The Analytical Overview of the Main Currency Pairs on 2024.06.03

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0829
• Prev. Close: 1.0849
• % chg. over the last day: +0.18%

The euro rose and reached $1.088, the highest level in the last two weeks, amid increasing divergence between the monetary policy rates of the European Central Bank and the US Federal Reserve. On the one hand, better-than-expected inflation figures in the Eurozone may force the ECB to reduce the number of rate cuts this year. Core and core inflation rose to 2.6% and 2.9%, respectively, in May, which exceeded expectations. On the other hand, core PCE prices, the Fed’s preferred measure of underlying inflation, rose by 0.2%, the slowest pace this year, raising hopes that inflation may be nearing target.

Trading recommendations

• Support levels: 1.0842,1.0830,1.0803,1.0781,1.0750,1.0713,1.0688,1.0652
• Resistance levels: 1.0859,1.0885,1.0903,1.0923

The trend on the EUR/USD currency pair on the hourly time frame is bullish. On Friday, euro quotes rose sharply on the weak PCE report. The price did not reach the resistance level of 1.0885, so growth is likely to continue. For buy deals, it is best to consider the support levels of 1.0842 and 1.0830. It is better not to use the resistance level of 1.0859 for selling, as it has already been tested several times by the price and is likely to be broken.

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: 1.2725
• Prev. Close: 1.2741
• % chg. over the last day: +0.12%

The British pound climbed above $1.275, nearing new five-week highs, as PCE inflation data convinced investors that the Federal Reserve has room to cut rates this year. Investors now expect the Bank of England to cut rates for the first time in September, down from its previous forecast for June. The likelihood of a June rate cut was further reduced after Prime Minister Sunak unexpectedly announced a general election in early July.

Trading recommendations

• Support levels: 1.2740,1.2725,1.2687,1,2668,1.2647,1.2608,1.2567,1.2548
• 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. Now, the price is trading at the level of moving averages. The MACD indicator is positive, but the momentum intraday is behind the sellers. Under these market conditions, the support level of 1.2740 will be broken, and the price will go down to 1.2725, where we can look for buying with confirmation in the form of buyers’ reaction. There are no optimal entry points for selling 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: 156.76
• Prev. Close: 157.24
• % chg. over the last day: +0.31%

The Japanese yen rose to 157 per dollar on Friday, rebounding from four-week lows, as a broad sell-off in risk assets triggered safe-haven buying. Rising domestic yields also supported the yen. But the currency pair continued to rise at the open on Friday. The interest rate differential between the US Federal Reserve and the Bank of Japan continues to pressure the Japanese currency. And until this differential decreases, the situation will not change much.

Trading recommendations

• Support levels: 157.08,156.56,156.01,155.29
• Resistance levels: 157.44,157.71,157.98,158.20,160.00

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bullish. Buyers are defending their positions around 156.56 and have now formed another zone below 157.08 to support the upward movement. Currently, the price has reached the resistance level at 157.44, where there is no activity from sellers. This increases the probability that the price will continue upward movement after a small consolidation, which is necessary to break through the supply area.

Alternative scenario:

Alternative scenario:if the price breaks and consolidates below the support level of 155.82, the downtrend is very likely to resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2344
• Prev. Close: 2328
• % chg. over the last day: -0.69

Last Friday, core PCE prices slowed down in April compared to March, while the underlying monthly and annual readings remained unchanged, matching forecasts. This further confirmed that the Fed has room to cut rates this year. Traders will now keep a close eye on the upcoming US Nonfarm payrolls data and other labor market indicators due this week in light of reduced expectations that the Fed will only cut rates once this year. Meanwhile, the ECB and the Bank of Canada are expected to cut rates this week, which could positively impact gold.

Trading recommendations

• Support levels: 2307,2276,2249,2229,2206
• Resistance levels: 2336,2351,2367,2395,2432,2450,2500

From the point of view of technical analysis, the trend on the XAU/USD is bearish. For the last trading week, gold traded widely, within which sellers dominated. Currently, the price is trading below the moving averages, and the MACD indicator is negative, but there are signs of divergence. Under such market conditions, we should expect the price to decline to the support level of 2307, where we can look for buy trades if buyers react.

Alternative scenario:

if the price breaks above the resistance level of 2364, the uptrend will likely resume.