Pound and Euro Test Key Support Levels: Is a Breakout Possible?

European currencies are showing surprising resilience. Despite the general strengthening of the dollar and strong macroeconomic data from the US, EUR/USD and GBP/USD continue to trade above strategically important levels:

- EUR/USD has been testing 1.0660 for over three weeks but cannot establish itself below this level.
- GBP/USD buyers have been holding off sellers for a second week at the 1.2610-1.2600 level.

EUR/USD

The recent parliamentary elections in France, with the first round concluding last Sunday, have contributed to a slight strengthening of the euro. The pair opened with a small price gap and managed to strengthen by over 60 pips within a few hours. Experts attribute the rise in the single European currency to the possibility that Le Pen's far-right party might outpace President Emmanuel Macron's centrist alliance and the left-wing "New People's Front" with fewer votes than needed for an absolute majority after the second and final round of voting.

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S&P 500: Mid-Year Prospects Analysis

As shown by the daily chart of the S&P 500 (US SPX 500 mini on FXOpen):

→ Since the beginning of 2023, the price has been moving in an upward blue channel. To date, the increase has been over 42%;

→ Since the start of 2024, the price has formed a steeper upward channel (shown in orange). In the first half of the year, the growth has exceeded 14%.

How realistic is it for bullish sentiment to persist? And what might the index quotations be by the end of 2024?

Yahoo Finance reports a decidedly bearish outlook for the S&P 500 (US SPX 500 mini on FXOpen) at the end of 2024, held by Marko Kolanovic, the chief strategist at JPMorgan Chase & Co. He cites the following factors:

→ Economic slowdown;

→ Downward revision of company profits;

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Market Analysis: AUD/USD and NZD/USD Set for Steady Gains

AUD/USD is correcting gains from the 0.6735 zone. NZD/USD is showing positive signs and might attempt a fresh increase above 0.6120.

Important Takeaways for AUD USD and NZD USD Analysis Today

• The Aussie Dollar started a downside correction from 0.6735 against the US Dollar.

• There is a key bullish trend line forming with support at 0.6700 on the hourly chart of AUD/USD at FXOpen.

• NZD/USD is gaining pace above the 0.6100 support zone.

• There is a major bullish trend line forming with support at 0.6100 on the hourly chart of NZD/USD at FXOpen.

AUD/USD Technical Analysis

On the hourly chart of AUD/USD at FXOpen, the pair started a fresh increase from the 0.6635 support. The Aussie Dollar was able to clear the 0.6680 resistance to move into a positive zone against the US Dollar.

There was a close above the 0.6700 resistance and the 50-hour simple moving average. Finally, the pair tested the 0.6735 zone. A high was formed near 0.6733 and the pair is now correcting gains.

There was a move below the 0.6720 level. The pair declined below the 23.6% Fib retracement level of the upward move from the 0.6634 swing low to the 0.6733 high. On the downside, initial support is near a key bullish trend line at 0.6700.

The next major support is near the 50% Fib retracement level of the upward move from the 0.6634 swing low to the 0.6733 high at 0.6680.

If there is a downside break below the 0.6680 support, the pair could extend its decline toward the 0.6660 level. Any more losses might signal a move toward 0.6635.

On the upside, the AUD/USD chart indicates that the pair is now facing resistance near 0.6720. The first major resistance might be 0.6735. An upside break above the 0.6735 resistance might send the pair further higher.

The next major resistance is near the 0.6760 level. Any more gains could clear the path for a move toward the 0.6800 resistance zone.

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US Dollar Consolidates Ahead of Nonfarm Payrolls: Possible Scenarios

In anticipation of the release of one of the most important reports, the NonFarm Payrolls, the US currency has suffered losses across almost all fronts. Earlier this week, the EUR/USD currency pair tested and settled above 1.0800, GBP/USD traded above 1.2700, and USD/CAD fell back to 1.3610.

Today, we might see either continued corrective pullbacks or a resumption of medium-term trends if the employment data deviates from expectations. So, what should we expect?

