The Analytical Overview of the Main Currency Pairs on 2024.05.08

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0763
• Prev. Close: 1.0754
• % chg. over the last day: -0.08%

This year, optimism about the Fed’s easing plans increased after softer-than-expected US labor market data. At the same time, the ECB is expected to start lowering borrowing costs in June. ECB chief economist Philip Lane said the latest data gives him confidence that inflation is returning to the 2% target. Most ECB officials seem supportive of easing next month, but President Lagarde did not hint at further cuts.

Trading recommendations

• Support levels: 1.0739,1.0713,1.0688,1.0652,1.0623,1.0590
• Resistance levels: 1.0757,1.0795,1.0843,1.0865

The trend on the EUR/USD currency pair on the hourly time frame has changed to an upward trend. The zone in front of 1.0795 turned out to be quite strong. The price started a corrective movement towards the nearest support levels. Under such market conditions, buying should be sought from the support zone below 1.0739 or, in case of a deeper correction, from 1.0713. There are no optimal entry points for selling now.

Alternative scenario:

if the price breaks the support level at 1.0673 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2556
• Prev. Close: 1.2508
• % chg. over the last day: -0.38%

The British pound is holding near $1.25 as investors remain focused on the timing of the Federal Reserve’s interest rate cuts. The US central bank is now expected to make its first rate cut in September, down from a previously projected timing in November, following the release of a softer-than-expected US jobs report. Meanwhile, the Bank of England is expected to leave rates unchanged at its upcoming May meeting, but investors are fully pricing in a first-rate cut in August rather than September.

Trading recommendations

• Support levels: 1.2482,1.2465,1.2423,1.2423
• Resistance levels: 1.2512,1.2562,1.2611,1.2634,1.2674,1.2707

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish. But the British pound has lost many positions against the dollar over the last 2 days. The price easily and confidently broke through the nearest support levels, and now the price is approaching the level of priority change. Under such market conditions, buying can be sought from 1.2482 or 1.2465, but with confirmation in the form of buyers’ reactions. There are no optimal entry points for selling right now.

Alternative scenario:

if the price breaks the support level of 1.2465 and consolidates below, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 153.86
• Prev. Close: 154.68
• % chg. over the last day: +0.53%

The Japanese yen fell to 155 per dollar, giving back about half of last week’s gains. The yen was pressured Tuesday by comments from Masato Kanda, Japan’s top currency official, who said the government does not need to intervene in the forex market if market movements are orderly, suggesting Japan will tolerate a weaker yen. Economists say intervention will only give the authorities some time, given the sharp interest rate differential between Japan and the US.

Trading recommendations

• Support levels: 151.93,151.59
• Resistance levels: 154.87,156.29,156.57,157.12,158.20,160.00

From a technical point of view, the medium-term trend of the currency pair USD/JPY is bearish. The Japanese yen is losing positions against the dollar and other currencies. There is buying pressure intraday despite the overall bearish bias that has emerged through interventions. With a high probability, the price is looking to test the liquidity above 156.28. Under such market conditions, we can look for selling from the area above this resistance, but subject to sellers’ reaction. Buying can be sought intraday but with short stops.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 158.00, the uptrend is likely to resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2325
• Prev. Close: 2314
• % chg. over the last day: -0.47%

The strengthening of the dollar on Tuesday had an impact on metals prices. In addition, hawkish comments from Minneapolis Fed President Kashkari harmed precious metals when he said the Fed is likely to keep interest rates unchanged “for an extended period.” However, gold found support on Wednesday after China’s central bank bought 60,000 troy ounces of gold in April, marking the eighteenth consecutive month it has increased its gold holdings.

Trading recommendations

• Support levels: 2307,2276,2249,2229,2206
• Resistance levels: 2327,2337,2350,2367,2400

From the point of view of technical analysis, the trend on the XAU/USD is bearish. On Wednesday morning, gold declined to the 2337 level, where buyers reacted. The price impulsively rebounded and consolidated higher. With these market conditions inside, it is worth looking to buy up to resistance at 2327, where we need to close part of the position. There are no optimal entry points for selling right now.

Alternative scenario:

If the price breaks and consolidates above the resistance level of 2350, the uptrend will likely resume.