The Analytical Overview of the Main Currency Pairs on 2024.08.06

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0922
• Prev. Close: 1.0959
• % chg. over the last day: +0.34%

The dollar on Monday continued last Friday’s decline on concerns that the Federal Reserve is not keeping pace with its support for the slowing US economy. Swap markets are now pricing in the likelihood that the Fed will cut interest rates by 50 bps at the September 17–18 FOMC meeting, which is bearish for the dollar. In addition, the decline in 10-year T-note yields on Monday to a 13-month low has weakened the dollar’s interest rate differential. Against this backdrop, the euro reached a 7-month high yesterday. The euro was also supported by the upwardly revised Eurozone PMI for July from S&P.

Trading recommendations

• Support levels: 1.0933,1.0884,1.0841,1.0816
• Resistance levels: 1.1000

The trend on the EUR/USD currency pair in the hourly time frame has changed to an upward trend. Technically, the euro now looks stronger than the pound, yen, and even gold. However, the divergence on the MACD and RSI indicates a technical correction. Where can the price go down? These are the support levels of 1.0933 and 1.0884. The second level is preferable as it is in the demand zone. There are no optimal entry points for selling right now.

Alternative scenario:

if the price breaks through the support level of 1.0786 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2808
• Prev. Close: 1.2772
• % chg. over the last day: -0.22%

The British pound fell to $1.273, nearing a one-month low, as investors expect the Bank of England to cut interest rates soon. The fall comes amid fears of a US recession, which has also caused British government bond yields to fall to new multi-month lows. Markets now expect two quarter-point cuts in the Bank of England rate by December. On Monday, interest rate futures were pointing to the possibility of a total of 56 bps in rate cuts this year, down from the 47 bps expected on Friday.

Trading recommendations

• Support levels: 1.2717,1.2694,1.2662
• Resistance levels: 1.2840,1.2879,1.2909,1.2950

From the point of view of technical analysis, the trend on the GBP/USD currency pair is bearish. Unlike the euro, the brit failed to consolidate above the priority level of 1.2840. Now the price is forming a balanced environment in the form of a narrowing triangle. When liquidity narrows like this, an impulsive exit occurs. Therefore, we need to watch the reaction. A break of the upper triangle line will open buying to 1.2840 with the potential to change the trend to 1.2879. A break of the lower triangle line will lead to a sell-off of 1.2694 or lower.

Alternative scenario:

if the price breaks through the resistance level at 1.2840 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 146.42
• Prev. Close: 144.15
• % chg. over the last day: -1.57%

The price of USD/JPY fell sharply on Monday at 142. The yen on Monday added to last Friday’s gains and rose to a 7-month high against the dollar. The yen’s sudden appreciation led to a massive unwinding of yen short trades, which contributed to the yen’s gains. In addition, a 12% drop in the Nikkei Stock Index (JP225) to a 9-month low on Monday helped boost demand for the yen as a safe haven.

Trading recommendations

• Support levels: 142.80,140.22,137.26
• Resistance levels: 148.13,150.88,151.26,153.80

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. Yesterday, the price declined to the support level of 142.80, where the buyers showed a reaction. Currently, the price has corrected to the downtrend line. A breakout of this line will open the way for the price to 148.13. If the sellers do not let the price consolidate above the trend line, the price may update yesterday’s low.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 150.88, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2444
• Prev. Close: 2408
• % chg. over the last day: -1.50%

Precious metals prices retreated on Monday, with gold falling to a 1-week low and silver to a 3-month low. But the decline in global stock markets on Monday sparked some demand for precious metals. The upward trend has continued, helped by the metal’s appeal as a safe haven as markets have become more risk-averse. Markets now estimate a total easing of more than 100 basis points this year and expect a significant 50 basis point rate cut in September. In addition, San Francisco Fed Chair Mary Daly said Monday that she is prepared to cut interest rates if necessary and emphasized the need for a proactive approach to policy. Meanwhile, heightened tensions in the Middle East continued to support gold’s appeal as a safe-haven currency.

Trading recommendations

• Support levels: 2367,2343
• Resistance levels: 2414,2445,2459,2471,2500

From the point of view of technical analysis, the trend on the XAU/USD has changed to a downtrend. Literally, in one day, the price changed the trend again. Yesterday, buyers reacted to the support level of 2367, but it looks more like a partial closing of sales than an interception of the initiative. Currently, the price is trading below the moving averages, and there is seller pressure intraday. Under such market conditions, we can look for selling from 2414 with the aim of renewing yesterday’s low.

Alternative scenario:

if the price breaks and consolidates above the resistance level of 2459, the uptrend will likely resume.