• Experts forecast a decline in average earnings to 0.3% (if the figure comes in at last month's level or higher, it could strengthen the US currency).

• The number of new jobs in June is expected to be 194K (if the figure is significantly higher or lower than the forecast, it could cause volatility in major currency pairs).

USD/CAD

Dollar buyers in the USD/CAD pair failed to overcome resistance at 1.3750. A rebound from this level led to the formation of a "bearish engulfing" pattern on the daily timeframe. According to the technical analysis of USD/CAD, the price has approached the lower boundary of the medium-term flat corridor at 1.3610. If the price consolidates below this level in the coming trading sessions, the downward movement could continue towards 1.3520-1.3480. A rebound from 1.3610 could lead to a retest of 1.3700-1.3660.

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FTSE 100 Index Behaves Bullishly Amid Elections

On Friday, the FTSE 100 index rose by 0.4% to 8273 points, continuing its 0.9% rise on Thursday. According to Trading Economics, the centre-left Labour Party, as expected, won the parliamentary elections and secured a majority, ousting the Conservative Party after 14 years in power.

The Labour Party emphasised the importance of economic stability in its decisions and committed to strict budgetary spending rules.

Prime Minister Sunak conceded defeat, and the UK stock market positively received the official election results. As shown by the chart, the FTSE 100 index (UK 100 on FXOpen) has risen by approximately 1.9% from the July 2nd low.

However, the situation remains unfavourable for the bulls.

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The EUR/GBP rate fluctuates under the influence of political factors

On 10th June, we wrote that the EUR/GBP rate fell to a 21-month low after the European Parliament elections. Political fundamental factors continue to influence this pair.

As Reuters reports:

→ The euro is down on Monday amid unexpectedly strong results for the left-wing forces in the French elections, which has created new uncertainty regarding the country’s financial outlook.

→ The pound sterling has risen to a 3.5-week high against the US dollar, as the British currency strengthens following the Labour Party’s decisive victory in last week’s elections, ending 14 years of Conservative rule.

Therefore, it is not surprising that a bearish gap formed on the EUR/GBP chart at the start of the week – however, bulls managed to recoup the decline during the Asian session. How will events unfold from here?

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XAU/USD Analysis: Gold Price Falls from Six-Week High

As shown by the XAU/USD chart, on Friday, 5 July, the price of gold rose above the $2390 level for the first time since 22 May. According to Reuters, this increase occurred following the release of key US employment data, which indicated a softening labour market, raising expectations of a Federal Reserve interest rate cut in September.

However, yesterday, Monday, the gold price fell to $2360 per ounce – the level from which Friday's ascent began. This suggests that the bulls were unable to maintain control over the market, which indicates a bearish sign.
Could the Gold Price Decline in the Coming Days?

From a technical analysis perspective of the XAU/USD chart:

• The gold market has clear support around the $2300 area. Each time the price fell below this level in June (as indicated by arrows), it quickly rebounded upwards, demonstrating sustained demand.

• Price action since April provides enough reference points to establish a descending channel (shown in red). The recent bearish reversal returned the price within this channel, reinforcing resistance from its upper boundary.

• There is also reason to believe that the bullish breakout of local resistance (shown in black) might be false.

Therefore, signs of seller activity in the $2380-2400 range suggest that the gold price could continue to decline towards the important support at $2300.

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Analysis of NZD/USD: The "kiwi" sharply fell after the central bank's decision

The Reserve Bank of New Zealand (RBNZ) kept the interest rate unchanged at 5.5% on Wednesday.

The decision to maintain the interest rate was anticipated. However, market participants noted a shift in the tone of the RBNZ's official statements. In May, the bank indicated that the tight policy would continue as long as necessary, but now it is open to easing the restrictive monetary policy if inflation slows down.

As a result, market participants are now considering the possibility of a nearer-term rate cut, which led to a decline in the New Zealand dollar relative to other currencies.

Specifically, against the US dollar, the "kiwi" fell by approximately 0.75%.

Will the decline continue as the situation develops?

