The EUR/USD currency pair
Technical indicators of the currency pair:
- Prev. Open: 1.0817
- Prev. Close: 1.0883
- % chg. over the last day: +0.61%
The euro climbed above $1.085, reaching its highest level in five weeks, amid growing expectations of monetary policy convergence between the US and Europe. The European Central Bank is expected to cut rates at its upcoming June 6 meeting, with market prognosis suggesting a possible rate cut of around 70 basis points over the year. Similarly, speculation is growing that the US will cut rates this year after core inflation slowed in April for the first time in six months. Meanwhile, the latest Eurozone GDP data confirmed an exit from recession in the first quarter, and the European Commission’s latest predictions suggest a smooth economic trajectory.
Trading recommendations
- Support levels: 1.0803,1.0781,1.0750,1.0713,1.0688,1.0652,1.0623,1.0590
- Resistance levels: 1.0885,1.0903,1.0923
The trend on the EUR/USD currency pair on the hourly time frame is bullish. Now, the price is trading in the 1.0885–1.0903 resistance area, but there is no reaction from big sellers. The MACD indicator is overbought but without divergence, which indicates a high probability of further growth. Buying is not recommended here as the price has deviated strongly from the average values. Sell deals can be considered if the price consolidates below 1.0885.
Alternative scenario:if the price breaks the support level at 1.0759 and consolidates below it, the downtrend will likely resume.
News feed for: 2024.05.16
- US Building Permits (m/m) at 15:30 (GMT+3);
- US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
- US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+3);
- US Industrial Production (m/m) at 16:15 (GMT+3);
- US FOMC Member Mester Speaks at 18:30 (GMT+3);
- US FOMC Member Bostic Speaks at 22:50 (GMT+3).
The GBP/USD currency pair
Technical indicators of the currency pair:
- Prev. Open: 1.2584
- Prev. Close: 1.2684
- % chg. over the last day: +0.79%
The British pound rose to $1.264, the highest in five weeks, thanks to a weaker dollar after weaker US inflation data reinforced the view that the Federal Reserve will cut rates for the first time in September. Also in the UK, Bank of England Chief Economist Huw Pill indicated the possibility of a rate cut over the summer after a recent report showed a cooling labor market. The probability of a rate cut by the Bank of England in June has risen to 50%, with traders expecting two quarter-point rate cuts before the end of the year. However, inflation data due next week will likely determine the timing of the first rate cut.
Trading recommendations
- Support levels: 1.2608,1.2567,1.2548,1.2487,1.2465,1.2446,1.2423
- Resistance levels: 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. The price approached the resistance level at 1.2707. The MACD indicator is overbought but without divergence, which increases the probability of another wave of growth. It is unwise to open buy trades here due to the small upside potential. Selling can be looked for from the resistance level of 1.2707, provided sellers react to this level.
Alternative scenario:if the price breaks the support level of 1.2508 and consolidates below, the downtrend will likely resume.
No news for today
The USD/JPY currency pair
Technical indicators of the currency pair:
- Prev. Open: 156.45
- Prev. Close: 154.86
- % chg. over the last day: -1.03%
The Japanese yen rose to almost 155 against the dollar amid the general weakening of the US dollar, helped by the latest data that reinforced expectations of the first Fed rate cut in September. As expected, US core and core inflation slowed, and retail sales unexpectedly stalled. The yen also received support from Monday’s cut in the Bank of Japan’s monthly bond purchases, which pushed the 10-year JGB yield to an 11-year high and increased speculation that the BOJ will continue to tighten monetary policy.
Trading recommendations
- Support levels: 153.83,153.12,151.93,151.59
- Resistance levels: 154.67,156.57,157.12,158.20,160.00
From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. On Wednesday, buyers showed a reaction on the 156.35–156.56 supply area, after which the price declined sharply to the demand zone below 153.84. The latest volume spike showed a partly bullish reaction, so the price will likely correct a bit before continuing to 153.11. Buying should be considered intraday from these support levels. For selling, it is best to consider the area above 154.67.
Alternative scenario:if the price breaks through and consolidates above the resistance level of 158.00, the uptrend will likely resume.
News feed for: 2024.05.16
- Japan GDP (q/q) at 02:50 (GMT+3).
The XAU/USD currency pair (gold)
Technical indicators of the currency pair:
- Prev. Open: 2357
- Prev. Close: 2386
- % chg. over the last day: +1.23%
Gold rose to $2,390 per ounce on Thursday, hitting its highest level in almost a month, helped by a weaker dollar and lower Treasury yields after the latest US CPI data showed a slowdown in growth, reinforcing expectations of an interest rate cut by the Federal Reserve. Meanwhile, Chicago Fed President Austan Goolsbee expressed optimism that inflation will continue to fall. Investors now estimate the probability of a Fed rate cut in September to be about 75% and 85% in November. Lower interest rates increase the attractiveness of gold, which does not generate income.
Trading recommendations
- Support levels: 2377,2343,2328,2307,2276,2249,2229,2206
- Resistance levels: 2395,2418
From the point of view of technical analysis, the trend on the XAU/USD is bullish. Yesterday, the price continued to grow from the moving average lines. The price has reached the supply zone, which was tested earlier but can still be a barrier to further price growth. The MACD indicator shows a divergence, which increases the probability of a downward corrective wave. Under such market conditions, buying should be considered from the demand zone below 2377. It is best to evaluate 2395 for sell deals, but only with confirmation on intraday time frames.
Alternative scenario:if the price breaks and consolidates below the 2306 support level, the downtrend will likely resume.
News feed for: 2024.05.16
- US Building Permits (m/m) at 15:30 (GMT+3);
- US Initial Jobless Claims (w/w) at 15:30 (GMT+3);
- US Philadelphia Fed Manufacturing Index (m/m) at 15:30 (GMT+3);
- US Industrial Production (m/m) at 16:15 (GMT+3);
- US FOMC Member Mester Speaks at 18:30 (GMT+3);
- US FOMC Member Bostic Speaks at 22:50 (GMT+3).
This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.