The Analytical Overview of the Main Currency Pairs on 2024.05.30

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0857
• Prev. Close: 1.0801
• % chg. over the last day: -0.51%

The German inflation rate in May slightly exceeded expectations and rose to 2.8% y/y. While the upside inflation surprise was not significant enough to jeopardize the ECB’s expected rate cut next week, lingering concerns that disinflation may be slowing and the backdrop of stronger growth highlighted by May’s PMIs increased uncertainty over whether the ECB can afford a looser monetary policy in the third quarter. At the same time, hawkish signals from Fed officials further reduced expectations of a rate cut in the US in the third quarter, which lent support to the Dollar Index.

Trading recommendations

• Support levels: 1.0792,1.0750,1.0713
• Resistance levels: 1.0820,1.0832,1.0865,1.0885,1.0903,1.0923

The trend on the EUR/USD currency pair on the hourly time frame is bullish. However, sellers continue to pressure. Yesterday, the price broke through two support zones almost without effort. The MACD indicator remains negative, intraday selling pressure is now prevailing. Recent volumes are also pointing to a seller. But the price has now reached the support level of 1.0792 and what will be the price reaction here will determine the further vector of movement. Under such market conditions, buy trades should be considered from the support level 1.0792, provided the buyers react. If buyers do not react and the price consolidates below, the uptrend will be jeopardized, as the price will have room to fall to 1.0766.

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: 1.2762
• Prev. Close: 1.2700
• % chg. over the last day: -0.49%

The British pound slipped below $1.275, retreating from a two-month high of $1.28, as the US dollar strength countered strong momentum for the sterling caused by the Bank of England’s hawkish stance. US Federal Reserve officials have said that the rate will only be cut after several months of falling inflation, raising calls for looser policy and strengthening the US dollar. At the same time, the probability of a rate cut from the Bank of England decreased due to Prime Minister Sunak’s unexpected statement about holding general elections in early July.

Trading recommendations

• Support levels: 1.2687,1,2671,1.2647,1.2608,1.2567,1.2548,1.2487
• Resistance levels: 1.2766,1.2796,1.2828

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish, but the price is approaching the priority change level. The price confidently holds below the moving averages, and the MACD indicator remains in the negative zone. Under such market conditions, buy trades should be considered from the support level of 1.2787 or 1.2671, subject to buyers’ reactions. We can consider the area around the resistance at 1.2718 for sell deals, but also with confirmation.

Alternative scenario:

if the price breaks the support level of 1.2671 and consolidates below, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 157.10
• Prev. Close: 157.61
• % chg. over the last day: +0.32%

The yen fell to a 4-week low against the dollar on Wednesday due to rising T-note yields. The yen was also impacted by Wednesday’s news that Japan’s Consumer Confidence Index for May unexpectedly fell to a 7-month low. However, hawkish comments from BoJ board spokesman Adachi on Wednesday limited the yen losses, as he said a persistent weakening yen could accelerate a BoJ rate hike. Swaps estimate the odds of a 10 bp BoJ rate hike at the June 14 meeting at 31%.

Trading recommendations

• Support levels: 157.09,156.56,155.29,155.15,154.60,153.83
• Resistance levels: 157.71,157.45,157.98,158.20,160.00

From the technical point of view, the medium-term trend on the USD/JPY currency pair is bullish. The price reached the resistance level at 157.71, where sellers showed a bearish reaction. Currently, the price has reached the first support level at 157.09. Here, we need to analyze the price action to the level. If there are initiatives from the buyers in intraday time frames, we can look to buy up to the resistance level at 157.44. If there is no reaction from the buyers, the yen will likely decline to 156.56.

Alternative scenario:

if the price breaks and consolidates below the support level of 156.56, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2362
• Prev. Close: 2338
• % chg. over the last day: -1.02%

Gold fell near $2,330 per ounce on Thursday, continuing its decline amid rising US Treasury yields and demand for the dollar due to hawkish remarks by Fed officials. On Wednesday, Atlanta Fed President Bostic said that the path to 2% inflation is not guaranteed and that the scope for price increases is still significant. This came from recent comments from Minneapolis FRB President Kashkari, who said the US Central Bank should hold off on cutting rates until inflation improves significantly. Investors now await today’s second GDP estimate and the key US PCE inflation report on Friday, the Fed’s preferred inflation gauge. Strong data could put additional pressure on precious metals.

Trading recommendations

• Support levels: 2342,2328,2307,2276,2249,2229,2206
• Resistance levels: 2347,2367,2395,2432,2450,2500

From the point of view of technical analysis, the trend on the XAU/USD is bearish. The price is trading below the moving averages. The MACD indicator is in a negative zone, with intraday momentum behind sellers. But now, the price has reached the support zone of 2325–2328, where the reaction should be analyzed. An initiative from the buyers will open the opportunity for long trades. If there is no reaction from the buyers, we should expect the price to decline further to 2307.

Alternative scenario:

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