The Analytical Overview of the Main Currency Pairs on 2023.08.23

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0890
• Prev. Close: 1.0844
• % chg. over the last day: -0.42%

Today, the data on business activity in Eurozone countries will be published. According to forecasts, the downturn in the manufacturing sector may deepen and negatively affect the larger service sector. The euro has been ignoring negative economic data for months now, focusing on the ECB rate hike, but that can’t last forever. Countries like Germany and the Netherlands are already in recession. If PMI business activity data shows a sharp decline, the European Central Bank (ECB) could press for a pause in September, which would come as a surprise for the euro.

Trading recommendations

• Support levels: 1.0835,1.0795
• Resistance levels: 1.0874,1.0879,1.0951,1.0983,1.1004,1.1046,1.1102

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The selling pressure has increased sharply ahead of important business activity data and the annual symposium in Jackson Hole. The MACD indicator has turned negative, and the price is already trading below the moving averages. Sell trades can be considered from the resistance level of 1.0874 or 1.0897 but with confirmation in the form of sellers’ reactions. Buy trades can be considered from the support level of 1.0835 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: 1.2753
• Prev. Close: 1.27471.2731
• % chg. over the last day: -0.17%

The stability of the British pound against the US dollar continues. The Bank of England (BoE) continues its aggressive cycle of interest rate hikes. Money markets favor a 25bps rate hike in September, but the probability of this has changed from 92% to 80%, with a high likelihood of a rate hike of 0.5% at once. Also, today, the UK will publish data on PMI business activity in the manufacturing and services sectors. A decline in the indicators will partially limit the Bank of England in terms of aggressiveness.

Trading recommendations

• Support levels: 1.2714,1.2666,1.2646
• Resistance levels: 1.2755,1.2796,1.2880,1.2913,1.2942,1.3011,1.3072

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price trades at the level of moving averages and a wide-volatile corridor with elements of upward pressure is formed. The MACD indicator became negative, there is sellers’ pressure throughout the day, but the price has reached the lower boundary of the corridor. Buy trades can be considered from the support level of 1.2714, but with additional confirmation on the lower time frames as the level has already been tested. Sell trades are best considered from the resistance level of 1.2755 or 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: 146.16
• Prev. Close: 145.88
• % chg. over the last day: -0.20%

The yen gained moderately against the dollar on Tuesday. The yen gained support on Tuesday after the 10-year JGB government bond yield soared to a 9-year-high. The Bank of Japan is buying Japanese bonds at a record pace this year as it tries to keep long-term bond yields low as part of its yield curve control program. An update from JP Morgan indicates analysts’ interest in the 150 yen per dollar mark as a level that could trigger currency intervention.

Trading recommendations

• Support levels: 145.53,145.00,144.41,143.54,143.26,142.64,140.98
• 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 MACD indicator has become inactive, and the price is starting to form a price corridor. Under such market conditions, the most suitable level for buying is the support level of 145.53, but with confirmation in the form of buyers’ initiative on the lower timeframes, as the level has already been tested. In the case of currency intervention, the fall could reach 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 also 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: 1894.21
• Prev. Close: 1897.53
• % chg. over the last day: +0.17%

Gold prices returned to the $1900 mark in early European trading thanks to a decline in the US Dollar Index and US Treasury yields. But recently, there has been increasing talk that the Federal Reserve will hold another rate hike this year, even as inflation numbers are falling. Given this trend and rising yields in the US, ahead of the Jackson Hole symposium, the US dollar may get additional support at this stage, which is harmful to gold.

Trading recommendations

• Support levels: 1893.83,1884.66,1854.17,1843.69,1835.37
• Resistance levels: 1901.49,1904.38,1911.51,1923.24

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 yesterday the attempt was unsuccessful. The price formed a false breakout zone, which now acts as a resistance level. The MACD indicator is in the positive zone, and intraday buying pressure prevails. It is better to buy after a pullback to the support level of 1893.83. Sell trades are best sought from the resistance level of 1901.49 but with confirmation in the form of a reverse initiative. In case of a breakout of 1904.38, traders should expect the price to test the liquidity behind the resistance level of 1911.55.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 1911.55, the uptrend will likely start.