The Analytical Overview of the Main Currency Pairs on 2023.08.25

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0862
• Prev. Close: 1.0809
• % chg. over the last day: -0.49%

The dollar index rose to a 2.5-month high on Thursday. The dollar was supported on Thursday by better-than-expected economic news from the United States. Weekly initial jobless claims unexpectedly fell by 10,000 to 230,000, indicating a strengthening labor market. In addition, hawkish comments from the Federal Reserve pushed up bond yields. They supported the dollar after Boston Fed President Collins and former St. Louis Fed President Bullard said that further rate hikes may be needed to control inflation.

Trading recommendations

• Support levels: 1.0767,1.0732
• Resistance levels: 1.0813,1.0875,1.0892,1.0951,1.0983,1.1004,1.1046,1.1102

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price broke through the support level of 1.0795 and rushed lower. The MACD indicator is in the negative zone, and the price is trading at the level of moving averages. Sell trades can be considered from the resistance level of 1.0813 or the moving average lines but with confirmation in the form of sellers’ reactions. Buy trades can be considered from the support level of 1.0867 but with confirmation in the form of a structure change on the lower timeframes.

Alternative scenario:

if the price breaks through the resistance level of 1.0875 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2715
• Prev. Close: 1.27471.2799
• % chg. over the last day: -0.92%

On Thursday, the British pound sterling closed at its lowest level against the US dollar since mid-June. A hawkish stance from Federal Reserve officials, along with weak economic data in the United Kingdom (UK), triggered a drop in GBP/USD. The publication of weak UK retail sales data and Wednesday’s disastrous PMI data, which fell below the 50 mark, considered the expansion/contraction level, reignited recession fears.

Trading recommendations

• Support levels: 1.2549,1.2520,1.2491
• Resistance levels: 1.2584,1.2566,1.2726,1.2880,1.2913,1.2942,1.3011,1.3072

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price confidently broke through the priority change level and consolidated below. Now, the price is trading below the moving averages. The MACD indicator is deeply negative with oversold signs. Buy traders can be considered from the support level of 1.2549 but with additional confirmation in the form of a false breakdown of the level and a structure change on the lower timeframes. Sell trades are best considered from the resistance level of 1.2584 or 1.2624 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks through the resistance level of 1.2725 and fixes above it, the uptrend will most likely be renewed.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 144.78
• Prev. Close: 145.81
• % chg. over the last day: +0.71%

The Japanese yen retreated on Thursday amid a stronger dollar and rising bond yields. In addition, the Nikkei225 stock index (JP225) rising to a one-week high on Thursday reduced demand for the yen as a safe haven. Also, traders should remember that the yen is influenced by Central Bank divergence: the US Fed, Bank of England, and ECB are still raising interest rates, while the Bank of Japan maintains QE and record low rates.

Trading recommendations

• Support levels: 145.24,145.00,144.41,143.54,143.26,142.64,140.98
• Resistance levels: 146.13,146.41,146.57,146.91

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price formed a false breakdown zone below the level of 145.00, and this zone completed the corrective movement. The price is trading above the moving averages, and the MACD indicator is in the positive zone with no signs of reversal. There is still buying pressure inside the day. Buy trades should be sought after a pullback to the 145.24 support level, as the price has deviated strongly. Sell trades can be considered from the resistance level of 146.11 or 146.57, but with confirmation in the form of a false breakout, as both levels have already been tested.

Alternative scenario:

if the price fixes below the 144.41 support level, with a high probability that the downtrend will be renewed.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1916.72
• Prev. Close: 1916.78
• % chg. over the last day: +0.01%

Precious metals prices closed slightly lower on Thursday. The rally of the dollar index on Thursday put pressure on metals. Also negative for precious metals was the rise in T-note bond yields on Thursday. In addition, a bearish factor for gold prices is the continued liquidation of long positions in ETF funds. Finally, hawkish Fed comments had a negative impact on precious metals prices after Boston Fed President Collins and former St. Louis Fed President Bullard said that the US Fed may need additional rate hikes to tame inflation.

Trading recommendations

• Support levels: 1911.69,1914.42,1904.33,1893.80
• Resistance levels: 1919.91,1922.71,1933.24,1938.46

From the point of view of technical analysis, the trend on the XAU/USD currency pair is bearish. The price is forming a flat corridor. Inside the day sales prevail, there is a high probability of testing liquidity below 1911.69. The indicator has become inactive. It is better to look for buy trades after a false breakdown of the support level 1911.69 but with confirmation in the form of a structure change on the lower timeframes. In case of a deeper correction, the price should wait at 1904.33. Sell trades are better to look for from the resistance level of 1919.91 but with confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks through and consolidates below the support level of 1893.80, the downtrend is likely to resume.