The Analytical Overview of the Main Currency Pairs on 2024.05.28

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0848
• Prev. Close: 1.0858
• % chg. over the last day: +0.09%

The euro rose to $1.085 in the last week of May, nearing two-month highs, as traders adjusted their bets for lower interest rates. Investors now estimate an 88% probability that the ECB will cut rates during its upcoming monetary policy meeting next week. However, doubts remain about further rate cuts beyond June, with traders now expecting only one cut. The ECB’s chief economist told the FT that the Central Bank is ready to cut interest rates in June, but policy should remain restrictive this year as wage growth will not normalize until 2026.

Trading recommendations

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

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price broke through the resistance level of 1.0861 and consolidated above. The MACD indicator is positive, and intraday buying pressure remains. Under such market conditions, it is worth looking for trend continuation trades intraday. However, it should be noted that the price is near the selling zone 1.0885–1.0903, where the sellers can show a reaction.

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: 1.2729
• Prev. Close: 1.2767
• % chg. over the last day: +0.29%

The British pound exchange rate was around $1.275, the strongest in two months, as investors lowered expectations of an interest rate cut by the Bank of England and welcomed Prime Minister Rishi Sunak’s call for a general election on July 4. Investors are now leaning towards the Bank of England cutting rates for the first time in September, rather than in June as previously thought. Meanwhile, support is growing for a government led by the opposition Labor Party, which is seen as more business-friendly.

Trading recommendations

• Support levels: 1.2734,1.2687,1,2668,1.2647,1.2608,1.2567,1.2548,1.2487
• Resistance levels: 1.2796,1.2828

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The support level at 1.2743 kept the price from going down. The MACD indicator is in the positive zone, but there are the first signs of divergence. Under such market conditions, we should look for intraday buying from moving average lines with a target of 1.2796, where sellers can take the initiative. In case of a confident breakout of 1.2796, the price will open the way to 1.2828.

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: 156.81
• % chg. over the last day: -0.04%

JPY traders remain cautious ahead of the important Tokyo Inflation data released later this week. The data will be released two weeks before the Bank of Japan’s next monetary policy meeting, at which some believe the Central Bank may hold a second rate hike after its historic March move. Policymakers are facing mounting pressure to raise rates amid the yen’s continued weakness, which has hurt consumption by raising the cost of importing raw materials.

Trading recommendations

• Support levels: 156.62,155.29,155.15,154.60,153.83,153.12,151.93,151.59
• 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, as the price failed to overcome the level of 157.12. At the market opening on Tuesday, the price reached the 156.62 support level, with a weak reaction of buyers intraday. The buyers need to hold this level, otherwise the path to 155.98 will be opened for the price. As the MACD indicator remains negative, the probability of a downside breakdown is higher than the probability of a bounce.

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: 2333
• Prev. Close: 2351
• % chg. over the last day: +0.77%

On gold, investors remain cautious ahead of the release of the key US PCE inflation report in search of signals on the Fed’s policy direction. The Fed’s preferred measure of inflation, which will be released on Friday, is expected to coincide with the CPI, indicating that inflation has not accelerated. In addition, personal income and spending data are scheduled to be released this week, which are expected to show a slowdown in growth.

Trading recommendations

• Support levels: 2342,2328,2307,2276,2249,2229,2206
• Resistance levels: 2367,2395,2432,2450,2500

From the point of view of technical analysis, the trend on the XAU/USD is bearish. On Friday, the price reached an important buyers’ zone at 2328, where there was a buyers’ reaction. After that, buyers formed another support level — 2342. The MACD indicator has turned positive, but the momentum of the buyers is decreasing. Under such market conditions, intraday buying from the support level of 2342 with a target of 2367 is possible. 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.