The Analytical Overview of the Main Currency Pairs on 2024.04.29

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0728
• Prev. Close: 1.0629
• % chg. over the last day: -0.33%

The US dollar strengthened on Friday as stronger-than-expected US economic reports on March personal spending and PCE deflator for March proved to be hawkish for Fed policy and may further delay Fed rate cuts. The US core PCE deflator for March, the Fed’s preferred measure of inflation, came in at 2.8% y/y, unchanged from February and above expectations of 2.7% y/y. The 5–10-year inflation expectation for April was unchanged at 3.0%. The divergence in Fed and ECB policies is weighing on the euro as the US Fed postponed its first rate cut to a later date, while the ECB is set to cut rates at its June meeting.

Trading recommendations

• Support levels: 1.0689,1.0632,1.0590
• Resistance levels: 1.0722,1.0756,1.0795,1.0843,1.0865

The trend on the EUR/USD currency pair on the hourly time frame is bearish. But the price is approaching the priority change level. The resistance level of 1.0722 was tested not for the first time, and each subsequent reaction of sellers was weaker than the previous one. Considering the latest volumes indicate a buyer, there is a high probability of further growth and a break of the medium-term trend. There are no optimal entry points for buying now, as the price trades in the supply zone. We can consider the resistance level 1.0722 for sell deals, provided the sellers react here and the price consolidates below the level.

Alternative scenario:

if the price breaks the resistance level of 1.0752 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2509
• Prev. Close: 1.2491
• % chg. over the last day: -0.14%

The US Fed is expected to cut rates in the second half of this year. If these expectations come true, the dollar will likely remain firm on the thesis that other major central banks may cut their interest rates ahead of the Fed or soon after. This reassessment has significantly affected sterling’s overall weakness against the dollar this year. Nevertheless, the US Dollar Index has fallen over the past week, and sterling, like many other currencies, has benefited from this. The pound has also benefited from clear signs that things are not as bad in the economy as many feared earlier this year.

Trading recommendations

• Support levels: 1.2423,1.2381,1.2312
• Resistance levels: 1.2458,1.2522,1.2612,1.2634,1.2674,1.2707

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bearish. However, the price is already testing the level of priority change for the third time. At the same time, each subsequent level test indicates the weakness of sellers, while the buyers are only increasing their efforts, which can be seen in the reaction to the last volume spike. There is a high probability of medium-term trend change. Under such market conditions, buying should wait for the price to consolidate above the level of priority change. Selling can be considered if sellers are active now and push the price below 1.2522.

Alternative scenario:

if the price breaks through the resistance level of 1.2522 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 155.60
• Prev. Close: 158.34
• % chg. over the last day: +1.76%

The Japanese yen fell to a 34-year low against the dollar on Friday after the Bank of Japan left all monetary policy settings unchanged. The yen fell well beyond levels called “red lines” for Japan and at a pace that has traders wondering when the authorities might start buying the currency to support it. At Monday’s open, the rate slipped to $160 per yen as traders increased bets against the currency despite illiquid trading in Japan. Markets continue to watch for signals of intervention from the Japanese authorities.

Trading recommendations

• Support levels: 155.88,154.96,154.54,153.95
• Resistance levels: 160

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price sharply rebounded from the psychological mark 160 and fell to 155.5. It is hard to say what caused such a sharp decline. The Bank of Japan did not give any official statements. Perhaps because of the low-liquidity session (today is a banking holiday in Japan), volatility increased sharply. It is also possible that the buyers, who previously held positions on USD/JPY, started to take profits at 160. Buying is not recommended due to the unknown nature of the decline. Selling can be considered from the intraday resistance level at 158.20, but with confirmation.

Alternative scenario:

if the price breaks and consolidates below the support level of 154.55, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2333
• Prev. Close: 2338
• % chg. over the last day: +2.14%

Despite the dollar’s rise on Friday, gold gained more than 2%. Demand for gold as a store of value rose on Friday after the Bank of Japan left interest rates unchanged and said it maintained the pace of bond purchases. That sent the yen falling against the dollar to a 34-year high. Chicago Fed chief Austan Goolsbee noted Friday that progress in reducing inflation has “stalled” this year, diverging from previous forecasts of upcoming rate cuts, which could limit the appeal of non-yielding assets such as gold while keeping rates high longer.

Trading recommendations

• Support levels: 2314,2292,2267,2249,2229,2206
• Resistance levels: 2336,2350,2367,2400

From the technical analysis point of view, the trend on the XAU/USD is bearish. On Friday, the price tested liquidity above 2350, and sellers reacted moderately. The price declined but did not reach the support zone. With a high probability the price will continue to lower to test the 2314 level again. Selling can be looked for intraday from the resistance level of 2337. There are no optimal entry points for buying right now.

Alternative scenario:

if the price breaks and consolidates above the resistance level of 2400, the uptrend will likely resume.