The Analytical Overview of the Main Currency Pairs on 2023.08.30

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0814
• Prev. Close: 1.0879
• % chg. over the last day: +0.60%

The EUR/USD pair initially declined on Tuesday after the German consumer confidence indicator fell to a 4-month low. The GfK Consumer Confidence Index fell by 0.9 to a 4-month low of minus 25.5, which was weaker than expectations of minus 24.5. But in the US session, the euro jumped on weak economic data from the US, which increased the likelihood of a pause from the Fed in September. This sent the dollar lower and risk assets such as the euro and the pound higher.

Trading recommendations

• Support levels: 1.0836,1.0804
• Resistance levels: 1.0876,1.0892,1.0929,1.0951,1.0983,1.1004

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price broke through the priority change level and consolidated above the moving average lines. The MACD indicator is in the positive zone, and there are signs of overbought. Sell deals can be considered from the resistance level of 1.0876 but with confirmation in the form of a reverse initiative. Buy trades can be considered from the support level of 1.0836 or 1.0804 but with confirmation in the form of buyers’ reaction to the level.

Alternative scenario:

if the price breaks through the support level of 1.0781 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2597
• Prev. Close: 1.27471.2643
• % chg. over the last day: +0.37%

The British pound also strengthened yesterday due to the fall in the dollar index. The Bank of England’s (BoE) outlook for the interest rate cycle remains relatively more aggressive than that of the ECB and the US Fed due to elevated inflationary pressures in the UK. Last weekend, Bank of England spokesman Broadbent said to keep rates at higher levels for an extended period of time to suppress inflation. Until the end of the year, the British pound may be more stable against the dollar and the euro.

Trading recommendations

• Support levels: 1.2603,1.2582,1.2549,1.2520,1.2491
• Resistance levels: 1.2653,1.2732,1.2764,1.2796,1.2913,1.2942,1.3011

Unlike the euro, the trend on the GBP/USD currency pair on the hourly time frame is still bearish. The price was able to consolidate above the moving averages but did not reach the priority change level. The MACD indicator has become positive, and weak buying pressure remains intraday. Sell trades are best considered from the resistance level of 1.2653 but with confirmation in the form of sellers’ initiative. Buying can be considered from the support level of 1.2603 or 1.2582 but with additional confirmation in the form of buyers’ reaction to the level and a change of structure on the lower time frames.

Alternative scenario:

if the price breaks through the resistance level of 1.2662 and fixes above it, the uptrend will most likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 146.50
• Prev. Close: 145.86
• % chg. over the last day: -0.44%

Japan’s unemployment rate unexpectedly rose to a 4-month high in July, which is dovish for the Bank of Japan (BoJ) policy. A weakening labor market risks triggering a negative spiral that will lead to a slowdown in wage growth, which is what the BoJ is aiming for. Economists expect that the yen could strengthen again in 2024, reaching 135 by the end of next year. The main risk in predicting further yen weakness over the next six months is that higher inflation and a weaker currency will trigger a stronger response in the form of currency intervention or an earlier move to a hawkish rate by the BoJ. But all of this is a long-term view. In the short term, the Japanese yen has no fundamental reasons to strengthen.

Trading recommendations

• Support levels: 145.71,145.34,145.00,143.54,143.26,142.64,140.98
• Resistance levels: 146.34,146.54,147.09

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish but is close to changing. The price corrected to the priority change level but failed to consolidate below. Buyers defended the level. But the sellers’ pressure remains intraday. The MACD indicator has turned negative, with no signs of reversal. Buy trades should be sought on intraday time frames after the false breakdown of 145.71. Sell trades can be considered from the resistance level of 146.33 or 146.34 but with confirmation in the form of a reversal initiative.

Alternative scenario:

if the price fixes below the 145.71 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: 1919.62
• Prev. Close: 1937.96
• % chg. over the last day: +0.95%

JOLTS job openings in the US for July fell by 338,000 to a 2-year low of 8.827 million, which was weaker than expectations of 9.500 million. The Conference Board Consumer Confidence Index in the US for August fell by 7.9 to 106.1, which was weaker than expectations of 116.0. The weak economic data led to a decline in bond yields and increased the likelihood that the Fed would suspend its rate hike campaign. The weakening dollar provided support for precious metals. Prices for precious metals showed strong growth on Tuesday, with gold rising to a 3-week high and silver to a 4-week high. And all conditions for further growth remain in place.

Trading recommendations

• Support levels: 1924.37,1920.02,1914.27,1903.87,1893.80
• Resistance levels: 1947.00

From the point of view of technical analysis, the trend on the XAU/USD currency pair is bullish. The price is trading above the moving averages. The MACD indicator is in the positive zone, but there are the first signs of divergence and overbought. There is still buying pressure inside the day. Buy deals are best sought after a small correction to the moving average levels as the price has deviated strongly. Sell trades are best sought after testing liquidity above 1947.00, but with confirmation in the form of a reversal initiative and structure change on intraday time frames.

Alternative scenario:

if the price breaks through and consolidates below the support level of 1914.37, the downtrend is likely to resume.