The Analytical Overview of the Main Currency Pairs on 2024.05.23

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0854
• Prev. Close: 1.0823
• % chg. over the last day: -0.28%

On Thursday, the Dollar Index held near 104.9 after rising to weekly highs in the previous session, helped by the hawkish tone of the minutes of the latest Federal Reserve meeting. The minutes showed that meeting participants were concerned about volatile inflation, which undermined sentiment for an interest rate cut. Some Fed representations also indicated a willingness to further tighten policy if inflation accelerates. The probability of a rate cut in September and November has fallen slightly to 61% and 72%, respectively.

Trading recommendations

• Support levels: 1.0818,1.0803,1.0781,1.0750,1.0713,1.0688,1.0652
• Resistance levels: 1.0848,1.0861,1.0885,1.0903,1.0923

The trend on the EUR/USD currency pair on the hourly time frame is bullish. Markets are entering the low-volatility summer period, volatility is decreasing. Currently, the price has corrected to the support level of 1.0818, but the reaction of buyers is weak. The latest volumes also indicate this. Therefore, it is very likely that the price will continue to decline to 1.0800. Sell trades can be looked for from the moving average lines. Buying is undesirable as there is no buyers’ initiative.

Alternative scenario:

if the price breaks the support level at 1.0759 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2706
• Prev. Close: 1.2715
• % chg. over the last day: +0.07%

The UK’s annual inflation rate eased to 2.3% in April, coming close to the Bank of England’s 2% target but exceeding prognoses of 2.1%. In addition, core inflation slowed for the third consecutive month to 3.9%, the lowest level since October 2021, but above expectations of 3.6%. Investors have eliminated the likelihood of lower borrowing costs in June, with only a slight majority expecting the first cut in September.

Trading recommendations

• Support levels: 1.2668,1.2647,1.2608,1.2567,1.2548,1.2487
• Resistance levels: 1.2733,1.2716,1.2762

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 received some support amid inflation but did not fall as much as expected. However, further growth of the pound is in question. The MACD indicator still points to divergence, with the so-called SMT divergence formed when the pound updated the maximum, while the euro did not. Typically, such conditions lead to a correction or reversal. Under such market conditions, sell desks can be seen from the resistance level of 1.2733, but with additional confirmation. There are no optimal entry points for buying right now.

Alternative scenario:

if the price breaks the support level of 1.2643 and consolidates below, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 156.13
• Prev. Close: 156.75
• % chg. over the last day: +0.39%

The Japanese yen slid to 157 per dollar, at its lowest level in three weeks and under pressure from the strong dollar, which rose on hawkish signals in the latest Federal Reserve meeting minutes. On the other hand, the markets are betting on the fact that the Bank of Japan will not be in a hurry to normalize monetary policy and raise rates, which keeps yen trading attractive in terms of further growth of quotes.

Trading recommendations

• Support levels: 155.29,155.15,154.60,153.83,153.12,151.93,151.59
• Resistance levels: 157.12,158.20,160.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is still bearish, but the conditions for a trend change are forming. There is a high probability that the price will reach the resistance level at 157.12, so intraday, we can look for buying, but with confirmation. Selling can be considered from the resistance zone near 157.12, but also with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 157.59, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2421
• Prev. Close: 2378
• % chg. over the last day: -1.80%

Gold prices fell below $2,400 per ounce, extending the pullback from Monday’s record high of $2,450. Concerns over the Fed’s hawkish stance outweighed demand for safe-haven housing and central bank purchases. The hawkish sentiment was broadly in line with recent remarks from policymakers indicating that with the current inflationary backdrop, there is not enough confidence to cut interest rates.

Trading recommendations

• Support levels: 2357,2343,2328,2307,2276,2249,2229,2206
• Resistance levels: 2395,2432,2450,2500

From the point of view of technical analysis, the trend on the XAU/USD has changed to a downtrend. The price has consolidated below the priority change level. But looking for sell trades now is not recommended, as the price has reached the support level and deviated from the moving average lines. Inside the day, you can look for buy deals with short targets up to the moving average lines. There is no optimal entry point for selling right now.

Alternative scenario:

if the price breaks above the resistance level of 2426, the uptrend will likely resume.