The Analytical Overview of the Main Currency Pairs on 2023.08.29

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0795
• Prev. Close: 1.0818
• % chg. over the last day: +0.21%

The Euro rose moderately on Monday on signs of shrinking liquidity in the Eurozone after the Eurozone’s money supply unexpectedly contracted in July by the most in 13 years. In addition, hawkish comments from ECB Governing Council spokesman Holzmann boosted bond yields and the euro exchange rate when he said he believed it was appropriate to continue raising ECB interest rates without pausing.

Trading recommendations

• Support levels: 1.0798,1.0732
• Resistance levels: 1.0842,1.0876,1.0892,1.0951,1.0983,1.1004

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price has broken the descending trend line and seeks to test the liquidity above the resistance level of 1.0842. The MACD indicator has become positive, and there is slight buying pressure intraday. Selling can be considered from the resistance level of 1.0842 but with confirmation in the form of a false breakout and structure change on the lower timeframes. Buy trades can be considered from the support level of 1.0798 but with confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks through the resistance level of 1.0877 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2578
• Prev. Close: 1.27471.2600
• % chg. over the last day: +0.17%

Yesterday was a bank holiday in the UK, so the pricing of the dollar index created the dynamics of GBP/USD. At the moment, traders are taking a cautious stance and avoiding large positions ahead of the US labor market data release this week. Given the Fed’s dependence on data, the information coming from the labor market will play a crucial role in determining the FOMC’s future actions. Strong job growth will encourage monetary tightening (GBP/USD falling), while weak job growth will reduce the prospects for further policy tightening (GBP/USD rising).

Trading recommendations

• Support levels: 1.2588,1.2549,1.2520,1.2491
• Resistance levels: 1.2653,1.2732,1.2764,1.2796,1.2913,1.2942,1.3011

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The situation is very similar to the Euro: the price has broken the downtrend line and seeks to test the liquidity above the nearest resistance level. The MACD indicator has turned positive, and there is weak buying pressure inside. Sell trades to continue the downtrend are best considered from the resistance level at 1.2653 but with confirmation in the form of sellers’ initiative. Buying can be considered from the support level of 1.2588 but with additional confirmation in the form of a false breakdown and a change of structure on the lower time frames.

Alternative scenario:

if the price breaks through the resistance level of 1.2732 and fixes above it, the uptrend will most likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 146.39
• Prev. Close: 146.53
• % chg. over the last day: +0.09%

On Monday, the Japanese yen strengthened slightly after Friday’s losses, mainly due to the decline in the dollar index. The yen fell to a 9-month low on Friday after comments from BOJ Governor Ueda that price growth remains slower than BOJ targets, indicating that the BOJ will maintain its ultra-soft monetary policy in the near term. At the moment, the Japanese yen has no fundamental factors for strengthening, except for the intervention of the Bank of Japan to prevent a strong depreciation of the currency.

Trading recommendations

• Support levels: 146.26,145.24,144.54,143.54,143.26,142.64,140.98
• Resistance levels: 146.57,146.91

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is forming a broadly volatile sideways trend. Given that yesterday, the price tested liquidity above the resistance level of 146.56, there is a high probability of a decline to the level of 146.26 or lower to distribute the grabbed liquidity. The MACD indicator has become inactive. Buy trades should be looked for after a false breakdown of 146.26 support. Sell trades can be considered from the 146.91 resistance level but with confirmation in the form of a reversal initiative.

Alternative scenario:

if the price fixes below the 144.54 support level, with a high probability that the downtrend will resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1914.25
• Prev. Close: 1919.60
• % chg. over the last day: +0.27%

Precious metals prices closed slightly higher on Monday. The decline in global bond yields on Monday was bullish for precious metals. In addition, precious metals were supported by dovish comments from central banks on Monday. On Friday, Fed Chair Powell left open the possibility of a pause in Fed rate hikes but said the Fed would “tread carefully” on whether to raise rates again. Currently, there is a 23% probability of a 25 bps rate hike at the September 20 FOMC meeting and a 67% probability of a 25 bps rate hike at the November 1 FOMC meeting.

Trading recommendations

• Support levels: 1916.71,1911.28,1903.64,1893.80
• Resistance levels: 1925.96,1930.24,1938.46

From the point of view of technical analysis, the trend on the XAU/USD currency pair is bearish. The price is trading above the moving averages. The MACD indicator is in the positive zone, but there are signs of divergence. There is still buying pressure inside the day, but it is getting weaker. It is better to buy from the support level of 1916.71 but with confirmation in the form of buyers’ initiative on the lower time frames. Sell trades are best sought after testing liquidity above 1925.96 or 1930.24, but with confirmation in the form of reverse initiative and structure change on intraday time frames.

Alternative scenario:

if the price breaks through and consolidates below the support level of 1903.64, the downtrend is likely to resume.