The Analytical Overview of the Main Currency Pairs on 2024.09.19

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1111
• Prev. Close: 1.1119
• % chg. over the last day: +0.07 %

The dollar fell on Wednesday after the FOMC cut the federal funds rate by 50 bps and projected another 50 bps rate cut before the end of the year. The FOMC also lowered its 2024 US GDP estimate and its 2024 PCE core price projection, which is dovish for Fed policy. According to the CME FedWatch Tool, markets expect a 25bps rate cut in November and a 25bps rate cut in December. In the medium term, this is a negative scenario for the US dollar, which the euro can take advantage of.

Trading recommendations

• Support levels: 1.1112, 1.1068, 1.1051, 1.1013, 1.0950, 1.0905, 1.0884
• Resistance levels: 1.1168, 1.1191, 1.1275

The EUR/USD currency pair’s hourly trend is bullish. On Wednesday, during the publication of the US Fed rate, the euro rose sharply and tested liquidity above 1.1168. A sharp sell-off followed, which led to a price decline to the support level of 1.1068. Here, the buyers have re-entered the game by taking the initiative, and the price has now virtually absorbed the entire downward movement. Inside the day, there is buying pressure. Under such market conditions, it is best to look for buy trades from the support level of 1.1112, but with confirmation. The profit target is 1.1168. There is no optimal entry point for selling now.

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: 1.3153
• Prev. Close: 1.3213
• % chg. over the last day: +0.45 %

The British pound soared yesterday to $1.33, its strongest level since February 2022, benefiting from the general weakening of the dollar after the US Federal Reserve cut interest rates by 50bps. The Fed has also signaled additional rate cuts of 50 bps this year and 100 bps next year. UK annual inflation in August remained at 2.2%, which is in line with expectations, while service inflation rose to 5.6%, as estimated. The Bank of England’s monetary policy meeting will take place today. On the back of the latest economic data, traders expect the Central Bank to leave interest rates unchanged, although they predict rate cuts in November and December and then five more in 2025. 

Trading recommendations

• Support levels: 1.3188, 1.3153, 1.3115, 1.3086, 1.3072, 1.3033, 1.3012, 1.2973, 1.2932
• Resistance levels: 1.3273, 1.3306

From the point of view of technical analysis, the trend on the GBP/USD currency pair is bullish. Yesterday, the price reached the daily resistance zone at 1.3273-1.3306, where sharp sell-offs followed. But buyers bought back the price from 1.3153 and now the price is trying to test the above resistance zone again. It is better to wait for a small pullback to buy, as the price has deviated strongly from the moving averages. The support level of 1.3188 is the most optimal. For selling, we can consider the zone of 1.3273–1.3306, provided the sellers take the initiative.

Alternative scenario:

if the price breaks the support level of 1.3145 and consolidates below it, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 142.39
• Prev. Close: 142.27
• % chg. over the last day: -0.08 %

The Japanese yen against the dollar jumped yesterday almost to 144. At its September meeting, the US Federal Reserve lowered its key interest rate by 50 bps, which exceeded the expectations of almost half of the market, and signaled a continuation of rate cuts next year amid expectations of rising unemployment and weakening inflation. In contrast, the Bank of Japan is expected to leave its key interest rate unchanged this week before embarking on another rate hike in December. In the medium term, the fundamental conditions now point to further yen strengthening.

Trading recommendations

• Support levels: 142.19, 141.13, 140.43, 137.26
• Resistance levels: 142.79, 144.42, 147.17, 148.29, 150.88, 151.26

From a technical point of view, the medium-term trend of the USD/JPY currency pair has changed temporarily to an uptrend. Technically, there was a reversal change, but fundamentally we have a downward trend. Under such conditions, it is necessary to trade up to the nearest targets. To buy, we should consider the support zone at 142.19. A price fixation below this zone may provoke a sell-off and the price will drop sharply to 140.43. For selling, we can also consider the resistance zone above 142.79, but with confirmation.

Alternative scenario:

if the price breaks and consolidates below the support at 140.43, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2570
• Prev. Close: 2560
• % chg. over the last day: -0.39 %

Gold fell to $2550 after nearly hitting a new record high of $2600 as investors digested the Fed’s latest decision. The Fed decided on a larger-than-expected 50 bps rate cut, the first in more than 4 years. The Central Bank also released updated economic projections. Policymakers expect a total of 100 basis points in rate cuts by the end of the year, which implies two more 25 basis point rate cuts at the last two meetings this year. However, during the regular press conference, Chairman Powell noted that the Fed is in no rush to ease and the dot plot of the federal funds rate estimate is not a political plan.

Trading recommendations

• Support levels: 2561, 2541, 2528, 2522, 2513, 2503
• Resistance levels: 2600

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Yesterday, the price hit the psychological level of 2600, followed by a sharp sell-off. It was very similar to the algorithm’s work. The price fell below 2561, and after grabbing new liquidity below, it went back to the upside. Under these market conditions, the support zone below 2561 can be considered for buying. There are no optimal entry points for selling right now.

Alternative scenario:

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