The Analytical Overview of the Main Currency Pairs on 2024.06.05

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0900
• Prev. Close: 1.0881
• % chg. over the last day: -0.17%

On Tuesday, the euro retreated from the 2-month high and suffered moderate losses. Weaker-than-expected German labor market news weighed on the euro after Germany’s unemployment rate rose more than expected in May. The ECB is also expected to cut rates by 25 basis points on Thursday, reacting to signs of weakening inflation. However, the recent rise in May inflation has raised uncertainty about the number of rate cuts expected this year. Meanwhile, in the US, economic data suggests that the economy is increasingly affected by rising interest rates, confirming the need for multiple rate cuts by the Federal Reserve this year.

Trading recommendations

• Support levels: 1.0870,1.0849,1.0830,1.0803,1.0781,1.0750,1.0713
• Resistance levels: 1.0891,1.0923,1.1000

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The euro yesterday corrected to the demand zone at 1.0860-1.0870, where buyers took the initiative. Recent volume spikes indicate bullish interest. The MACD indicator has become inactive. Under such market conditions, we should expect further price growth. It is best to buy from the level of 1.0870. It is best to consider the resistance levels of 1.0891 and 1.0923 for selling.

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: 1.2805
• Prev. Close: 1.2769
• % chg. over the last day: -0.28%

The UK manufacturing sector rebounded in May, with output growing faster in two years thanks to an influx of new orders. S&P Global’s seasonally adjusted UK Manufacturing Purchasing Managers’ Index rose to 51.2 in May from 49.1 in April, the highest level since July 2022. Today, the UK will publish PMI data in the services sector, but no changes are expected, so the GBP/USD rate dynamics will depend more on the US dollar.

Trading recommendations

• Support levels: 1.2749,1.2740,1.2725,1.2687,1,2668,1.2647,1.2608
• Resistance levels: 1.2804,1.2828

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 corrected to the support level of 1.2749, where the buyers took the initiative. Recent volume spikes indicate bullish interest. The MACD indicator has become inactive. Under such market conditions, we should expect further price growth. The same level of 1.2749 should be considered for buying. There are no optimal entry points for selling now.

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: 156.01
• Prev. Close: 154.82
• % chg. over the last day: -0.77%

The yen rose on Tuesday on reports that the Bank of Japan will likely discuss a reduction in bond purchases at its June 13-14 meeting. The yen also found support from comments by BoJ Deputy Governor Himino, who said it is important for authorities to watch the impact of currencies on the broader economy as a weak yen could affect imports, among other consequences. Swaps estimate the odds of a 10 bps BOJ rate hike at the June 14 meeting at 21%.

Trading recommendations

• Support levels: 154.60,155.31
• Resistance levels: 155.97,156.53,156.93,157.45,157.71,157.98

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bearish. The price declined to the support level of 154.60, and the latest volumes indicate both fixation of previously opened sales and new purchases. Price is now trading at the moving averages and is looking to test the liquidity zone above 155.97, which could be considered for selling, subject to reaction. There are no optimal entry points for buying right now.

Alternative scenario:

if the price breaks and consolidates above the resistance level at 156.49, it is very likely that the uptrend will resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2352
• Prev. Close: 2327
• % chg. over the last day: -1.07%

Weakening inflation expectations limited demand for gold as an inflation hedge after the 10-year breakeven inflation rate fell to a 2-week low of 2.310% on Tuesday. This hurt precious metals yesterday. Meanwhile, the Bank of Canada is expected to cut rates at its meeting today, and the European Central Bank will follow suit on Thursday. And this will be a positive factor for gold. According to the World Gold Council, net gold purchases by global central banks rose to 33 metric tons in April from a revised 3 tons in March, indicating strong demand despite high prices.

Trading recommendations

• Support levels: 2335,2315,2307,2276,2249,2229,2206
• Resistance levels: 2345,2352,2364,2395,2432,2450,2500

From the technical analysis point of view, the trend on the XAU/USD is bearish. The price is forming a highly volatile corridor with the boundaries 2315-2352, and most likely, until Friday’s Non-Farm news, the price will trade within this range. Recent volumes are pointing to buyers, and the MACD also shows signs of growth. Under these market conditions, buying from the intraday support level of 2335 can be considered, but with confirmation. For sell deals, traders can consider the 2345 resistance level.

Alternative scenario:

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