The Analytical Overview of the Main Currency Pairs on 2024.05.31

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0801
• Prev. Close: 1.0832
• % chg. over the last day: +0.28%

Weak US economic reports on Thursday led to lower T bond yields and put pressure on the dollar. The US first quarter GDP was revised downward to 1.3% (q/q annualized) from 1.6%, which aligned with expectations. The core PCE Price Index for the first quarter was unexpectedly revised downward to 3.6% (QoQ annualized), weaker than expected, with no change at 3.7%. A weaker dollar on Thursday provided support for the euro along with hawkish European economic reports.

Trading recommendations

• Support levels: 1.0803,1.0792,1.0750,1.0713
• Resistance levels: 1.0824,1.0842,1.0865,1.0885,1.0903,1.0923.

The trend on the EUR/USD currency pair on the hourly time frame is bullish. Yesterday, the price found support at 1.0792, where the buyers showed initiative. At the US session, the price reached the support zone at 1.0842, where the sellers had already entered the game. Now, the price is trying to test the liquidity zone below 1.0803, where we can look for buying if the bulls react. Selling can be considered intraday from the resistance level of 1.0824, but only with confirmation.

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: 1.2702
• Prev. Close: 1.2731
• % chg. over the last day: +0.23%

Without important economic data releases from the UK, election speculation could weigh on the pound. Concerns over political uncertainty could undermine the pound and limit the pair’s near-term growth. Meanwhile, growing speculation that the Bank of England (BoE) will start cutting interest rates at its August meeting due to the deteriorating UK inflation outlook is also putting pressure on the currency.

Trading recommendations

• Support levels: 1.2695,1,2671,1.2647,1.2608,1.2567,1.2548,1.2487
• Resistance levels: 1.2725,1.2766,1.2796,1.2828

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish. Yesterday, the price found support at 1.2695, where the buyers showed initiative. However, the buyers’ pressure started to disappear by the end of the trading session. Under such market conditions, intraday we can look for sell trades from the 1.2725 resistance level. The target is 1.2695, where the buyers may become active again.

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: 157.57
• Prev. Close: 156.77
• % chg. over the last day: -0.51%

Tokyo’s inflation accelerated in May, allowing the Bank of Japan to consider a rate hike in the coming months even as the economy shows weakness. Consumer prices excluding fresh food rose to 1.9% y/y in May. Tokyo’s inflation data usually serves as a leading indicator of nationwide trends. This suggests a similar acceleration is possible when nationwide data is released next month. Economists expect the Bank of Japan to raise interest rates sooner than expected due to the impact of the weak yen.

Trading recommendations

• Support levels: 156.56,155.29,155.15,154.60,153.83
• Resistance levels: 156.99,157.71,157.45,157.98,158.20,160.00

From the technical point of view, the medium-term trend on the USD/JPY currency pair is bullish but close to a shift. The price has fallen to the priority change level, where buyers are trying to protect positions, but the pressure from sellers is not weakening — only growing. With a high probability, the price will deflate for a short period to accumulate enough liquidity to break down. Under such market conditions, sell trades should be sought from the resistance level of 156.99 or after the 156.56 support level breakdown. There is no optimal entry point for buying right now.

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: 2338
• Prev. Close: 2341
• % chg. over the last day: +0.12%

Gold declined to $2,340 per ounce on Friday after a slight rise in the previous session as investors await the US PCE inflation report due out later in the day. The Fed’s preferred measure of inflation is expected to coincide with the CPI, indicating that there is no acceleration in inflation. Meanwhile, expectations for a Fed interest rate cut have been renewed after the latest data showed that US GDP grew below previous estimates and corporate profits unexpectedly declined. At the same time, initial jobless claims rose last week, suggesting a softening labor market.

Trading recommendations

• Support levels: 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. Currently, the price is trading at the level of moving averages. The MACD indicator has become inactive, markets are waiting for the PCE Price Index report. We expect a broad consolidation to form. The initiative from the buyers will open the opportunity for long trades only after breaking the resistance level of 2347. If there is no reaction from buyers, we should expect further decline.

Alternative scenario:

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