The Analytical Overview of the Main Currency Pairs on 2023.08.22

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0865
• Prev. Close: 1.0894
• % chg. over the last day: +0.26%

The weakening of the dollar on Monday supported the euro. In addition, the rise in European government bond yields was a favorable factor for EUR/USD. On Monday, the Bundesbank published its monthly report, which stated that the German economy continues to be weak. Still, no further decline in production is forecast. Producer prices (reflecting inflation between production) in Germany fell sharply in July, which will weigh on the ECB ahead of its September meeting, which is harmful to the euro.

Trading recommendations

• Support levels: 1.0889,1.0858,1.0835,1.0795
• Resistance levels: 1.0951,1.0983,1.1004,1.1046,1.1102,1.1198,1.1227

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The MACD indicator has become positive, and the price is already trading above the moving averages. Sell trades can be considered from the resistance level of 1.0951 but with confirmation in the form of sellers’ reactions. Buy trades can be considered from the support level of 1.0889 but with confirmation in the form of a change of structure on the lower timeframes.

Alternative scenario:

if the price breaks through the resistance level of 1.0951 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2727
• Prev. Close: 1.27471.2754
• % chg. over the last day: +0.21%

This week, few economic events are expected in the UK; thus, the US Dollar will bring the main dynamics in GBP/USD pricing. At the moment, the probability that the US Fed will not raise rates again this year is more than 60%. Two weeks earlier, this probability was more than 75%. At the same time, analysts expect at least two more interest rate hikes from the Bank of England. Thus, reducing the differential in rates will contribute to the growth of GBP/USD quotes in the medium term.

Trading recommendations

• Support levels: 1.2744,1.2714,1.2666,1.2646
• Resistance levels: 1.2796,1.2880,1.2913,1.2942,1.3011,1.3072

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price is trading above the moving averages. The MACD indicator has become positive. There is buying pressure during the day, so further upward movement is expected. Buy deals can be considered from the support level of 1.2744 but with additional confirmation on the lower timeframes. Sell trades are best considered from the resistance level of 1.2796 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks through the support level of 1.2666 and fixes below it, the downtrend will most likely be renewed.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 145.29
• Prev. Close: 146.21
• % chg. over the last day: +0.63%

Talks about the BOJ intervention subsided after Japan’s Finance Minister Shun’ichi Suzuki said that unwanted volatility in the exchange rate is more important than its level. This admission has given USD/JPY traders a target of around 150 to test the Finance Ministry’s resolve. An update from JP Morgan indicates interest in the 150 mark as a level that could trigger currency intervention.

Trading recommendations

• Support levels: 145.00,144.41,143.54,143.26,142.64,140.98,140.71,139.57
• Resistance levels: 146.55,146.55,146.91

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading at the level of moving averages. The indicator has returned to the positive zone, although the indicator momentum is downward. But despite this, the price is not showing signs of buyers’ weakness. The most suitable level for buying is the support level of 145.85 but with confirmation in the form of buyers’ initiative on the lower timeframes. In the case of currency intervention, the fall may occur to 144.41 or 143.54. Sell trades can be considered from the resistance level of 146.55, but with confirmation in the form of a false breakout, as the level has 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: 1889.19
• Prev. Close: 1894.28
• % chg. over the last day: +0.27%

Precious metals prices rose on Monday, with silver hitting a 2-week-high. A weak dollar on Monday was bullish for metals prices. But fundamentally, gold remains under pressure and could suffer further losses if Fed Chairman Jerome Powell uses a symposium in Jackson Hole to reiterate that the Central Bank is entirely focused on keeping inflation in check. The annual meeting of central bankers will be held from August 24-26 under the title “Structural Shifts in the Global Economy” and will include a keynote address by Fed Chairman Powell.

Trading recommendations

• Support levels: 1890.06,1884.66,1854.17,1843.69,1835.37
• Resistance levels: 1895.76,1903.50,1911.51,1923.24

From the point of view of technical analysis, the trend on the XAU/USD currency pair is bearish. The price is trying to break through the descending channel, but it is necessary to consolidate above the 1895.76 resistance level for this purpose. The MACD indicator has become positive. Buying pressure prevails throughout the day. It is better to buy after a pullback to the support level of 1890.06. Sell deals are better to consider from the resistance level of 1895.76, but with confirmation in the form of a reverse initiative, while the price is tightly pressed to the level with a breakout purpose. In case of a breakout of 1895.76, traders should expect the price to test the liquidity behind the resistance level of 1903.50.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 1911.51, the uptrend is likely to start.