The Analytical Overview of the Main Currency Pairs on 2024.08.16

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1011
• Prev. Close: 1.0972
• % chg. over the last day: -0.36%

The dollar rose amid stronger-than-expected US economic reports that proved hawkish for Fed policy. Thursday’s economic reports helped lower expectations for a 50bp Fed rate cut at the September 18 FOMC meeting to 26% from 75% last week. In addition, dovish Fed comments on Thursday weakened the dollar when Atlanta Fed President Bostic said he was open to an interest rate cut in September. St. Louis Fed President Musalem added that approaching the time, an adjustment to the moderately restrictive policy may be appropriate. The dollar’s rally on Thursday amid signs of a strengthening US economy pressured the euro.

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. On Wednesday, the price reached the resistance level of 1.1045, where the sellers reacted, confirming the surge in volume. On Thursday, the price corrected but failed to get the support level of 1.0947, which increases the probability of another downward wave. Under such market conditions, buying should be sought from the support level of 1.1045, but with confirmation. Selling can be sought intraday from the moving average lines but with a short stop loss.

Alternative scenario:

if the price breaks down 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: 1.2820
• Prev. Close: 1.2853
• % chg. over the last day: +0.26%

The British pound is trading at nearly $1.2870, holding near the three-week high that reached at the beginning of the month. GDP growth slowed slightly in the second quarter and stopped in June, which was in line with expectations. Traders continue to bet that the Bank of England (BoE) will deliver two more 25bp rate cuts this year. Still, the probability of a rate cut in September remains below 50%, while the probability of rates remaining unchanged is almost 59%.

Trading recommendations

• Support levels: 1.2848,1.2800,1.2726,1.2714,1.2665
• 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 has taken over the initiative from the euro and looks more confident now. Yesterday, the price reached the support level of 1.2800, where the buyers showed a sharp reaction. At the same time, the buyers formed another support zone below 1.2848. Now, the price is consolidating above the resistance level of 1.2868. This increases the probability of further growth to 1.2912. The support level of 1.2848 can be used to join the trend. There are no optimal entry points for selling now.

Alternative scenario:

if the price breaks through 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: 147.25
• Prev. Close: 149.27
• % chg. over the last day: +1.37%

The yen also came under pressure on Thursday after Japan’s industrial production data for June was revised downward. However, Japan’s Q2 GDP report released on Thursday showed that the Japanese economy grew faster than expected, which is hawkish for BoJ policy and a supportive factor for the yen. Swaps estimate the odds of a 10bp BoJ rate hike at 0% at the September 20 meeting and 8% at the October 31 meeting.

Trading recommendations

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

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. However, the probability of a priority change sharply increased after the price consolidated above the range of 146.12–148.13 yesterday when it had been trading for 7 trading days. The breakout of 148.13 opened the way for the price to 150 and above, so intraday buying from 148.13 can be considered. If the price falls below 148.13, it is undesirable for the buyers and may trigger sell-offs to 146.

Alternative scenario:

if the price breaks 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: 2448
• Prev. Close: 2456
• % chg. over the last day: +0.32%

Thursday’s dovish Fed comments were a favorable factor for the demand for gold as a store of value. Markets continue to bet that the Fed will begin cutting rates in September; however, a rise in monthly consumer inflation has dampened expectations of a larger rate cut next month due to higher housing and transportation costs. This has also dampened the strong performance of gold prices as it is linked to interest-bearing assets. Meanwhile, the metal continues to benefit from its appeal as a “safe-haven currency” amid the Middle East conflict as investors remain concerned about a possible Iranian retaliatory strike on Israel.

Trading recommendations

• Support levels: 2440,2416,2367,2343
• Resistance levels: 2469,2476,2500

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Yesterday, the price tested liquidity above the resistance level, where sellers reacted. However, buyers also stepped in from the support level of 2439, and now the price is hovering in this range right at the level of the moving lines. The MACD indicator has become inactive. With these market conditions, there are no optimal entry points for either buying or selling right now, as the price is right in the middle of the balance sheet environment.

Alternative scenario:

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