The Analytical Overview of the Main Currency Pairs on 2024.05.27

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0811
• Prev. Close: 1.0846
• % chg. over the last day: +0.32%

The Euro climbed above USD 1.0830, rebounding from the recent weekly low, as the latest data confirmed the possibility that the ECB will raise rates less frequently this year. Contractual wages rose 4.7% year-on-year in the first quarter, approaching the record levels seen in Q3 2023, prompting the ECB’s inflation warning. In addition, PMI data showed that private sector activity rose by the most in April of the year amid accelerating growth in new orders and employment. As a result, investors now estimate the probability of an ECB rate cut this year at only 60 bps.

Trading recommendations

• Support levels: 1.0820,1.0803,1.0781,1.0750,1.0713,1.0688,1.0652
• Resistance levels: 1.0861,1.0885,1.0903,1.0923

The trend on the EUR/USD currency pair on the hourly time frame is bullish. Today is expected to be a weakly volatile day due to the bank holiday in the United States. The price will likely continue to trade in a narrow corridor, with a slight bullish bias to 1.0861. There are no optimal entry points for buying. Selling can be considered from the resistance level 1.0861, provided sellers react.

Alternative scenario:

if the price breaks the support level at 1.0766 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2690
• Prev. Close: 1.2736
• % chg. over the last day: +0.36%

Sterling has gained against the US dollar over the past few days, but now comes a trading week with very few scheduled domestic events. In recent weeks, the British pound has found support in the unexpected resilience of inflation and signs that the latest purchasing managers’ index data suggests that the UK is continuing to emerge from recession. However, the currency has yet to react to news of the snap general election scheduled for July 4. After fourteen years of Conservative rule, the vote looks almost certain to hand power to the Labor Party.

Trading recommendations

• Support levels: 1.2734,1.2687,1,2668,1.2647,1.2608,1.2567,1.2548,1.2487
• Resistance levels: 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. On Friday, the price found support below 1.2687. There was a liquidity grab, after which the price rose sharply. This liquidity needs to be distributed, and the closest level is the previous week’s high, which is near 1.2762. But since today is a bank holiday in Britain, the price is likely to flat with a slight bullish bias intraday.

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: 156.88
• Prev. Close: 156.92
• % chg. over the last day: +0.03%

The Japanese yen rose to 156.7 per dollar, pulling back slightly from three-week lows, as investors digested the latest remarks from Bank of Japan officials. BoJ Governor Kazuo Ueda said inflation expectations must be reinforced again and warned that accurately estimating Japan’s neutral interest rate is difficult. At the same time, BoJ Deputy Governor Shin’ichi Uchida said that the end of the fight against deflation is just around the corner, adding that wages are likely to continue rising.

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 a technical point of view, the medium-term trend on the currency pair USD/JPY is still bearish, as the price has failed to overcome the level of 157.12. On Friday, the price retreated from the level and declined into the demand zone. At the same time, the surge in volumes on Thursday shows a bearish reaction, which indicates the fixation of previously opened positions. Today, we should not expect any sharp movements due to the weekend in the US. The price is likely to flat along the moving average lines. Since the price is in the buying zone, we can look for intraday trades from 156.62, but only with confirmation and short targets.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 157.12, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2329
• Prev. Close: 2334
• % chg. over the last day: +0.21

Gold prices fell last week after briefly reaching an all-time high on Monday, dropping more than 3%. The decline was mainly driven by a rise in short-term Treasury yields after hawkish Fed minutes and better-than-expected US PMI data, which showed that business activity in the service sector accelerated in May to the fastest pace in two years, a sign that the economy is holding up very well and can tolerate higher interest rates for longer. However, the long-term outlook for gold remains bullish as central banks begin to cut interest rates aggressively in the second half of the year.

Trading recommendations

• Support levels: 2328,2307,2276,2249,2229,2206
• Resistance levels: 2350,2395,2432,2450,2500

From the technical analysis point of view, the trend on the XAU/USD is bearish. On Friday, the price reached the important buying zone near 2328, where the buyers’ reaction took place. The MACD indicator has become positive; the current momentum is behind the buyers. Under these market conditions, intraday buying can be sought up to the resistance level 2350. There are no optimal entry points for selling now.

Alternative scenario:

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