The Analytical Overview of the Main Currency Pairs on 2024.09.16

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1068
• Prev. Close: 1.1074
• % chg. over the last day: +0.05 %

The euro rose slightly on Friday, thanks to the dollar’s weakening. The euro also gained support amid comments from several ECB officials, who said they do not favor cutting interest rates at the ECB’s October meeting. ECB President Lagarde said that she is willing to consider an interest rate cut in October if the Eurozone economy suffers a major setback, but a rate cut at the December ECB meeting is more likely as the ECB will have better information on the economy by then. Holtzmann of the ECB’s Governing Council also believes that another rate cut should be made in December. Swaps discount the odds of a 25bp ECB rate cut at the October 17 meeting by 47% and a 25bp rate cut at the December 12 meeting by 100%.

Trading recommendations

• Support levels: 1.1068, 1.1051, 1.1013, 1.0950, 1.0905, 1.0884
• Resistance levels: 1.1134, 1.1191, 1.1275

The EUR/USD currency pair’s hourly trend is bullish. On Friday, the euro rose slightly, and at the opening of Monday, it rushed up again. But the volumes on the rising candlesticks are decreasing, indicating no interest above Friday’s high. Considering the divergence on the MACD indicator, there is a high probability of corrective movement. Selling can be looked for on intraday time frames, provided the initiative. Buying should be considered from 1.1068 or 1.1051.

Alternative scenario:

if the price breaks the support level of 1.1002 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3124
• Prev. Close: 1.3121
• % chg. over the last day: -0.02 %

In the UK, the focus shifts to inflation data and the Bank of England (BoE) meeting. The Bank of England is expected to leave rates unchanged at 5% with an 80% probability this week. Key UK inflation data is due out on Wednesday, the day before the Bank of England’s policy announcement. The latest data showed that the UK economy stagnated in July, falling short of the expected 0.2% growth, sending the pound down to its lowest level since August 20. Investors are predicting that the Bank of England will move to cut rates in November.

Trading recommendations

• Support levels: 1.3115, 1.3086, 1.3072, 1.3033, 1.3012, 1.2973, 1.2932
• Resistance levels: 1.3150, 1.3202, 1.3306

From the point of view of technical analysis, the trend on the GBP/USD currency pair is bullish. The situation is similar to the euro. Buyers took the initiative from the support level of 1.3115. However, there is no interest from the buyers above Friday’s high, which, along with divergence on MACD, can provoke a corrective wave. If sellers show interest here, intraday, we can look for a sell trade with a target up to the moving average lines, but the trade will be counter-trend. It is recommended to consider the support at 1.3115.

Alternative scenario:

if the price breaks the support level of 1.3033 and consolidates below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 141.76
• Prev. Close: 140.83
• % chg. over the last day: -0.66 %

The Japanese yen climbed back to 141 per dollar on Friday, nearing yearly highs on the back of a hawkish monetary policy outlook from the Bank of Japan. Recent Japanese economic data is positive, supporting the BoJ’s policy direction. Japanese industrial production for July was revised upward by 0.3 to 3.1% m/m from the previously reported 2.8% m/m. Swaps estimate the odds of a 10 bps BoJ rate hike at 0% at the September 20 meeting and 11% at the October 30–31 meeting.

Trading recommendations

• Support levels: 140.22, 137.26
• Resistance levels: 141.32, 143.04, 144.42, 147.17, 148.29, 150.88, 151.26

From the technical point of view, the medium-term trend on the currency pair USD/JPY is a downtrend. The Japanese yen reached the support level of 140.22, but there is no buyers’ reaction at the moment. On the other hand, the volumes show that the downward momentum is exhausted, and a correction is needed. The MACD indicates divergence. Buying can be considered from the 140.22 level if intraday buyers take the initiative. For selling, it is best to look for intraday points near the resistance level at 141.32.

Alternative scenario:

if the price breaks through and consolidates above the resistance at 143.04, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2558
• Prev. Close: 2578
• % chg. over the last day: +0.78 %

Friday’s decline in the dollar index to 1-week lows was a favorable factor for metals. Gold set a record high while silver prices hit an 8-week high. Comments from former New York Fed Chair Dudley on Friday spurred demand for gold as a store of value when he said he sees “a strong case for a 50bp cut in Fed interest rates” at next week’s FOMC meeting. Finally, gold fund buying supported gold prices as long gold positions in ETFs rose to a 7-month high on Thursday.

Trading recommendations

• Support levels: 2574, 2541, 2528, 2522, 2513, 2503
• Resistance levels: 2575, 2600

From the point of view of technical analysis, the trend on the XAU/USD is bullish. The price continues to grow without pullbacks. It is difficult to predict where the next resistance levels are, as gold is trading at historical highs. Currently, only psychological resistance levels of 2575 and 2600 exist above the price. Buying here is very high as the price has deviated a lot from the mid-lines. It is best to wait for a pullback to the nearest support zone — 2574. Selling against such a trend is not recommended.

Alternative scenario:

if the price breaks down the support level of 2513, the downtrend will likely resume.