The Analytical Overview of the Main Currency Pairs on 2024.05.06

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0723
• Prev. Close: 1.0762
• % chg. over the last day: +0.36%

The euro rose to $1.08, hitting its highest level since April 9, as traders revised their expectations for an interest rate cut after releasing a weaker-than-expected US jobs report. The data showed that the US created fewer jobs than forecast last month, just 175,000, prompting investors to accelerate forecasts for the Federal Reserve’s first rate cut from November to September. In addition, annual wage growth fell to 3.9% and the unemployment rate unexpectedly rose to 3.9%. Meanwhile, in Europe, the stable inflation rate and moderate Eurozone GDP growth released earlier further strengthened the position in favor of a possible ECB interest rate cut in June.

Trading recommendations

• Support levels: 1.0739,1.0713,1.0688,1.0652,1.0623,1.0590
• Resistance levels: 1.0795,1.0843,1.0865

The trend on the EUR/USD currency pair on the hourly time frame has changed upward. On Friday, after the Non-farm payrolls report, the price was consolidated above the priority level change. The price rose to the resistance level of 1.0795, where positions started to cover, as a result by the end of the trading day the price declined to the moving average levels. This can be seen from the price reaction to the volume spike. Under such market conditions, buying should be sought from the support zone below 1.0739. There are no optimal entry points for selling now.

Alternative scenario:

if the price breaks the support level at 1.0673 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2520
• Prev. Close: 1.2546
• % chg. over the last day: +0.21%

The British pound jumped to $1.26, hitting its highest level since April 9, as traders revised their expectations for the timing of interest rate cuts in 2024 following the release of weaker-than-expected US jobs data. The Fed is expected to cut interest rates for the first time in September, down from the previous prediction in November. Meanwhile, the Bank of England is expected to leave rates unchanged this week, but investors expect the first rate cut to come in August rather than September. In April, Bank of England Governor Andrew Bailey expressed optimism that British inflation was on track to reach the 2% target.

Trading recommendations

• Support levels: 1.2531,1.2513,1.2465,1.2440,1.2423,1.2423
• Resistance levels: 1.2561,1.2611,1.2634,1.2674,1.2707

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish. On Friday, the price reached the resistance level of 1.2561, where buyers actively got involved. It is difficult to say whether these sales were the closing of previously opened purchases or a new liquidity injection. We are watching the price reaction to the support zones below 1.2531 and 1.2513. If the buyers show initiative here, we can consider buying deals. Sell positions can be considered from the area above 1.2561, but only with confirmation.

Alternative scenario:

if the price breaks the support level of 1.2331 and consolidates below, the downtrend is likely to be resumed.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 153.60
• Prev. Close: 152.94
• % chg. over the last day: -0.43%

The Japanese yen strengthened to below 152 per dollar on Friday amid general dollar weakness. Japan’s government declined to confirm whether it was behind the sudden appreciation of the currency, although Bank of Japan data showed Tokyo spent about $60 billion to support the yen. Meanwhile, Japan’s Finance Minister Suzuki has expressed support for currency intervention if the yen experiences significant fluctuations affecting households and businesses.

Trading recommendations

• Support levels: 151.93,151.59
• Resistance levels: 154.16,156.29,156.57,157.12,158.20,160.00

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bearish. Conducting 2 interventions by the Japanese government allowed the Japanese yen to intercept the advantage against the dollar. But on Friday, there was some buying, which led to the beginning of the corrective movement. Under such market conditions, we can look for selling from the area above 154.16, subject to sellers’ reactions. We can consider the support level of 153.11 for buy deals, but also with confirmation.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 158.00, the uptrend is likely to resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2304
• Prev. Close: 2302
• % chg. over the last day: -0.08%

Gold fell more than 1.5% over the week as optimism over an Egyptian-backed ceasefire agreement between Israel and Hamas reduced gold’s appeal as a “safe-haven” currency. While the jobs data reinforced the belief that the Federal Reserve will start cutting interest rates this year, which could potentially support zero-yielding bullion, it led investors to prefer riskier assets.

Trading recommendations

• Support levels: 2307,2276,2249,2229,2206
• Resistance levels: 2323,2337,2350,2367,2400

From the technical analysis point of view, the trend on the XAU/USD is bearish. On Friday, the price reached the support zone, where buyers reacted sharply. At the opening on Monday, gold strengthened to 2310, with a demand zone formed below 2307, which hypothetically could be the basis for further growth. Intraday bias is now with the buyers. Selling should not be considered before 2323.

Alternative scenario:

If the price breaks and consolidates above the resistance level of 2350, the uptrend will likely resume.