The Analytical Overview of the Main Currency Pairs on 2024.07.18

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0901
• Prev. Close: 1.0939
• % chg. over the last day: +0.34%

Today, the European Central Bank will hold a monetary policy meeting. Economists expect the ECB to keep the interest rate at 4.25% at the current meeting. No change is expected this time, as rising inflation and wage growth just before the meeting is not what the ECB Governing Council would like to see for a further rate cut. The press conference should focus on future rates and developments in France. If ECB President Lagarde refrains from giving clear indications about the future, the euro could continue its recent rise. If, however, there are direct hints of a rate cut in September, it could be a negative factor for the single currency.

Trading recommendations

• Support levels: 1.0906,1.0886,1.0875,1.0859,1.0807,1.0753,1.0727,1.0718
• Resistance levels: 1.0953

The trend on the EUR/USD currency pair on the hourly timeframe is bullish. Yesterday, the price broke through the resistance level of 1.0923 on impulse and rushed higher. Most likely today, the price will test the next level of 1.0953. Evaluating the price reaction to this or that level is significant. For buying, it is better to consider the support level of 1.0906. For sales — 1.0953, but with confirmation. Also, pay attention to the MACD divergence, which indicates the likelihood of a deep correction soon.

Alternative scenario:

if the price breaks the support level of 1.0871 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2965
• Prev. Close: 1.3008
• % chg. over the last day: +0.33%

The British pound strengthened to $1.3, holding near one-year highs, after UK inflation for June remained at 2%, compared to estimates of a slowdown to 1.9%. Services inflation also didn’t fall and remained at 5.7%, above the Bank of England’s prediction of 5.1%. Odds of an interest rate cut by the Central Bank in August fell to around 33% from nearly 49% before the CPI release. Traders are awaiting new data, including wage growth and retail sales, to gauge the timing of the first cut in borrowing costs.

Trading recommendations

• Support levels: 1.2976,1.2937,1.2878,1.2824,1.2801,1.2761,1.2741,1.2701
• Resistance levels: 1.3025

From the point of view of technical analysis, the trend on the GBP/USD currency pair is bullish. The price broke through the resistance level of 1.2976 and rushed higher. The MACD indicator is positive, but there are the first signs of divergence. The resistance level of 1.3025 can be considered for selling, provided that the price reacts accordingly. The support level of 1.2976 is suitable for buying, but it also requires confirmation.

Alternative scenario:

if the price breaks the support level of 1.2937 and consolidates below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 158.32
• Prev. Close: 156.16
• % chg. over the last day: -1.38%

On Thursday, the Japanese yen jumped to 155.37 per dollar and then retreated to a six-week-high amid another suspicion of intervention by the Japanese authorities. The yen rose about 1.4% during Wednesday’s session, extending gains of about 2% from last week. Data from the Central Bank indicated that authorities may have bought nearly 6 trillion yen on July 11–12 through intervention. Investors now await the BoJ meeting in late July, which is expected to announce plans to reduce bond purchases and possibly raise interest rates again. Swaps estimate the odds of a 10bp BoJ rate hike at 58% for the July 31 meeting and 30% for the September 20 meeting.

Trading recommendations

• Support levels: 155.84,154.60
• Resistance levels: 156.60,158.25,159.43,160.20,161.81,162.00

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. Yesterday, the price sharply strengthened on the background of the supposed next intervention. Now, the price has reached the support level of 155.84, where the buyers showed a reaction. Given the divergence on MACD, a technical correction is possible here. Intraday, it is worth looking for buying from 155.84. For sell deals, look at resistance levels at 156.60, and 158.25, but with confirmation in the form of sellers’ reaction.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 158.61, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2468
• Prev. Close: 2459
• % chg. over the last day: -0.37%

Precious metals prices gave up early gains on Wednesday and closed lower, with silver falling sharply to a 2-week low. Hawkish comments from several Fed members on Wednesday pressured precious metals, when they said they wanted to wait for more evidence of slowing inflation before cutting interest rates. However, the overall fundamental fundamentals for precious metals remain positive.

Trading recommendations

• Support levels: 2457,2426,2395,2370,2351,2339,2319,2295,2276
• Resistance levels: 2471,2500

From the point of view of technical analysis, the trend on the XAU/USD is bullish. The price is striving for the psychological mark of 2500. Among the counter resistances, there are only 2471. If the sellers react, the price is likely to flat between 2457 and 2471. The nearest support levels are 2457 and 2426. The second level is preferable, but the price does not make deep corrections on a strong trend. There are no optimal entry points for selling now.

Alternative scenario:

if the price breaks below the 2401 support level, the downtrend will likely resume.