The Analytical Overview of the Main Currency Pairs on 2024.06.21

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0740
• Prev. Close: 1.0702
• % chg. over the last day: -0.36%

The dollar index rose by 0.34% on Thursday. Thursday’s rise in T-note yields reinforced the interest rate differential and supported the dollar. Also, bullish for the dollar were hawkish comments from Minneapolis Fed President Kashkari, who said that the US will likely need a year or two to return to the 2% inflation rate. The dollar’s strength on Thursday hurt the euro. In addition, Thursday’s Eurozone new car registrations report and German producer price index report were dovish for ECB policy and negative for the euro.

Trading recommendations

• Support levels: 1.0693,1.0666,1.0590
• Resistance levels: 1.0732,1.0756,1.0773,1.0817

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price has consolidated below the support level 1.0730 and is now trading below the moving average lines. Recent volume spikes indicate a bearish price reaction. Under such market conditions, intraday selling should be sought from the resistance level 1.0732 with a target of 1.0693. There are no optimal entry points for buying right now.

Alternative scenario:

if the price breaks the resistance level of 1.0816 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2713
• Prev. Close: 1.2656
• % chg. over the last day: -0.45%

The British pound fell below $1.27 after the Bank of England (BoE) left the key bank rate unchanged at 5.25% as expected, with only two members voting in favor of a rate cut as they did at the previous meeting. However, the decision not to cut the rate was “finely balanced” for some policymakers, suggesting that policy easing is set to happen this year. As in September, the odds of a rate cut in August increased, but markets are only fully pricing in the first 25 bps rate cut for November.

Trading recommendations

• Support levels: 1.2658,1.2647,1.2602
• Resistance levels: 1.2694,1.2722,1.2735,1.2806

From the point of view of technical analysis, the trend on the GBP/USD currency pair is bearish. The price decreased to the support level of 1.2658. This level was tested for the second time, and now, the reaction of buyers is weak. The latest volumes indicate the presence of sellers. Under such market conditions, we should expect further price decline. However, considering the MACD divergence intraday, the price may be slightly correct to 1.2694, where we can look for sales. The downside targets are 1.2647 and 2602.

Alternative scenario:

if the price breaks the resistance level at 1.2735 and consolidates above, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 157.98
• Prev. Close: 158.92
• % chg. over the last day: +0.60%

The Japanese yen weakened to 159 per dollar, approaching the 160 level. Japan’s chief currency diplomat, Masato Kanda, said the government is ready to take further action against speculative currency movements, and the US Treasury Department added Japan to a list of countries under surveillance as currency manipulators. Meanwhile, data showed Japan’s annual core inflation rate jumped to 2.8% in May from 2.5 percent in April, the highest since February. Core inflation also accelerated to 2.5% from 2.2% but came in below forecasts of 2.6%.

Trading recommendations

• Support levels: 158.23,157.59,157.33,156.56
• Resistance levels: 159.20,160.20

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bullish. The Japanese continued to lose positions against the dollar and approached the intervention levels again. The price seeks to test the resistance level of  159.20, where buyers are likely to close some of the previously opened positions, leading to a small correction. But in general, the bullish bias remains, and there are all preconditions to renew the high to 160.20.

Alternative scenario:

if the price breaks below the support level of 157.59, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2330
• Prev. Close: 2359
• % chg. over the last day: +1.24%

Gold held near $2,360 per ounce on Friday, at its highest level in two weeks. The Swiss National Bank cut its key rate by 25 bps to 1.25% for the second consecutive meeting, citing easing inflationary pressures. For precious metals, this is a positive factor. In addition, Norges Bank kept the rate at 4.5% and talked about a rate cut later this year.

Trading recommendations

• Support levels: 2352,2339,2307,2276
• Resistance levels: 2370,2387

From the point of view of technical analysis, the trend on the XAU/USD is bearish, but the conditions for a change in the medium-term trend are forming. Yesterday, the price impulsively left the narrowing triangle and rushed upwards, with the latest volumes indicating buying pressure. Now, the price has approached the resistance zone of 2370, where there may be the first cover buys, leading to a corrective decline. However, if the sellers’ reaction to the level is weak and the price starts to flat in the selling area, the probability of further growth will increase, and the price may rush to 2387.

Alternative scenario:

if the price breaks above the resistance level of 2387, the uptrend will likely resume.