The Analytical Overview of the Main Currency Pairs on 2024.06.04

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0847
• Prev. Close: 1.0904
• % chg. over the last day: +0.52%

The euro rose to $1.09, reaching its highest level in the last 10 weeks, after an unexpected decline in the US manufacturing index, which put pressure on the dollar against other major currencies. The US ISM manufacturing index for May unexpectedly fell by 0.5 to 48.7, weaker than expectations of a rise to 49.5. Swaps discount the odds of a 25 bps ECB rate cut at Thursday’s ECB meeting at 96%. If the ECB cuts rates by 25 bps on Thursday as expected, markets expect a 0% chance of another rate cut at the next meeting on July 18 and a 61% chance of a 25 bps rate cut at the September 12 meeting.

Trading recommendations

• Support levels: 1.0885,1.0870,1.0849,1.0830,1.0803,1.0781,1.0750,1.0713
• Resistance levels: 1.0923,1.1000

Alternative scenario:

The EUR/USD currency pair’s hourly trend is bullish. The euro grew steadily against the dollar yesterday. Recent volume spikes indicate bullish interest. The MACD indicator is ascending, with no signs of divergence. But now the price has strongly deviated from the moving averages, and to find good entry points for buying, we should wait for a correction to 1.0885 or 1.0870. For selling, it is best to consider the resistance level of 1.0923.

Technical indicators of the currency pair:

Trading recommendations

The EUR/USD currency pair’s hourly trend is bullish. The euro grew steadily against the dollar yesterday. Recent volume spikes indicate bullish interest. The MACD indicator is ascending, with no signs of divergence. But now the price has strongly deviated from the moving averages, and to find good entry points for buying, we should wait for a correction to 1.0885 or 1.0870. For selling, it is best to consider the resistance level of 1.0923.

Alternative scenario:

if the price breaks the support level at 1.0827 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2731
• Prev. Close: 1.2806
• % chg. over the last day: +0.59%

The British pound fell to $1.27 as investors took profits after the exchange rate rose 2% in May, posting its best monthly result this year. Markets expect the ECB to cut rates by about 57 basis points in 2024, compared to 33 bps from the Bank of England. This gives some sort of advantage to the GBP. There are no major events in the UK this week that could affect the pound, so investors will mainly focus on the ECB decision and US employment data.

Trading recommendations

• Support levels: 1.2796,1.2774,1.2740,1.2725,1.2687,1,2668,1.2647,1.2608
• Resistance levels: 1.2828

From the technical analysis point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The situation is very similar to the euro. The price has strongly deviated from the midlines, so for buying, it is best to wait for a small correction to the support levels of 1.2796 or 1.2774, but with confirmation. There are no optimal entry points for selling right now. The minimum growth target is 1.2828.

Alternative scenario:

if the price breaks the support level of 1.2693 and consolidates below, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 157.13
• Prev. Close: 156.01
• % chg. over the last day: -0.72%

The Japanese yen rose to 156 per dollar, the strongest level in the last two weeks, as the US dollar declined amid weak US manufacturing data, which supported the view that the Federal Reserve should cut the interest rate. On the domestic front, investors await the release of Japanese wage and household spending data this week, which could influence the country’s monetary policy outlook. Swaps estimate the odds of a 10 bps BoJ rate hike at the June 14 meeting at 33%.

Trading recommendations

• Support levels: 156.01,155.31
• Resistance levels: 156.53,156.93,157.45,157.71,157.98,158.20,160.00.

From the technical point of view, the medium-term trend on the currency pair USD/JPY has changed to a downtrend. The price has confidently consolidated below the priority change level. Now, the price has reached the buying zone, where the fixation of part of the profits took place. However, since there is no divergence on MACD, and the last volume spike shows bearish pressure, the price will continue to decline with a high probability. For selling, it is better to consider the resistance level of 156.53. For buying, it is 156.01 and 155.31, but only with confirmation.

Alternative scenario:

if the price breaks and consolidates above the resistance level at 157.45, it is very likely that the uptrend will resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2328
• Prev. Close: 2351
• % chg. over the last day: +0.98%

Precious metals bounced back from early losses on Monday and posted moderate gains after the dollar index fell to a 2-week low. In addition, a decline in global government bond yields on Monday supported precious metals. Gold’s growth accelerated after the May index of business activity in the US manufacturing sector unexpectedly declined, which strengthened expectations of a Fed rate cut. A bearish factor for gold was hawkish comments from Fed President Minneapolis Kashkari, who said the Federal Reserve will likely hold interest rates for an “extended period.”

Trading recommendations

• Support levels: 2337,2324,2307,2276,2249,2229,2206
• Resistance levels: 2351,2364,2395,2432,2450,2500

From the point of view of technical analysis, the trend on the XAU/USD is bearish. However, the conditions for the trend change are beginning to form. The price trades above the moving averages, the MACD indicator has turned positive, and recent volume spikes indicate bullish pressure. Under such market conditions, buying should be sought from the support zone around 2336-2340, but with confirmation. The 2349-2350 zone can be considered for selling, but only with short targets.

Alternative scenario:

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