The Analytical Overview of the Main Currency Pairs on 2023.09.07

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0722
• Prev. Close: 1.0726
• % chg. over the last day: +0.04%

The ECB’s hawkish comments on Wednesday helped keep the Euro from falling too much. Peter Kažimír, a representative of the ECB Governing Council, said that the ECB needs to raise interest rates again to make sure inflation returns to 2%, and a rate hike in September is preferable to a later increase. Another representative of the ECB Governing Council, Klaas Knot, also warned that markets may be underestimating the likelihood of the ECB raising rates next week.

Trading recommendations

• Support levels: 1.0714,1.0659
• Resistance levels: 1.0767,1.0781,1.0827,1.0842,1.0881,1.0943,1.1004

The trend on the EUR/USD currency pair on the hourly time frame is a downtrend. The price has reached the daily support level and is now forming a flat accumulation. The MACD indicator is in the negative zone, but the selling pressure is weak, while the divergence has increased. Under such market conditions, buy trades can be looked for from the support level of 1.0714 but with confirmation on the lower time frames. Sell traders can be considered from the resistance level of 1.0767 or 1.0781 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: 1.2564
• Prev. Close: 1.27471.2506
• % chg. over the last day: -0.46%

The British pound declined sharply against the dollar yesterday and fell to a three-month low. Bank of England Governor Andrew Bailey suggested at a hearing before the Senate that UK interest rates may not need to be raised again, saying that a “marked” decline in inflation is likely this year and that monetary policy is probably “near the top of the cycle.” This is extremely negative for the British currency, as prior to the hearing, analysts were expecting at least two rate hikes from the Bank of England at 0.25%.

Trading recommendations

• Support levels: 1.2491,1.2458,1.2307
• Resistance levels: 1.2549,1.2611,1.2659,1.2712,1.2733,1.2746,1.2764

According to technical analysis, the GBP/USD currency pair trend on the hourly time frame is bearish. The British pound reached the daily support level, but the reaction of buyers is weak. Now, the price is forming a flat accumulation, and there is a high probability of a price decline to the 1.2458 level. The MACD indicator is in the negative zone but with signs of divergence. Buy trades can be considered from the support level of 1.2491 or 1.2458 but with additional confirmation on the lower time frames in the form of impulse initiative of buyers. Sell trades are best considered from the resistance level of 1.2549 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks through the resistance level of 1.2642 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 147.64
• Prev. Close: 147.65
• % chg. over the last day: +0.01%

Japan’s chief currency diplomat, Masato Kanda, warned that Tokyo sees evidence of unwanted movements in the currency market and claims that fundamentals cannot explain such movements. The well-known ‘carry trade,’ utilizing the interest rate differential between the two currencies, has been going on for a long time, with markets still anticipating the likelihood of another 25bp Fed rate hike before the end of the rate hike cycle. Warnings from Tokyo suggest possible intervention. Analysts see the 150 mark as a level above which the BoJ could intervene. The USD/JPY price has already passed the first intervention level seen in 2022, and the second level is below 152.

Trading recommendations

• Support levels: 147.41,147.03,146.23,145.69,145.39,145.00
• Resistance levels: 147.81,148.80

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price starts to form a wide volatile corridor with the boundaries of 147.03-147.71. At the same time, buyers’ pressure prevails inside the accumulation. The MACD indicator is in the positive zone but without signs of bullish pressure. Buying trades should be sought on intraday time frames after a pullback to the support level of 147.41. But it should be understood that it will be an entry in the middle of the accumulation. Such trades are considered highly risky. In case of a stronger decline, expect the price at the 147.03 support level. Sell trades can be considered from the 147.81 resistance level but with confirmation in the form of a false breakout and change of structure on the lower time frames.

Alternative scenario:

if the price consolidates below the support level of 145.00, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1925.84
• Prev. Close: 1916.63
• % chg. over the last day: -0.47%

Precious metals prices closed moderately lower on Wednesday, with gold falling to a one-week low and silver to a 2-week low. The dollar index rally to a 5-month high on Wednesday was bearish for metals. In addition, the rise in global bond yields on Wednesday had a negative impact on precious metals prices. The US economic news on Wednesday supported the dollar after the ISM Services Business Activity Index for August unexpectedly increased by 1.8 to the maximum for 6 months value of 54.5.

Trading recommendations

• Support levels: 1914.37,1903.87,1893.80
• Resistance levels: 1934.71,1941.79,1947.81,1961.06

From the point of view of technical analysis, the trend on the XAU/USD currency pair is bullish. But the price is trading below the moving averages for the third consecutive session and approached the priority change level. The MACD indicator remains in the negative zone, but the divergence towards buying is increasing. Under these market conditions, buy trades can be considered after an impulsive breakout of the downtrend line. Sell trades are better to look for from the resistance level of 1928.63 or 1934.63 but with confirmation in the form of a reverse initiative and change of structure on intraday time frames.

Alternative scenario:

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