The Analytical Overview of the Main Currency Pairs on 2024.07.11

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0814
• Prev. Close: 1.0830
• % chg. over the last day: +0.15%

The second round of the French parliamentary elections resulted in a hung parliament where the left-wing New Popular Front unexpectedly won the most votes but did not get a majority, giving investors some relief about more radical policies and aggressive fiscal measures. Meanwhile, investors still expect the ECB to cut interest rates once or twice this year, although policymakers are proceeding cautiously amid uncertainty over consumer prices. Preliminary data showed that the Eurozone’s annual inflation rate fell to 2.5% in June, but the core rate was unchanged at 2.9%, and services inflation remained at a high of 4.1%.

Trading recommendations

• Support levels: 1.0807,1.0753,1.0727,1.0718,1.0685,1.0666,1.0590
• Resistance levels: 1.0837,1.0862

Alternative scenario:

The EUR/USD currency pair’s trend on the hourly time frame is bullish. The price tested the demand zone below 1.0807, where buyers reacted. The resistance zone at 1.0837 is being tested for the third time, increasing the probability of further price movement. How the price reacts at 1.0837 will determine the price dynamics for the day. Selling should be considered if the price consolidates below 1.0837 or from 1.0862, subject to sellers’ reaction.

Technical indicators of the currency pair:

Trading recommendations

The EUR/USD currency pair’s trend on the hourly time frame is bullish. The price tested the demand zone below 1.0807, where buyers reacted. The resistance zone at 1.0837 is being tested for the third time, increasing the probability of further price movement. How the price reacts at 1.0837 will determine the price dynamics for the day. Selling should be considered if the price consolidates below 1.0837 or from 1.0862, subject to sellers’ reaction.

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: 1.2778
• Prev. Close: 1.2847
• % chg. over the last day: +0.54%

The British pound rose more than 0.5% to surpass $1,282, hitting its highest level in four months after Bank of England Chief Economist Hugh Pill expressed concerns about inflation. Pill noted that while the central bank is moving closer to cutting interest rates, service price inflation and wage growth remain uncomfortably high. As a result, traders tempered expectations for a rate cut soon, which is positive for the British currency.

Trading recommendations

• Support levels: 1.2824,1.2801,1.2761,1.2741,1.2701,1.2681,1.2663,1.2653
• Resistance levels: 1.2885

From the point of view of technical analysis, the trend on the GBP/USD currency pair is bullish. The price is steadily rising, breaking through all the counter-resistance levels. The MACD indicator is positive, but there are the first signs of divergence. Inside the day, we should look for buying from the EMA lines with the aim of testing the resistance level of 1.2885. Selling can be looked for from 1.2885, but only after the sellers’ initiative. It may arise when news on the CPI consumer price index is published.

Alternative scenario:

if the price breaks the support level of 1.2776 and consolidates below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 161.24
• Prev. Close: 161.67
• % chg. over the last day: +0.27%

The Japanese yen held near 161.5 per dollar, near its lowest level in 38 years, as traders remain uncertain about how aggressively the Bank of Japan (BoJ) will normalize monetary policy. The BoJ is expected to announce its plans to reduce bond purchases at its upcoming meeting in late July after meeting with market participants this week to determine the actual pace of the reduction in bond-buying operations. Markets also speculate that the central bank may raise interest rates again this month amid a sharply weaker yen.

Trading recommendations

• Support levels: 161.22,160.95,160.72,159.00,158.23,157.59,157.33,156.56
• Resistance levels: 161.81,162.00

From a technical point of view, the medium-term trend of the currency pair USD/JPY is still bullish. Currently, the price has reached an important resistance zone near 161.81. There is a seller’s reaction to the level, which, considering the divergence on MACD, may trigger a deeper correction to 161.22. A price fixing above 161.81 will open the way to 162 and higher.

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: 2364
• Prev. Close: 2371
• % chg. over the last day: +0.29%

Gold rose above $2,380 an ounce on Thursday as investors await US consumer price index data due out later today for clues on the timing and depth of interest rate cuts by the Federal Reserve. Annual CPI inflation is expected to fall to 3.1% from 3.3% in June, while core CPI will remain unchanged at 3.4%. Meanwhile, Fed Chair Powell emphasized on Wednesday that the Fed cut rates depending on readiness after emphasizing last Tuesday the need for more data to boost confidence in the inflation outlook. Markets are currently pricing in a 73% probability that the Fed will cut interest rates in September, with another cut expected in December.

Trading recommendations

• Support levels: 2370,2351,2339,2319,2295,2276
• Resistance levels: 2395

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Yesterday, the price broke the downward trend line and consolidated above the 2370 level. Volume spikes indicate the presence of big buyers. Before the CPI news, it is best to look for intraday buying. On the news release, the price may jump sharply to 2395, where a change in imbalance may occur, so it is important to watch the price reaction to one level or another.

Alternative scenario:

if the price breaks below the 2351 support level, the downtrend will likely resume.