The Analytical Overview of the Main Currency Pairs on 2023.09.04

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0836
• Prev. Close: 1.0772
• % chg. over the last day: 0.59%

The US Nonfarm Payrolls rose by 187,000 in August, which was stronger than expectations of 170,000. However, the unemployment rate in August unexpectedly rose to its highest level in a year and a half, from 3.5% to 3.8%, indicating a weak labor market. The dollar index reacted with a sharp rise to this data. In addition, the dollar was supported by hawkish comments from Fed Chairman Cleveland Mester. Today is a bank holiday in the United States, so given the lack of important news in the Eurozone, volatility on the EUR/USD currency pair will be low.

Trading recommendations

• Support levels: 1.0781,1.0767,1.0767
• Resistance levels: 1.0827,1.0842,1.0893,1.0943,1.1004

The trend on the EUR/USD currency pair on the hourly time frame has changed to a downtrend. The price has consolidated below the priority change level (breakdown of the second extremum). The MACD indicator became negative, and selling pressure remained throughout the day. Since the price made a false breakdown of the 1.0781 support level, traders can consider buy trades, but with confirmation in the form of a change of structure on the lower time frames. Sell deals can be considered from the resistance level of 1.0827 or 1.0842 but with confirmation in the form of a reverse initiative. The reverse initiative means the sellers’ reaction in the form of an engulfing candlestick or when a pin bar is formed.

Alternative scenario:

if the price breaks through the resistance level of 1.0893 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2670
• Prev. Close: 1.27471.2585
• % chg. over the last day: -0.67%

Bank of England Chief Economist Hugh Pill said on Friday that the Bank of England remains concerned about “sticky” inflation as underlying price growth has yet to fall to the same extent as core inflation. He said the combination of a robust labor market and workers’ desire to catch up with inflation meant the Monetary Policy Committee should be “particularly wary of the emergence of dynamics that would lead to persistent inflation.” Pill reiterated the Bank of England’s statement that it will “follow through” on bringing inflation back to the 2% target and hinted that the Bank of England will keep interest rates high for a long time.

Trading recommendations

• Support levels: 1.2562,1.2549,1.2520,1.2491
• Resistance levels: 1.2659,1.2712,1.2733,1.2746,1.2764

According to the technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish but close to change. The British pound fell less than the euro, indicating resistance to the dollar’s rise. The price is now trading below the moving averages. The MACD indicator has become negative, and there is continued selling pressure intraday. Buy deals can be considered from the support level of 1.2562 but with additional confirmation on the lower time frames. There is a high probability of testing liquidity below 1.2549. Sell trades are best considered from the resistance level of 1.2759 but with confirmation in the form of 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: 145.50
• Prev. Close: 146.16
• % chg. over the last day: +0.45%

The Japanese yen fell against the Dollar on Friday despite positive economic data. A weakening yen benefits Japanese exporters but hurts local businesses that rely heavily on imports. Dollar drivers are weakening amid deteriorating fundamental data in the US. But at the same time, the yen strengthening seems unlikely, as the representatives of the Bank of Japan believe that more sustainable growth of the economy and prices is needed to overcome the deflationary mood, which is firmly rooted in Japan.

Trading recommendations

• Support levels: 145.69,145.39,145.00,143.54,143.26,142.64,140.98
• Resistance levels: 146.53,147.09

From the technical point of view, the medium-term trend on the currency pair USD/JPY is still bullish despite the fact that the price briefly fell below the priority change level. Buyers showed a sharp reaction in the form of unwillingness for the price to stay below the 145 level. At the moment, a false breakdown zone downward has been formed at this price level. The MACD indicator has become positive, with buyers’ pressure remaining on the lower time frames. Buy trades should be sought on intraday time frames after a pullback to the support level of 145.69 or 145.39. 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 145.00 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: 1940.00
• Prev. Close: 1939.78
• % chg. over the last day: -0.01%

The US dollar went up on Friday amid rising bond yields. Bond yields jumped after the Nonfarm Payrolls report and also on the back of a stronger-than-expected ISM manufacturing index for August. Gold has an inverse correlation to government bond yields. However, the analysts believe that Friday’s rise in the dollar has no fundamental support. In their opinion, the labor market data released on Friday showed clear signs of cooling. This data is likely to prevent the Fed from going for a rate hike in September, keeping the hope that the US economy can avoid recession. Therefore, the medium-term picture for gold remains bullish.

Trading recommendations

• Support levels: 1934.92,1924.31,1914.35,1903.87,1893.80
• Resistance levels: 1947.78,1961.06

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 positive, but the buying pressure is weak. There is a high probability of a test below the support level of 1934.92. It is better to look for sell trades from the resistance level of 1947.78 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 1914.35, the downtrend is likely to resume.