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Market Analysis: EUR/USD Jumps, USD/JPY Bulls Seem Unstoppable

EUR/USD is climbing higher above the 1.0800 level. USD/JPY surged above the 160.00 and 161.40 resistance levels.

Important Takeaways for EUR/USD and USD/JPY Analysis Today

• The Euro started a decent increase above the 1.0780 pivot level.

• There is a key bullish trend line forming with support near 1.0820 on the hourly chart of EUR/USD at FXOpen.

• USD/JPY climbed higher above the 160.50 and 161.40 levels.

• There is a connecting bullish trend line forming with support near 161.55 on the hourly chart at FXOpen.

EUR/USD Technical Analysis

On the hourly chart of EUR/USD at FXOpen, the pair started a fresh increase from the 1.0710 zone. The Euro cleared a few key hurdles near 1.0780 to move into a positive zone against the US Dollar.

The pair settled above the 1.0800 level and the 50-hour simple moving average. A high was formed at 1.0845 and the pair is now consolidating gains. There was a test of the 23.6% Fib retracement level of the upward move from the 1.0710 swing low to the 1.0845 high.

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GBP/USD Hits Four-Month High Following GDP Growth News

day, the UK Office for National Statistics published data showing an increase in GDP.

According to Forex Factory:

→ A month ago, GDP was at 0.0% month-on-month;

→ This month, analysts had forecasted growth of 0.2%;

→ Actual growth reached 0.4%.

This news should be welcomed by the Labour Party, which has come into power with ambitious plans for economic development.

On the other hand, how will the Bank of England respond? The GDP growth might provide an argument for maintaining high interest rates for a longer period to ensure that fears of a new inflationary surge do not materialise.

As Bloomberg reports, markets currently assess the likelihood of a rate cut at the next Bank of England meeting on 1 August at just under 50%.

Financial markets reacted with a rise in the sterling's value against other currencies. The GBP/USD rate is at its highest level since early March.
Will the Growth Continue?

The GBP/USD chart shows that the price is in a rally, having risen by 1.7% since the beginning of July.

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Market Analysis: GBP/USD Eyes 1.3000 While EUR/GBP Struggles

GBP/USD is gaining pace above the 1.2900 resistance. EUR/GBP declined and is now consolidating losses above the 0.8400 region.

Important Takeaways for GBP/USD and EUR/GBP Analysis Today

• The British Pound is attempting a fresh increase above 1.2950.

• There is a key bullish trend line forming with support near 1.2910 on the hourly chart of GBP/USD at FXOpen.

• EUR/GBP is trading in a bearish zone below the 0.8440 pivot level.

• There was a break above a connecting bearish trend line with resistance near 0.8425 on the hourly chart at FXOpen.

GBP/USD Technical Analysis

On the hourly chart of GBP/USD at FXOpen, the pair remained well-bid above the 1.2750 level. The British Pound started a decent increase above the 1.2850 zone against the US Dollar.

The bulls were able to push the pair above the 50-hour simple moving average and 1.2900. The pair even climbed above 1.2925 and traded as high as 1.2949. Recently, there was a minor decline below the 23.6% Fib retracement level of the upward move from the 1.2775 swing low to the 1.2949 high, but the bulls were active above 1.29700.

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Analysis of USD/JPY: Was There an Intervention?

Yesterday’s news of slowing inflation in the US sharply weakened the dollar, anticipating the Federal Reserve’s monetary easing. In the first 15 minutes after the data release:

→ EUR/USD rose by approximately 0.45% to the psychological level of 1.09;

→ GBP/USD increased by approximately 0.55%, reaching a 2024 high.

Conversely, USD/JPY fell, with a more aggressive movement. As the chart shows, the dollar weakened against the yen by about 1.8% in the first 15 minutes after the release. This suggests that amidst the US news, the Bank of Japan intervened to support its currency, which hadn’t fallen below 160 yen per USD since June 26.

Reuters reports that Tokyo’s chief currency diplomat, Masato Kanda, stated on Friday that authorities would take necessary measures in the currency market but declined to comment on whether they had intervened.

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