The Analytical Overview of the Main Currency Pairs on 2024.07.05

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0788
• Prev. Close: 1.0811
• % chg. over the last day: +0.21%

Today, the US will release the Labor Market Data for June. The Nonfarm Payrolls employment report is one of the most important economic indicators closely watched by investors and policymakers. Economists expect the US economy to add 189,000 jobs in June after the previous month’s 272,000 increase exceeded forecasts, indicating a robust labor market. The unemployment rate is projected at 4.0%, and the annualized wage rate is expected to decline from 4.1% to 3.6%. The focus is likely to be on the payroll data. Typically, wage growth fuels inflation, so the sharp decline in wages that economists forecast could trigger the US Federal Reserve to start its easing cycle in September. And this may be a very negative factor for the dollar.

Trading recommendations

• Support levels: 1.0806,1.0753,1.0727,1.0718,1.0685,1.0666,1.0590
• Resistance levels: 1.0818,1.0837

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages. The MACD indicates bullish pressure, but there are the first signs of divergence. Recent volume spikes indicate partial closing of long positions. It is important to watch the price reaction to resistance levels of 1.0818 and 1.0837 for sell deals. We can consider the demand zone below 1.0806 for buy deals, but also with confirmation. If the price consolidates below 1.0806, we could see a sell-off to 1.0772.

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: 1.2735
• Prev. Close: 1.2758
• % chg. over the last day: +0.18%

The British pound is holding near $1.275, near its highest level in three weeks, as polls showed the Labour Party winning the UK general election, bringing relief to markets amid a clearer policy direction. The center-left Labour won 410 of the 650 parliamentary seats, giving the party a large majority and ending the Conservatives’ 14-year rule. Analysts believe this political shift is favorable for the British pound, equities, and investment in the UK as a whole, as it revives the UK’s reputation as a “safe haven.”

Trading recommendations

• Support levels: 1.2741,1.2701,1.2681,1.2663,1.2653,1.2623,1.2602,1.2566
• Resistance levels: 1.2780,1.2815

From the technical analysis point of view, the trend on the GBP/USD currency pair is bullish. Similar to the euro, the price is trading above the moving averages. Recent volume spikes indicate partial closing of long positions. The MACD indicator is positive, with the price rising on the histogram decline, indicating strong buying pressure. Intraday, looking for a buy trade with a target of 1.2780 or even 1.2815 is best. Selling can be considered from 1.2780 if there is an opposite initiative.

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: 161.65
• Prev. Close: 161.21
• % chg. over the last day: -0.27%

The Japanese yen rose to 161 per dollar, rebounding slightly from 38-year lows and benefiting mostly from the dollar’s decline, as soft economic data from the US reinforced expectations that the Federal Reserve may start cutting interest rates as early as September. Fears of another government intervention also supported the currency, as Japanese authorities spent nearly 10 trillion yen between late April and late May to support the yen after it broke through the 160 per dollar mark.

Trading recommendations

• Support levels: 160.26,159.00,158.23,157.59,157.33,156.56
• Resistance levels: 160.80,161.13,161.81,162.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is still bullish, but the price is moving. Soft change of priority. Buyers are not responding to the demand zone below 160.80, which means there is a high probability of further decline to 160.26. Price consolidation above 160.80 will give a bullish signal up to 161.13, but until that happens, the intraday focus should be on selling.

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: 2357
• Prev. Close: 2357
• % chg. over the last day: 0.0%

Gold strengthened near $2,360 per ounce on Friday and was set to rise for a second straight week as investors look ahead to a key monthly US jobs report that could cement expectations for Fed interest rates this year. Earlier this week, data indicated an unexpected contraction in service sector activity and disappointing US private sector employment figures, supporting a dovish view of Fed policy. Markets currently estimate the probability that the Fed will start cutting rates in September at around 73%.

Trading recommendations

• Support levels: 2343,2339,2319,2295,2276
• Resistance levels: 2368,2384

From the point of view of technical analysis, the trend on the XAU/USD is bullish. The price trades above the moving averages, and the MACD indicator is strictly bullish, with no signs of reversal. There is a high probability of further price growth. A breakout of the resistance level 2368 will open the way for the price to 2384. But if the sellers react to 2368, the price may fall sharply to 2343. Therefore, the dynamics of the gold price movement today will be determined by the price reaction to the 2368 level.

Alternative scenario:

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