The Analytical Overview of the Main Currency Pairs on 2023.09.14

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0749
• Prev. Close: 1.0728
• % chg. over the last day: -0.20%

The ECB will hold a monetary policy meeting today. The probability of a 25bp ECB rate hike rose to 64% from 46% a day earlier after Reuters reported that the ECB’s inflation forecasts to be released today will remain above 3% in 2024, reinforcing support for a more hawkish ECB policy. But even if the ECB decides not to raise rates today, a rate hike is almost guaranteed at the next meeting. This situation will favor the growth of the European currency in the medium term.

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: 1.2488
• Prev. Close: 1.27471.2489
• % chg. over the last day: +0.01%

The GBP/USD quotes have been declining against some of its peers in recent weeks, with no signs of a reversal yet. And the latest data on the labor market, manufacturing, and GDP did little to change that. The UK economy contracted by 0.5% in July, adding to fears of a recession in the year’s second half. This means that the Bank of England’s forecast of 0.4% economic growth in the third quarter is unlikely to be met. This is likely the main reason why Bank of England Governor Andrew Bailey sharply adopted a dovish stance last week, stating that the Bank of England is “much closer” to ending its tightening cycle.

Trading recommendations

• Support levels: 1.2449,1.2307
• Resistance levels: 1.2502,1.2549,1.2611,1.2659,1.2712,1.2733,1.2746,1.2764

According to technical analysis, the GBP/USD currency pair trend on the hourly time frame is bearish. The price is still forming a broadly volatile flat. The MACD indicator has become inactive. Buy deals can be considered on intraday time frames from the support level of 1.2449, provided buyers react to the level. Buying can also be looked for on intraday timeframes if the resistance level of 1.2502 is broken, which keeps the price from rising for the third session in a row. Sell trades are best considered from the resistance level of 1.2502 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: 147.07
• Prev. Close: 147.25
• % chg. over the last day: +0.25%

Yesterday’s economic data was mixed for the yen. On the downside, Japan’s PPI declined to 3.2% y/y in August from 3.4% y/y in July, which was better than expectations of 3.3% y/y. The decline in inflationary pressures is unacceptable for the BoJ, which aims to accelerate inflation to a sustainable level. On the other hand, the Q3 manufacturing business conditions index rose to its highest level in almost 2 years. But in general, the divergence in the positions of central banks continues to put pressure on the yen.

Trading recommendations

• Support levels: 146.92,145.88,145.39,145.00
• Resistance levels: 147.32,147.81,148.80

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price closed the gap yesterday, which was formed on the week opening. And the sellers’ reaction followed. The MACD indicator became negative. Buy trades should be looked for from the support level of 146.92. Sell trades can be sought intraday from the resistance level of 147.31.

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: 1912.89
• Prev. Close: 1908.79
• % chg. over the last day: -0.21%

US inflation data came out mixed yesterday. The overall inflation rate rose from 3.2% to 3.7% (3.6% forecast) on an annualized basis. But core inflation, which excludes food and energy prices, fell to 4.3% y/y from 4.7% y/y. Following the report, markets put the odds of a 25 bps rate hike at the September 20 FOMC meeting at 3% and a 25 bps hike at the November 1 FOMC meeting at 42%. The probabilities have fallen sharply, with rising inflation expectations increasing demand for precious metals as an inflation hedge, so the report for gold is more positive than negative.

Trading recommendations

• Support levels: 1903.87,1893.80
• Resistance levels: 1919.04,1930.75,1934.71,1941.79,1947.81,1961.06

From the point of view of technical analysis, the trend on the XAU/USD currency pair has changed to bearish. The price is trading below the moving averages and is forming a wide, volatile flat. The MACD indicator is in the negative zone, but the sellers’ pressure is weakening due to divergence. There is a high probability of liquidity testing below 1903.87. It is better to look for sell trades intraday or from the resistance level of 1919.04 but with confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 1930.75, the uptrend will likely resume.