The Analytical Overview of the Main Currency Pairs on 2024.08.14

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0928
• Prev. Close: 1.0993
• % chg. over the last day: +0.60%

The euro climbed above $1.095, approaching January levels, thanks to the weakening dollar after weaker-than-expected US producer inflation data. The data boosted investor confidence that the Federal Reserve will soon start cutting interest rates. However, the ZEW survey showed weaker-than-expected investor confidence in Germany, which often signals broader trends in the Eurozone. The ZEW economic sentiment indicator for Europe’s largest economy fell 22.6 points over the month to 19.2 points, well below expectations of 32 points. Swaps estimate the probability of a 25 bps ECB rate cut at the September 12 meeting at 98%.

Trading recommendations

• Support levels: 1.0944,1.0905,1.0884,1.0841,1.0816
• Resistance levels: 1.1000,1.1138

Alternative scenario:

The EUR/USD currency pair’s hourly trend is bullish. The price has reached the resistance level of 1.1000, but there has been no seller reaction yet. Buyer pressure prevails intraday, and the MACD also indicates upward momentum. Under such market conditions, it is necessary to analyze the price behavior to a certain level. A breakout of 1.1000 will open the way for the price to 1.1138. Seller initiatives above 1.1000 could trigger a sharp sell-off to 1.0944.

Technical indicators of the currency pair:

Trading recommendations

The EUR/USD currency pair’s hourly trend is bullish. The price has reached the resistance level of 1.1000, but there has been no seller reaction yet. Buyer pressure prevails intraday, and the MACD also indicates upward momentum. Under such market conditions, it is necessary to analyze the price behavior to a certain level. A breakout of 1.1000 will open the way for the price to 1.1138. Seller initiatives above 1.1000 could trigger a sharp sell-off to 1.0944.

Alternative scenario:

if the price breaks through the support level of 1.0913 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2757
• Prev. Close: 1.2859
• % chg. over the last day: +0.78%

The British pound climbed above $1.28 as the UK labor market showed unexpected strength. The unemployment rate fell to 4.2% for the quarter, contrary to expectations of a rise, while wage growth slowed to 5.4% from 5.8% y/y. This strong report may encourage the Bank of England (BoE) to be cautious about further rate cuts. Upcoming data on inflation and economic growth will be crucial for future policy decisions. Inflation is expected to rise to 2.3% in July, up from 2% in previous months.

Trading recommendations

• Support levels: 1.2844,1.2800,1.2726,1.2714,1.2665
• Resistance levels: 1.2879,1.2912,1.2950

From the point of view of technical analysis, the trend on the GBP/USD currency pair is bullish. The price is trading above the moving averages. The MACD indicator is positive, with no signs of reversal. The price is aiming to test liquidity above 1.2879. In case of a breakout of 1.2779, the price will open the way to 1.2912. Selling requires a reaction to one of these levels. In a sell reaction, we can expect a sell-off to 1.2800.

Alternative scenario:

if the price breakdown the support level of 1.2726 and consolidates below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 147.20
• Prev. Close: 146.83
• % chg. over the last day: -0.26%

Japanese economic news on Tuesday supported the yen after July machine tool orders rose for a third month, and the July producer price index rose at the fastest pace in 11 months, a hawkish factor for BoJ policy. Japan’s producer price index rose 3.0% y/y in July, the biggest increase in 11 months. However, a 3% rise in the Nikkei Stock Index (JP225) to a 1-week high has dampened demand for the yen. Swaps estimate the odds of a 10 bps BoJ rate hike at 0% at the September 20 meeting and 10% at the October 31 meeting.

Trading recommendations

• Support levels: 146.12,142.80,140.22,137.26
• Resistance levels: 148.13,150.88,151.26,153.80

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bearish. The price is again trading in the balanced environment with the range of 146.12-148.13. The range rules indicate that one should always buy from the lower boundary and sell from the upper boundary. Under these market conditions, analyzing the price reaction to the range levels is necessary. For selling, 148.13 can be considered again, but only with confirmation. A breakout of 148.13 will open the way for the price to 150 and above, so it is very important for sellers to hold this resistance level. A price move below 146.12 will trigger a sell-off to 145.

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: 2471
• Prev. Close: 2467
• % chg. over the last day: -0.16%

The decline in the dollar index to a one-week low on Tuesday supported metal prices. In addition, Tuesday’s decline in global bond yields was favorable for precious metals prices. Also, dovish comments from Atlanta Fed President Bostic boosted precious metals prices when he said he would likely be willing to support a Fed rate cut.

Trading recommendations

• Support levels: 2459,2440,2416,2367,2343
• Resistance levels: 2476,2500

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Currently, the price has reached the 2476 resistance level, above which there is a large amount of liquidity, and the price will certainly seek to test this liquidity. However, a breakdown of the rising trendline indicates intraday selling pressure. The buyers need to hold above 2459, otherwise, the price may fall sharply to 2440. Buying trades should be sought from the support level of 2459, or 2440, on a deeper pullback to renew the high of the week.

Alternative scenario:

if the price breakdown the support level of 2416, the downtrend will likely resume.