The Analytical Overview of the Main Currency Pairs on 2024.09.06

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1080
• Prev. Close: 1.1110
• % chg. over the last day: +0.27 %

The EUR/USD pair rose to a 1-week high on Thursday and finished up 0.20%. The dollar’s weakening on Thursday supported a moderate rise in the euro. In addition, signs of a strengthening German economy had a positive impact on the euro after German factory orders for July unexpectedly rose. However, growth was limited after Eurozone retail sales rose less than expected for July. Swaps rate the probability of a 25 bps ECB rate cut at the September 12 meeting at 100%. Markets rate the odds of a 25bp rate cut at the September 17–18 FOMC meeting at 100% and a 50bp rate cut at 40%.

Trading recommendations

• Support levels: 1.1063, 1.1028, 1.1017, 1.0950, 1.0905, 1.0884
• Resistance levels: 1.1116, 1.1159, 1.1191, 1.1275

The EUR/USD currency pair’s hourly trend is bearish, but close to a reversal. The price has reached the resistance level of 1.1116 and is likely to flat in front of the level before the publication of Nonfarm Payrolls news. A breakout of the 1.1116 level will trigger price growth to the 1.1140 level. However, given the divergence on MACD, there is a high probability that sellers will turn on and push the price back to 1.1063 on the news. Watch price reaction to the levels on intraday time frames.

Alternative scenario:

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: 1.3142
• Prev. Close: 1.3178
• % chg. over the last day: 0.27 %

Today, the US will release the labor market data for August. Economists expect the US economy added 164,000 jobs in June after 114,000 in the previous month. The weaker-than-expected data for July caused turbulence in the market, instilling fears of a possible recession in the US. Therefore, any signs of a weakening labor market could revive fears about the prospect of a recession and cause further market turmoil. This could be a positive trigger for risky currencies, especially sterling.

Trading recommendations

• Support levels: 1.3157, 1.3127, 1.3055, 1.2973, 1.2932, 1.2848, 1.2800
• Resistance levels: 1.3202, 1.3306

From the point of view of technical analysis, the trend on the GBP/USD currency pair is downward, but the pressure of buyers inside the day pushes the price to the level of priority change. The price may likely test 1.3202 on the NFP news, where we will need to monitor the price reaction. A breakout of 1.3202 will open the way for the price to 1.3306. If sellers take the initiative from 1.3202, the price could correct sharply to 1.3157 or lower.

Alternative scenario:

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: 143.70
• Prev. Close: 143.44
• % chg. over the last day: -0.18 %

The Japanese yen rose to 143 per dollar, hitting a one-month high, as the Bank of Japan (BoJ) is expected to keep raising interest rates amid persistent inflationary pressures and wage growth. Data released earlier this week showed that Japan’s real wages rose for the second consecutive month in July, rising 0.4% year-on-year, while total money income rose 3.6%. On the other hand, the US Federal Reserve is expected to start cutting interest rates this month amid growing risks in the labor market and weakness in the overall economy. This situation will contribute to the strengthening of the Japanese yen in the medium term.

Trading recommendations

• Support levels: 142.40, 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 continues to strengthen and has reached the support level of 142.40. Considering the divergence on MACD, the price here can bounce if buyers take the initiative intraday. However, buying should be considered only if buyers absorb the last bearish momentum, i.e., above 143. A downside break of 142.40 will open the way for the price to 141.08.

Alternative scenario:

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: 2495
• Prev. Close: 2516
• % chg. over the last day: +0.84 %

Gold held near $2,520/oz on Friday, near one-week highs ahead of the much-anticipated US jobs report, which could reinforce expectations of a significant interest rate cut by the Federal Reserve. Lower interest rates could reduce the opportunity cost of holding non-income-producing gold. Recent data suggests a weakening labor market, with ADP data showing that US private employers hired the fewest number of workers in 3.5 years in August. Markets are now pricing in a 41% chance of a 50 basis point rate cut and have raised bets on a total rate cut of 125 basis points over the year. This is a positive for gold.

Trading recommendations

• Support levels: 2508, 2488, 2471, 2451, 2440, 2416, 2367, 2343
• Resistance levels: 2521, 2532

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Yesterday, buyers took the initiative from the support level 2508. Currently, the price has reached the resistance level of 2521.60, but the sellers’ reaction to the level is weak. The breakout of this level will open the way for the price to 2532. A stronger dollar on the labor market news could trigger a sell-off in gold to 2505 or lower.

Alternative scenario:

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