The Analytical Overview of the Main Currency Pairs on 2024.09.10

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1079
• Prev. Close: 1.1034
• % chg. over the last day: -0.40 %

Swap markets are pricing the odds of a 50bp rate cut at next week’s FOMC meeting at 31%, down from 50% following the release of the US payrolls report last Friday. Pressure on the euro on Monday came from a stronger dollar and news that the Eurozone’s Sep Sentix Investor Confidence Index unexpectedly fell to an 8-month low. Also, weighing on the euro, there are expectations that the ECB will cut interest rates by 25bps at Thursday’s meeting. Swaps discount the odds of a 25 bp ECB rate cut at the September 12 meeting to 100%.

Trading recommendations

• Support levels: 1.1028, 1.1013, 1.0950, 1.0905, 1.0884
• Resistance levels: 1.1140, 1.1191, 1.1275

The EUR/USD currency pair’s hourly trend is bearish. Yesterday, the price broke through the support level of 1.1059 and rushed lower, reaching the level of 1.1028. Buyers’ reaction here is weak, so further price decline to 1.1013 is expected. Under such market conditions, it is worth evaluating the price reaction to the support level of 1.1013. If buyers can show initiative, we can look for buy trades. However, if the price consolidates below 1.1013, it will likely see a sell-off to 1.0950.

Alternative scenario:

if the price breaks through the resistance level of 1.1191 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3118
• Prev. Close: 1.3073
• % chg. over the last day: -0.34 %

Today, the employment report for July will be released. The unemployment rate fell by 0.2% to 4.2% in June, but another big drop may not be as welcome as wage growth is finally heading towards levels that are more in line with inflation. The probability of no change in September is currently around 75%, so sterling could come under severe pressure if the unemployment data comes in worse than expected.

Trading recommendations

• Support levels: 1.3055, 1.3031, 1.2973, 1.2932, 1.2848, 1.2800
• Resistance levels: 1.3120, 1.3150, 1.3202, 1.3306

From the point of view of technical analysis, the trend on the GBP/USD currency pair is downward. The situation is similar to the euro. The price broke through the support level of 1.3120 and rushed lower. The nearest resistance levels, where the reaction of buyers should be evaluated, are 1.3055 and 1.3031. If buyers show interest here, we can look for buy trades with a target of up to 1.3120. A price consolidation below 1.3031 will open the way to 1.2973.

Alternative scenario:

if the price breaks the resistance level of 1.3202 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 143.44
• Prev. Close: 143.17
• % chg. over the last day: -0.19 %

The yen came under pressure on Monday after Japan’s Q2 GDP data was unexpectedly revised downward. Japan’s Q2 GDP was unexpectedly revised to 2.9% (Q/Q annualized) from 3.1%, which was weaker than expectations of an upward revision to 3.0%. Swaps estimate the odds of a 10bp BoJ rate hike at 0% at the September 20 meeting and 14% at the October 30–31 meeting.

Trading recommendations

• Support levels: 141.93, 141.08, 140.22, 137.26
• Resistance levels: 144.42, 147.17, 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 a downtrend. The Japanese yen resists the strengthening of the US dollar much more strongly than the euro and the British pound. Now, the price is trading at the levels of moving averages, forming a narrowing triangle. Trading inside the triangle is not advisable, so it is best to wait for a breakout of one of the sides.

Alternative scenario:

if the price breaks through and consolidates above the resistance at 146.30, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2497
• Prev. Close: 2509
• % chg. over the last day: +0.36 %

Federal Reserve Bank of New York President John Williams said that the US Central Bank should now cut interest rates, citing progress in inflation and cooling the labor market. Markets remain divided on whether the Fed will cut rates by 25 or a more substantial 50 basis points during the upcoming meeting, but they still expect the Fed to cut 125 basis points over the remaining meetings this year. A less tight monetary policy is favorable for gold as it reduces the opportunity cost of holding non-interest-bearing bullion assets.

Trading recommendations

• Support levels: 2488, 2471, 2451, 2440, 2416, 2367, 2343
• Resistance levels: 2504, 2526, 2532

From the point of view of technical analysis, the trend on the XAU/USD is bullish. On Friday, on the NFP news, the price reached the resistance level of 2526, where sellers showed strong initiative. The price corrected to 2488, where buyers started to stop the move, but the initiative was not enough to absorb the intraday selling pressure. Under these market conditions, it is worth considering selling from the resistance level of 2507, but with confirmation. A consolidation above 2507 will indicate the weakness of the sellers and open the price way to 2526 again.

Alternative scenario:

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