The Analytical Overview of the Main Currency Pairs on 2023.09.12

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0714
• Prev. Close: 1.0749
• % chg. over the last day: +0.32%

The weakening of the dollar on Monday supported the euro. EUR/USD gains were limited amid weaker-than-expected economic news from Italy and after the European Commission lowered its 2023 Eurozone GDP forecast, which is dovish for ECB policy. Markets rate the probability of a 25 bps rate hike at this Thursday’s ECB meeting at 38%.

Trading recommendations

• Support levels: 1.0730,1.0700,1.0659
• Resistance levels: 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 still a downtrend. The price is trading above the moving averages and forms a wide-volatile corridor. The MACD indicator has become positive, but the buying pressure is weak. Under such market conditions, buy trades can be looked for from the support level of 1.0730 but with confirmation on the lower time frames. Sell trades can be considered from the resistance level of 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: 1.2467
• Prev. Close: 1.27471.2508
• % chg. over the last day: +0.32%

Today’s focus will be on the labor market data in the UK. Private sector wage growth currently stands at 8.2% and is likely to remain unchanged, but there is a risk that the figure could fall slightly. The unemployment rate could also rise slightly. While the weak unemployment and employment change figures are positive from a Bank of England (BoE) perspective, average earnings continue to exert inflationary pressure in the UK. This factor will be of paramount importance in terms of the exchange rate, and if the upward trend continues, the hawkish rhetoric may regain strength.

Trading recommendations

• Support levels: 1.2504,1.2465,1.2449,1.2307
• Resistance levels: 1.2549,1.2611,1.2659,1.2712,1.2733,1.2746,1.2764

1.2504, 1.2465, 1.2449, 1.2307

Alternative scenario:

According to technical analysis, the GBP/USD currency pair trend on the hourly timeframe is bearish. Yesterday, the price attempted to break the flat corridor, but the market participants did not hold the movement, and there is a high probability of return. The MACD indicator has become inactive. Buy deals can be considered on intraday time frames from the support level of 1.2504, provided that buyers react to the level. Sell trades are best considered from the resistance level of 1.2549 or after the price breaks down the support level of 1.2504. In this case, a fall to 1.2465 is almost guaranteed.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 147.00
• Prev. Close: 145.57
• % chg. over the last day: -0.98%

On Monday, the yen rose to a one-week high against the dollar amid hawkish comments from Bank of Japan Governor Ueda, who said that Japan’s negative interest rate policy may end by the end of the year. In addition, the Chinese yuan strengthened against the dollar on news of better-than-expected credit growth in China and after China’s central bank (PBoC) said it would correct one-way moves in the FX market when needed. But keep in mind that due to the interest rate differential between the Bank of Japan and other leading central banks, the Japanese yen currently lacks fundamentals for growth.

Trading recommendations

• Support levels: 146.23,145.88,145.39,145.00
• Resistance levels: 146.69,147.25,147.81,148.80

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. Yesterday, the price corrected to the nearest support levels on the background of hawkish comments from the head of the Bank of Japan, but buyers immediately showed a reaction. The MACD indicator is in the negative zone, but the sellers’ pressure has disappeared. Currently, the market participants do not support the quotes’ falling. Buying deals should be sought after breaking the 146.69 resistance level but with confirmation on the lower time frames. Sell trades can be considered from the resistance level of 147.23 but with confirmation in the form of sellers’ reactions.

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: 1919.15
• Prev. Close: 1922.67
• % chg. over the last day: +0.18%

Precious metals prices showed moderate gains on Monday. The weakening of the dollar on Monday contributed to the growth of gold and silver prices. In addition, lower expectations of interest rate hikes by the ECB and the US Federal Reserve supported gold. Government bond yields are now at peak levels, and they will start to fall as soon as banks stop raising rates. Since gold has an inverse correlation to government bond yields, the medium and long-term picture for gold remains very promising.

Trading recommendations

• Support levels: 1920.30,1914.26,1903.87,1893.80
• Resistance levels: 1928.64,1934.71,1941.79,1947.81,1961.06.

From the point of view of technical analysis, the trend on the XAU/USD currency pair is bullish. Compared to yesterday, the situation has not changed much. The corrective movement seems to be coming to an end. At the moment, the price is trading in a wide-volatility corridor, with the pressure of buyers prevailing inside it. The MACD indicator is inactive. Under such market conditions, buy trades can be considered from the support level of 1920.30, but with confirmation. Sell trades are better to look for from the resistance level of 1928.64 or 1934.71, 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 1914.26, the downtrend will likely resume.