The Analytical Overview of the Main Currency Pairs on 2024.05.14

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0766
• Prev. Close: 1.0789
• % chg. over the last day: +0.21%

The euro strengthened above $1.078, approaching a five-week high. This week, investors will watch US inflation data and first-quarter GDP and employment figures in the Eurozone, which could influence future monetary policy. Bloomberg raised its 2024 Eurozone GDP projection to 0.7% from 0.5% last month. The European Central Bank is expected to start cutting interest rates in June. Swaps discount the odds of an ECB rate cut by 25 bps to 95% at its next meeting on June 6. Markets expect the ECB to cut rates by 70 basis points this year and the Fed by 45 basis points. Such a differential of expectations is not in favor of the European currency.

Trading recommendations

• Support levels: 1.0781,1.0750,1.0713,1.0688,1.0652,1.0623,1.0590
• Resistance levels: 1.0795,1.0843,1.0865

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The supply zone around 1.0790–1.0795 does not give the price further room for growth. The price is still bouncing sharply from this zone. Currently, the price has corrected and is trading at the moving average lines. There is weak selling pressure intraday. Under these market conditions, buying should be sought from the support zone below 1.0781, but with confirmation. If the price does not react to this zone, we should expect a fall to 1.0750.

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: 1.2509
• Prev. Close: 1.2558
• % chg. over the last day: +0.39%

The British pound is trading at around $1.25. Today, the UK will release a labor market report. Predictions point to an increase in the unemployment rate to 4.3% in Q1, while wage growth is expected to slow the most since Q2 2022. Such indicators are dovish for the Bank of England’s monetary policy and could pressure the British currency. Recently, economists have slightly increased the probability of a rate cut in June, while a 25 basis point rate cut in August remains fully expected.

Trading recommendations

• Support levels: 1.2544,1.2487,1.2465,1.2446,1.2423
• Resistance levels: 1.2576,1.2611,1.2634,1.2674,1.2707

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The British pound continued to grow yesterday from the moving average lines. This was somewhat unexpected, as the price had nothing to lean on regarding the support zone. The price is now looking to test liquidity above 1.2576. Buying can be considered from the support zone below 1.2544. There are no optimal entry points for selling right now.

Alternative scenario:

if the price breaks the support level of 1.2465 and consolidates below, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 155.77
• Prev. Close: 156.20
• % chg. over the last day: +0.27%

The yen fell to a 1-week low against the dollar on Monday and remains under pressure on speculation that the Japanese authorities will not intervene in the Forex market again anytime soon to support the yen. The Bank of Japan bought 425 billion yen ($2.7 billion) of 5-10-year debt on Monday, down from 475.5 billion yen purchased last month, the first reduction in bond purchases in 6 months. Investors now await Japan’s first-quarter gross domestic product report this week.

Trading recommendations

• Support levels: 155.06,153.83,153.12,151.93,151.59
• Resistance levels: 156.29,156.57,157.12,158.20,160.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. Further medium-term movement will depend on how the price reacts to the zone above 156.28. If sellers are not active here, the probability of a trend change and a new wave of growth to the historical highs will increase sharply. Selling should be considered if the price consolidates below 156.12. There are no optimal entry points for buying.

Alternative scenario:

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

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2360
• Prev. Close: 2337
• % chg. over the last day: -0.98%

Hawkish comments from Fed Vice Chairman Jefferson on Monday impacted precious metals prices. He said that it was appropriate for the Fed to keep interest rates in a restrictive range. Gold prices also fell after the Bank of Japan cut its monthly bond purchases for the first time in six months. But long-term factors for gold remain bullish.

Trading recommendations

• Support levels: 2328,2307,2276,2249,2229,2206
• Resistance levels: 2344,2354,2372,2418

From the point of view of technical analysis, the trend on the XAU/USD is bullish. On Friday, the price reached the supply zone above 2372, where sellers reacted. Now the price is correcting. The first support zone failed to hold the sellers, so with a high probability, the price will continue to decline to 2328. Under such market conditions, we can look for selling from the resistance level of 2344. Buying can be considered if buyers react to the level below 2328.

Alternative scenario:

if the price breaks and consolidates below the 2306 support level, the downtrend will likely resume.