The Analytical Overview of the Main Currency Pairs on 2024.08.15

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0984
• Prev. Close: 1.1012
• % chg. over the last day: +0.25%

On Wednesday, the Dollar Index fell to 102.2, back to levels not seen since mid-January, as the US CPI report came in broadly in line with expectations and continued to point to mild disinflation. The US inflation fell to 2.9% in July, supporting expectations of a Federal Reserve rate cut in September. The euro climbed above $1.10, thanks to a weaker dollar. In Europe, investors had slightly raised their expectations for two rate cuts by mid-October from the European Central Bank. However, recent data showed a sharp drop in investor confidence and an unexpected decline in industrial activity in the Eurozone. Eurozone GDP grew by 0.3% in the second quarter, unchanged from the previous period and in line with preliminary estimates.

Trading recommendations

• Support levels: 1.0947,1.0905,1.0884,1.0841,1.0816
• Resistance levels: 1.1019,1.1045,1.1138

The trend on the EUR/USD currency pair in the hourly time frame is bullish. The price has reached the 1.1045 resistance level, where sellers have shown a reaction, which also confirms a volume spike. Given the MACD divergence of the older time frame, sellers may look to sell from resistance levels of 1.1019 or 1.1045, but with confirmation. There is no optimal entry point for buying right now.

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: 1.2858
• Prev. Close: 1.2824
• % chg. over the last day: -0.26%

The British pound fell in price to USD 1.2820, pulling back from a three-week high reached earlier this month after UK inflation data raised bets on a rate cut by the Bank of England. Annual inflation rose as expected but was less than the estimated 2.2%. In addition, services inflation fell to 5.2%, the lowest in two years and below the Central Bank’s prognosis of 5.6%. Core inflation also slowed more than expected. The odds of another 25bp rate cut in September rose to 47% from 36% before publication. Traders are now predicting two more quarter-point rate cuts before the end of the year.

Trading recommendations

• Support levels: 1.2818,.2800,1.2726,1.2714,1.2665
• Resistance levels: 1.2868,1.2912,1.2950

From the point of view of technical analysis, the trend on the GBP/USD currency pair is bullish. The British pound looks weaker than the euro. Currently, the price is forming a balanced environment with the range of 1.2818–1.2868 and is right in the center of this range, which makes it difficult to find good entry points. For selling, the resistance level of 1.2868 is worth considering, but with confirmation in the form of a sellers’ reaction. For buy deals, it is worth using the support levels of 1.2818 or 1.2800, but also with confirmation.

Alternative scenario:

if the price breaks down 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: 146.74
• Prev. Close: 147.33
• % chg. over the last day: +0.40%

The Japanese yen came under pressure on Wednesday after Japanese Prime Minister Kishida said he would not run for a second term as leader of Japan’s ruling party, creating political uncertainty. In addition, the Nikkei Stock Index (JP225) rally on Wednesday, which was the high of the week, reduced demand for the yen as a safe haven. 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 the technical point of view, the medium-term trend on 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. But the longer the price trades in the range, the stronger the trend movement will be after the price leaves the range.

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: 2467
• Prev. Close: 2447
• % chg. over the last day: -0.81%

Precious metals prices retreated from weekly highs on Wednesday and closed moderately lower. Lower expectations of a 50bp rate cut at next month’s FOMC meeting weighed on gold prices on Wednesday, as swap markets assessed the probability of a 50bp rate cut at only 41%, down from 75% last week. Wednesday’s rally in the S&P 500 (US500) to its highest in weeks also limited demand for precious metals. However, the overall fundamental picture of gold remains positive.

Trading recommendations

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

From the point of view of technical analysis, the trend on the XAU/USD is bullish. After testing the liquidity above 2476, the price corrected to the support level of 2440, where the buyers tried to buy back the fall. Now the price seeks to test liquidity above 2458, where we can look for selling, but with confirmation. There are no optimal entry points for buying today.

Alternative scenario:

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