can be considered, but with short stops. There are no optimal entry points for buying.

Technical indicators of the currency pair:

Trading recommendations

The EUR/USD currency pair’s hourly trend has changed to a downtrend. Yesterday, the euro saw a sell-off amid a sharp rise in the dollar. The price relentlessly broke through all support levels and consolidated below the priority change level. The target is to test liquidity below 1.0725. Under these market conditions, intraday selling can be considered, but with short stops. There are no optimal entry points for buying.

Alternative scenario:

if the price breaks the resistance level of 1.0865 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2674
• Prev. Close: 1.2539
• % chg. over the last day: -1.07%

The British pound weakened to USD 1.2540 after the release of stronger-than-expected US inflation data, which dampened expectations of an interest rate cut by the Federal Reserve this year. Markets now expect the Fed to ease policy by around 50 basis points this year, while the UK is expected to cut rates by around 70 basis points. Last month, the Bank of England (BoE) kept borrowing costs at a 16-year high of 5.25%, with two of the Bank’s most hawkish officials refusing to raise rates and Bank Governor Andrew Bailey hinting at the possibility of an interest rate cut this year. Investors await the UK’s monthly GDP data on Friday for further clarity on the Bank’s policy trajectory.

Trading recommendations

• Support levels: 1.2540,1.2501,1.2446
• Resistance levels: 1.2612,1.2634,1.2674,1.2707

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. The price has consolidated below the priority change level and deviated from the moving averages. At the moment, the price tested the liquidity below 1.2539, but the reaction of sellers is weak. With a high probability, the price will continue to decline after a small bounce with a target of 1.2501. Under such market conditions, sell trades are best sought on intraday time frames but with a short stop. There are no optimal entry points for buying.

Alternative scenario:

if the price breaks through the resistance level of 1.2707 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 151.72
• Prev. Close: 153.14
• % chg. over the last day: +0.93%

As the dollar rallied, the Japanese yen fell to 153 against the US dollar, its lowest level since July 1990. Despite the recent tightening, Japan’s key short-term interest rate remains at 0-0.1%, which encourages carry trades. Traders await any sign of currency intervention from the BoJ, viewing the 152-153 USD exchange rate as a potential catalyst. Finance Minister Shun’ichi Suzuki said on Tuesday that the authorities do not rule out any action against excessive yen movement, reiterating warnings made in his previous statements.

Trading recommendations

• Support levels: 151.52,151.14,150.80,150.25
• Resistance levels: 151.83,151.94,152.50

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bullish. The Japanese price tested liquidity above 153, where sellers showed moderate initiative. The price is trading at intervention levels, so buying here is risky, as the Bank of Japan may intervene at any moment to support the rate. However, since the price failed to consolidate above 153, we can consider selling intraday but with a short stop. Before the intervention, the price may update the current week’s high to grab more liquidity.

Alternative scenario:

if the price breaks and consolidates below the support level of 151.55, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2353
• Prev. Close: 2333
• % chg. over the last day: -0.85%

Yesterday, metals prices were under the pressure of the dollar index growth. Wednesday’s report on the US consumer price index lowered expectations of a Fed rate cut this year and put pressure on gold prices. In addition, the growth of global bond yields on Wednesday is a “bearish” factor for precious metals (gold has an inverse correlation to bond yields). Nevertheless, gold retains its growth potential, supported by strong demand for a “safe haven” as investors seek refuge from geopolitical risks and price pressure.

Trading recommendations

• Support levels: 2334,2322,2300,2267,2249,2229,2206
• Resistance levels: 2364,2400,2450,2500

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Gold corrected yesterday but maintained a bullish bias. The price tested the buying zone below 2322, where the buyers took the initiative. Gold will likely form a broadly volatile flat with an upward bias. Under such market conditions, it is better to look for intraday buy trades from the support level of 2334 or 2322, but with confirmation. The nearest target is 2350, but the price may try to renew the high of the week again. There are no optimal entry points for selling.

Alternative scenario:

if the price breaks below the support at 2303, the downtrend will likely resume.