The Analytical Overview of the Main Currency Pairs on 2024.01.15

The EUR/USD currency pair

• Prev Open: 1.0968
• Prev Close: 1.0949
• % chg. over the last day: -0.17 %

On Friday, the euro initially rose on positive economic news after French consumer spending unexpectedly rose by 0.7% m/m, which exceeded expectations of a 0.2% m/m decline and was the biggest increase in the last five months. But by the end of the day, the euro declined as the dollar's recovery caused the liquidation of long positions in the euro. EUR/USD was also affected by dovish comments from ECB President Lagarde, who said that once the ECB's 2% inflation target is met, she is "very confident that interest rates will start to fall." Swaps currently estimate the odds of a 25 bps ECB rate cut at 4% at the next meeting on January 25 and 43% at the March 7 meeting.

• Support levels: 1.0938, 1.0908, 1.0864, 1.0827
• Resistance levels: 1.0985, 1.1010, 1.1037, 1.1080, 1.1097, 1.1171

The trend on the EUR/USD currency pair on the hourly time frame is a downtrend. At the moment, the price is forming a flat accumulation, and taking into account the fact that today is a bank holiday in the United States, most likely, the euro will remain trading in the range. A price consolidation above 1.0985 will open the way to 1.1010. Buying can also be looked for from the support level of 1.0938 if the price corrects today, but only with confirmation, as the level has been tested several times. Selling can be considered from 1.0985 or 1.1010, but subject to sellers' reaction to the level.

Alternative scenario: if the price breaks the resistance level of 1.1037 and consolidates above it, the uptrend will likely resume.

• – Eurozone Industrial Production (m/m) at 12:00 (GMT+2);
• – Eurozone Trade Balance (m/m) at 12:00 (GMT+2).

The GBP/USD currency pair

• Prev Open: 1.2748
• Prev Close: 1.2751
• % chg. over the last day: +0.02 %

UK GDP in November 2023 grew more than expected, mainly driven by the services sector and a slight increase in manufacturing. Last month's growth was 0.3%. However, the main concern is the quarterly data. Third quarter GDP contracted by 0.1%, and if the fourth quarter shows a negative reading, it would mean that the UK has reached a technical recession. That said, the longer-term picture shows serious problems for the growth of the economy. This will lead to the Bank of England being forced to cut rates earlier to avoid hurting the economy further. In such a situation, the British pound will be under pressure. Conversely, GDP growth will give the Bank of England more time to keep rates at the current level, which is positive for the British currency.

• Support levels: 1.2745, 1.2672, 1.2611, 1.2572, 1.2548, 1.2499
• Resistance levels: 1.2787, 1.2827, 1.2881, 1.2937

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bearish but close to the shift. The price is testing the level of priority change at 1.2787 again and again, but each time, sellers show initiative and do not let the price consolidate above. However, the probability of priority change has increased because, with each new test of the price, the level is weakening. A breakout of 1.2787 will open the way to 1.2827. Buying should be sought from the support level of 1.2745 but with confirmation in the form of buyers' reactions and short stop-losses.

Alternative scenario: if the price breaks through the resistance level of 1.2787 and consolidates above it, the uptrend will likely resume.