The Analytical Overview of the Main Currency Pairs on 2024.10.21

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0829
• Prev. Close: 1.0867
• % chg. over the last day: +0.35 %

The euro rose to 1.086 USD but declined for the third consecutive week as money markets raised expectations of further rate cuts by the European Central Bank (ECB). ECB President Christine Lagarde’s remarks were interpreted as worsening the economic outlook, leading markets to speculate that rates will be cut by 25 basis points at each meeting until mid-2025. A 25 basis point rate cut is expected in December, and there is a 25% chance of a larger 50 basis point rate change.

Trading recommendations

• Support levels: 1.0837, 1.0809, 1.0783
• Resistance levels: 1.0868, 1.0894, 1.0951, 1.0979, 1.1013, 1.1036, 1.1079

The EUR/USD currency pair’s hourly trend is bearish. On Friday, the euro corrected and reached the resistance level of 1.0868, where sellers showed a moderate reaction. Today, we can consider selling with a short stop with a target of 1.0837. Buying should be considered from 1.0837 but with confirmation in the form of initiative on the lower time frames.

Alternative scenario:

 if the price breaks the resistance level at 1.0902 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.3003
• Prev. Close: 1.3049
• % chg. over the last day: +0.36 %

The softer September CPI strengthens the market’s confidence that the Bank of England will make a second quarter-point rate cut during its next meeting on November 7. The likelihood of this is embedded in overnight swaps with a probability of over 90%. The issue is the last meeting of the year (December 19). The market is divided in opinion, but after the release of the latest inflation report, the swaps market’s confidence in a rate cut in December has increased from a probability of just under 50% to around 75%.

Trading recommendations

• Support levels: 1.3005, 1.2993, 1.2977
• Resistance levels: 1.3071, 1.3101, 1.3171, 1.3290, 1.3327, 1.3377, 1.3389

From the point of view of technical analysis, the trend on the GBP/USD currency pair is bearish. On Friday, the price reached the resistance level of 1.3071, where sellers showed a moderate reaction. Today intraday, we can look for selling with a target of 1.3005. Buying can be considered from 1.3005 but with confirmation in the form of a buying initiative.

Alternative scenario:

if the price breaks the resistance level at 1.3101 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 150.17
• Prev. Close: 149.52
• % chg. over the last day: -0.44 %

Policy uncertainty in Japan and the US provokes volatility in the yen. New Prime Minister Shigeru Ishiba said earlier this month that the country is not ready to raise interest rates further, although he later said he stands by the Bank of Japan’s view. As for the Fed, indexed overnight swaps indicate that there will be at least two quarter-point rate cuts over the next three meetings through January. A further drop in the yen to 155 could lead the Bank of Japan to raise rates sooner than expected. Or officials will conduct another intervention to support the yen.

Trading recommendations

• Support levels: 148.90, 148.12, 148.12, 147.50, 146.90, 146.02, 144.20, 143.53
• Resistance levels: 149.63, 150.31, 150.93, 153.42

From a technical point of view, the medium-term trend of the USD/JPY currency pair is bullish. Last Thursday, the price reached the resistance level at 150.31, after which the correction started. The sellers’ pressure is present throughout the day, and there is a high probability that the price will reach the support level of 148.90. Here, we can look for buying, provided the buying side reacts. A breakdown of 148.90 will open the price to 148.12.

Alternative scenario:

if the price breaks down the support level of 148.11, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2693
• Prev. Close: 2722
• % chg. over the last day: +1.08 %

Gold rose above $2710 per ounce on Friday, reaching a new record high, driven by global demand for safe-haven assets and expectations of further interest rate cuts by major central banks. The People’s Bank of China is expected to cut short- and long-term interest rates on Monday. Gold also received support from rising tensions in the Middle East after the Israeli military confirmed on Thursday that a key Hamas leader had been eliminated, and on Friday, Lebanon attacked Netanyahu’s residence in Israel.

Trading recommendations

• Support levels: 2704, 2685, 2673, 2661, 2640, 2605, 2584, 2574, 2561, 2541, 2528
• Resistance levels: 2711, 2750

From the point of view of technical analysis, the trend on the XAU/USD is bullish. On Friday, the price confidently consolidated above 2700. As for the resistance levels, we can only focus on the psychological levels and on the levels of the lower time frames. The nearest psychological resistance level is 2750. For buying, we can look for intraday levels or use moving averages. For selling, there are no optimal entry points right now, there is no initiative from sellers.

Alternative scenario:

if the price breaks down the support level of 2640, the downtrend will likely resume.