The Analytical Overview of the Main Currency Pairs on 2024.08.01

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0814
• Prev. Close: 1.0825
• % chg. over the last day: +0.10%

Eurozone annual inflation unexpectedly accelerated to 2.6% in July due to higher energy prices, but services inflation declined for the first time in three months. In addition, there were differences between countries: prices rose faster in Germany, France, and Italy but weakened in Spain. Meanwhile, preliminary estimates suggest that the Eurozone economy grew at a faster-than-expected 0.3% in the second quarter, driven by growth in France, Italy, and Spain. As a result, investors continue to believe that the ECB will cut rates at least two more times this year, with the next cut coming in September.

Trading recommendations

• Support levels: 1.0772,1.0753,1.0727,1.0718
• Resistance levels: 1.0827,1.0844,1.0869,1.0884,1.0905,1.0953

The trend on the EUR/USD currency pair on the hourly time frame is bearish. Yesterday, the price tested the resistance level at 1.0849, where sellers took the initiative and formed a false breakout. Today, at the Asian session, buyers tried to sell the resistance level of 1.0827 but without success. Under such market conditions, intraday sales can be looked for with a target of up to 1.0772. A breakout of 1.0827 will open the way for the price to 1.0849.

Alternative scenario:

if the price breaks the resistance level at 1.0897 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2828
• Prev. Close: 1.2855
• % chg. over the last day: +0.21%

The Bank of England will hold its monetary policy meeting today. Uncertainty ahead of the meeting is higher than usual as key Central Bank officials have not spoken publicly in over two months due to regulations ahead of the UK general election on July 4. After several setbacks, UK inflation has fallen sharply this year, surpassing the 2% target in the past two months. Bank of England policymakers remain concerned about high inflation in the services sector and the slow decline in wage growth. However, recent comments suggest that MPC members have no consensus on cutting rates in August, with market opinion splitting 50/50. Economists believe that the Bank of England could spring a surprise and go for a rate cut. In such a scenario, the British pound may come under pressure.

Trading recommendations

• Support levels: 1.2824,1.2801,1.2761,1.2741,1.2701
• Resistance levels: 1.2868,1.2909,1.2941,1.2976,1.3012,1.3025

From the technical analysis point of view, the trend on the GBP/USD currency pair is bearish. The price is testing the support level at 1.2824 for the fourth time in the last three days. The latest volume spikes indicate that the sellers’ activity is intensifying. Under such market conditions, intraday sales should be sought with a target of 1.2802. It is important for the sellers not to let the price consolidate above 1.2868. Otherwise, the probability of a reversal will increase sharply.

Alternative scenario:

if the price breaks through the resistance level at 1.2888 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 152.72
• Prev. Close: 149.47
• % chg. over the last day: -2.17%

The Japanese yen surpassed the 150 per dollar mark, the strongest in four and a half months after the Bank of Japan raised the discount rate “to around 0.25%,” the highest level since 2008. The BoJ also added that if the outlook for economic activity and prices materializes, the discount rate will continue to rise, and the degree of monetary accommodation will be adjusted. Markets are betting on two more rate hikes this fiscal year, which ends in March 2025, with the next rate hike coming in December.

Trading recommendations

• Support levels: 148.58,147.06
• Resistance levels: 151.28,153.92,158.22

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price has reached the support level of 148.48, where sellers covered some sales, which leads to a technical correction. There is a high probability that the price will continue to decline, so intraday, it makes sense to look for sell deals to the support level of 147.06. It is better to look for sales from the EMA lines or the resistance level of 151.28. There are no optimal entry points for buying now.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 157.18, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2409
• Prev. Close: 2448
• % chg. over the last day: +1.62%

Precious metals showed moderate gains on Wednesday. That day, the US Federal Reserve left interest rates unchanged as expected, suggesting that recent economic trends, including progress in cooling consumer prices and a weakening labor market, support a less tight monetary policy. Meanwhile, the growing threat of wider conflict in the Middle East is increasing gold’s appeal from a security perspective. Hamas leader Ismail Haniyeh was killed in Tehran early Wednesday morning after Israel said an airstrike on Beirut on Tuesday killed Hezbollah’s top commander. Iran vowed revenge, saying Israel would “pay a heavy price.”

Trading recommendations

• Support levels: 2400,2391,2370,2351,2339,2319,2295,2276
• Resistance levels: 2432,2451,2471,2500

From the point of view of technical analysis, the trend on the XAU/USD has changed to a bullish one. The price has steadily consolidated above the priority change level. Now, the price has reached the resistance level of 2458, where buyers are closing some positions, which leads to a technical pullback. Buying is high here, as the price has deviated strongly from the moving averages. Therefore, intraday, you can look for selling with a short stop loss and take profit. For buying, it is best to consider EMA lines or support level 2414, but with confirmation.

Alternative scenario:

if the price breaks and consolidates above the resistance level of 2384, the uptrend will likely resume.