The Analytical Overview of the Main Currency Pairs on 2024.08.20

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1027
• Prev. Close: 1.1085
• % chg. over the last day: +0.53%

The Dollar Index fell to 102 on Monday, reaching its weakest level in almost eight months, amid expectations that the Federal Reserve will soon be forced to lower borrowing costs to stave off an economic slowdown. This came amid dovish comments from San Francisco Fed President Daly and Minneapolis Fed President Kashkari, who signaled they would be open to a Fed rate cut at the September FOMC meeting. In addition, the prospect that the Fed will cut rates faster than the ECB has reinforced the euro interest rate differential. Swaps discount the odds of a 25bp ECB rate cut at the September 12 meeting to 100%.

Trading recommendations

• Support levels: 1.1060,1.1017,1.0950,1.0905,1.0884,1.0841,1.0816
• Resistance levels: 1.1138

The trend on the EUR/USD currency pair in the hourly time frame is bullish. Yesterday, the price consolidated above the resistance level of 1.1045. Now, the way to 1.1138 is open for the price. Under such market conditions, we can look for buying from the support level of 1.1060. There are no optimal entry points for selling now.

Alternative scenario:

if the price breaks through the support level of 1.0950 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2932
• Prev. Close: 1.2987
• % chg. over the last day: +0.42%

The British pound strengthened above $1.299, reaching a one-month-high, as signs of a robust economy and moderate inflation led traders to expect fewer rate cuts from the Bank of England than the Federal Reserve. Traders expect the Bank of England to cut rates by 44 basis points this year, with a 39% chance of a 25bp rate cut in September. As for the Fed, a 25 basis point rate cut in September is already fully priced in, the probability of a larger 50 basis point cut is 24.5%, and more than 90 basis points of easing is expected by the end of the year.

Trading recommendations

• Support levels: 1.2937,1.2912,1.2848,1.2800,1.2726,1.2714,1.2665
• Resistance levels: 1.3012

From the point of view of technical analysis, the trend on the GBP/USD currency pair is bullish. Yesterday, the price broke through the 1.2960 resistance level. The breakout and consolidation of this level opened the way for the price to 1.3012. Under such market conditions, the support level of 1.2973 should be used for buying, but with confirmation. The profit target is 1.3012. Selling can be considered from 1.3012, but only if there is a reverse initiative.

Alternative scenario:

if the price breaks down the support level of 1.2800 and consolidates below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 147.57
• Prev. Close: 146.55
• % chg. over the last day: -0.69%

The Japanese yen exceeded 145.5 per dollar yesterday, reaching its highest level in almost two weeks, as the dollar weakened on the back of the Federal Reserve’s increasingly accommodative monetary policy outlook. Central Bank divergence is helping to boost the yen — the Fed will start cutting interest rates next month, while the Bank of Japan is expected to continue raising rates. Swaps estimate the odds of a BoJ rate hike at 10 bps at 0% for the September 20 meeting and 8% for the October 30–31 meeting. Markets now await Japanese inflation data due out later this week for clarity on the BoJ’s monetary policy path.

Trading recommendations

• Support levels: 146.86,145.90,145.40,142.80,140.22,137.26
• Resistance levels: 148.29,150.88,151.26,153.80

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The yen strengthened sharply yesterday and eventually reached the support level of 145.40, where the buyers took the initiative. Currently, the price has reached the support level of 145.42, but there is no buyers’ reaction. The yen will resist the growth of the dollar, so we should expect the formation of a balanced environment. Intraday you can look for buying from 146.86, but only with confirmation. There is no optimal entry point for selling right now.

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: 2509
• Prev. Close: 2504
• % chg. over the last day: -0.20%

The decline of the Dollar Index on Monday to a 7-month low was a favorable factor for metals. Gold hit an all-time high of $2,509 an ounce. And silver prices hit a 2-week high. “Dovish” comments from San Francisco Fed President Daly and Minneapolis Fed President Kashkari supported precious metals prices. Demand for precious metals also remains strong due to concerns that Iran may attack Israel in retaliation for the recent assassination of a Hamas political leader in Tehran.

Trading recommendations

• Support levels: 2500,2477,2451,2440,2416,2367,2343
• Resistance levels: 2510

From the point of view of technical analysis, the trend on the XAU/USD is bullish. The price has updated the historical maximum and is trading near the psychological level of 2500. The reaction of sellers is weak and it looks more like a partial closing of positions. But market conditions show that the price is ready to rise further. There are no optimal entry points for selling now. For buying, we should look for levels on intraday timeframes from the support level of 2500.

Alternative scenario:

if the price breaks down the support level of 2451, the downtrend will likely resume.