The Analytical Overview of the Main Currency Pairs on 2023.09.01

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0919
• Prev. Close: 1.0842
• % chg. over the last day: -0.71%

The preliminary Eurozone Consumer Price Index for August rose by 0.6% m/m to 5.3% y/y, which was stronger than expectations of 0.4% m/m and 5.1% y/y. Core inflation, which excludes food and energy prices, fell to 5.3% y/y from 5.5%. The data turned out to be mixed – core inflation is falling while the broader measure of consumer prices rose. Steady inflation, along with a robust labor market, could force the ECB to raise the rate higher this year.

Trading recommendations

• Support levels: 1.0834,1.0804
• Resistance levels: 1.0867,1.0893,1.0943,1.0983,1.1004

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price has corrected to the zone below 50% Fibonacci (discount area). As a rule, this zone is used to find buy trades. The MACD indicator has become negative, and there is still selling pressure inside the day. Buy trades can be considered from the support level of 1.0834 but with confirmation in the form of buyers’ reaction to the level. Sell trades can be considered from the resistance level of 1.0867 or 1.0893 but with confirmation in the form of a reverse initiative and a change of structure on the lower time frames.

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: 1.2711
• Prev. Close: 1.27471.2672
• % chg. over the last day: -0.31%

Institutional money continues to favor the pound’s appreciation. According to the latest data, funds’ net long positions exceed net short positions in sterling as interest rate expectations keep the pound strong. Yesterday, Bank of England economist Hugh Pill made it clear that he favors keeping rates unchanged rather than raising them, which in turn led to some weakness in the pound. Today, data on business activity in the manufacturing sector will be published in the UK. The decline in indicators may put additional pressure on the British currency.

Trading recommendations

• Support levels: 1.2617,1.2603,1.2582,1.2549,1.2520,1.2491
• Resistance levels: 1.2733,1.2746,1.2764

According to the technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The British pound corrected less than the euro, which indicates a greater resistance to the growth of the dollar. The price is now trading at the level of the moving averages. The MACD indicator has turned negative, and there is a little selling pressure intraday. Buy trades can be considered from the support level of 1.2617 or 1.2666 but with additional confirmation on the lower time frames. Sell trades are best considered after testing liquidity above 1.2746 but with confirmation in the form of a false breakout and sellers’ initiative.

Alternative scenario:

if the price breaks through the support level of 1.2562 and fixes below it, the downtrend will most likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 146.75
• Prev. Close: 145.52
• % chg. over the last day: -0.84%

Despite the rise in the dollar, the Japanese yen strengthened yesterday on the back of positive retail sales. Japanese retail sales for July rose by 2.1% m/m to 6.8% y/y, stronger than expectations of 0.8% m/m and 5.5% y/y. But other economic data was not as comforting. Japan’s preliminary industrial production data for July fell by 2.0% m/m and 2.5% y/y, worse than expectations of 1.4% m/m and 1.4% y/y. Japan’s July new housing starts data fell by 6.7% y/y, which was much worse than expectations of 1.3% y/y and weaker than the June report of 4.8% y/y. In the medium term, the Japanese yen has practically no factors for strengthening.

Trading recommendations

• Support levels: 145.33,145.00,143.54,143.26,142.64,140.98
• Resistance levels: 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 has corrected to the priority change level but cannot be consolidated below. Buyers are defending the level every time and preventing the price from consolidating below. Feeling a liquidity grab below previous extremes of the day for a jump to the upside. The MACD indicator is in the negative zone, but there is a divergence, with buying pressure building on the lower time frames. Buy trades should be sought on intraday time frames after the false breakdown of 145.33 and the change of structure. Sell trades can be considered from the resistance level of 146.53 but with confirmation in the form of a reverse initiative.

Alternative scenario:

if the price fixes below the 145.33 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: 1943.42
• Prev. Close: 1939.94
• % chg. over the last day: -0.18%

The Dollar Index rose by 0.45% on Thursday on the back of a strong US Personal Consumption Expenditures (PCE) report (0.8% m/m), which pointed to the resilience of US consumer spending. This brought optimism back into the dollar and government bonds. Gold has an inverse correlation to government bond yields, so after the rally seen over the past two weeks, precious metals prices came under pressure from long liquidations. Gold has also been hit by the liquidation of gold stocks by funds after long gold holdings in ETF funds fell to a 3-year low on Tuesday. But the medium to long-term scenario for gold remains bullish.

Trading recommendations

• Support levels: 1938.49,1924.38,1914.27,1903.87,1893.80
• 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 forming a flat accumulation and is trading at the level of moving averages. The MACD indicator has become negative, and there is sellers’ pressure inside the day. Most likely, the support level of 1938.49 will not hold the price, so it is better to buy after correction to the support level of 1924.38. It is better to sell after testing liquidity above 1947.00 but with confirmation in the form of reverse initiative and change of structure on intraday time frames.

Alternative scenario:

if the price breaks through and consolidates below the support level of 1914.21, the downtrend is likely to resume.