The Analytical Overview of the Main Currency Pairs on 2024.07.04

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0745
• Prev. Close: 1.0787
• % chg. over the last day: +0.39%

The Dollar Index hit a 3-week low on Wednesday. The dollar came under pressure amid weaker-than-expected news from the US labor market, which showed weaker-than-expected ADP employment growth in June and a jump in weekly jobless claims to a 2-year-high, a dovish factor for Fed policy. In addition, a bearish factor for the dollar is the widening of the US trade deficit in May to a 19-month-high. The dollar’s losses accelerated after June’s Service Sector Business Activity Index contracted the most in 4 years. The weakening of the dollar on Wednesday provided support for the euro. Also, a positive factor for EUR/USD was the upward revision of the Eurozone PMI Composite Index for June.

Trading recommendations

• Support levels: 1.0753,1.0727,1.0718,1.0685,1.0666,1.0590
• Resistance levels: 1.0795,1.0818,1.0837

The trend on the EUR/USD currency pair on the hourly time frame has changed to bullish. The price has consolidated above the level of priority change. Recent volume spikes indicate partial closing of long positions, which leads to a moderate price correction. Due to today’s holiday in the US, expect a weakly volatile movement around the moving averages. A move above 1.0795 will open the way to 1.0818.

Alternative scenario:

if the price breaks the support level of 1.0710 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2674
• Prev. Close: 1.2740
• % chg. over the last day: +0.52%

The British pound hit a three-week high as traders pushed the dollar down amid speculation that the US Federal Reserve will cut rates in September due to disappointing economic data. UK markets are expecting a rate cut in August following the Bank of England’s decision to leave interest rates unchanged in June despite inflation falling back to its 2% target. In politics, the Labor Party is set to succeed Rishi Sunak after 14 years of Conservative leadership. Parliamentary elections will be held today.

Trading recommendations

• Support levels: 1.2701,1.2681,1.2663,1.2653,1.2623,1.2602,1.2566
• Resistance levels: 1.2752,1.2780,1.2806

From the point of view of technical analysis, the trend on the GBP/USD currency pair has changed to bullish. Similar to the eurodollar, the price has consolidated above the priority change level. Recent volume spikes indicate partial closing of long positions, which leads to a moderate price correction. Given today’s holiday in the US, expect weakly volatile movement around the moving averages. A move above 1.2752 will open the way to 1.2780.

Alternative scenario:

if the price breaks the support level of 1.2615 and consolidates below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 161.40
• Prev. Close: 161.64
• % chg. over the last day: +0.15%

The Japanese yen fell to 161.94 per dollar yesterday, dropping to its lowest level since 1986 and making markets fearful of new government intervention. The currency was held down by sharp interest rate differentials between Japan and the US, as well as the growing chances of a second Donald Trump presidency, which could lead to a further rise in Treasury bond yields. Meanwhile, Finance Minister Shun’ichi Suzuki reiterated on Tuesday that the government remains vigilant in monitoring exchange rate movements, saying exchange rate levels reflect a complex mix of factors.

Trading recommendations

• Support levels: 161.11,160.80,160.00,159.00,158.23,157.59,157.33,156.56
• Resistance levels: 161.81,162.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. Yesterday, the price corrected sharply to the support level of 160.80, but the volumes still indicate the presence of a big buyer. Now, the price will be squeezed between 161.11 and 161.81, and they will most likely trade in this range until the end of the week. Hence, trades can be looked for from these levels, but with confirmation. Also, don’t forget that the Bank of Japan may intervene at any time to support the rate.

Alternative scenario:

if the price breaks below the support level of 160.26, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2330
• Prev. Close: 2356
• % chg. over the last day: +1.11%

The decline in the Dollar Index to a 3-week low on Wednesday helped metals prices. In addition, weaker-than-expected economic news from the US on ADP employment change for June, factory orders for May, and ISM Services Index for June are dovish for Fed policy and bullish for precious metals. Continuing tensions in the Middle East and political uncertainty in France also contribute to the demand for precious metals.

Trading recommendations

• Support levels: 2343,2339,2319,2295,2276
• Resistance levels: 2367,2387

From the point of view of technical analysis, the trend on the XAU/USD has changed to bullish. The price is trading above the moving averages. The MACD indicator is strictly bullish, with no signs of reversal. Today, expect a weakly volatile movement around the moving averages. The support level of 2343 is worth considering for buying. However, the price may reach the resistance level of 2367 without strong pullbacks.

Alternative scenario:

if the price breaks below the 2319 support level, the downtrend will likely resume.