The Analytical Overview of the Main Currency Pairs on 2023.09.15

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0727
• Prev. Close: 1.0642
• % chg. over the last day: -0.79%

The European Central Bank unexpectedly raised the interest rate by 0.25% to 4.5% at yesterday’s meeting but clarified that this is the maximum level to which rates will rise in this cycle. Such data collapsed the Euro to a 3-month low against the dollar. In addition, the ECB’s actions to lower the Eurozone’s GDP forecast for 2024 put additional pressure on the Euro. The ECB lowered the Eurozone GDP forecast for 2023 to 0.7% from the previous forecast of 0.9% and raised the inflation forecast for 2023 to 5.6% from the previous forecast of 5.4%. The 25 bps rate cut is largely priced into prices through June 2024. Financial markets took these forecasts in a dovish light despite the rate hike.

Trading recommendations

• Support levels: 1.0635
• Resistance levels: 1.0730,1.0768,1.0842,1.0881,1.0943,1.1004

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is trading below the moving averages but has reached the daily support level. The indicator is deeply negative, with no signs of reversal. There is a high probability of another update of the low. Under such market conditions, buy trades can be sought from the support level of 1.0635 but with confirmation on the lower time frames. It is not recommended to enter against the trend without buyers’ initiative. Sell deals can be considered after a pullback to the moving averages as the price has deviated strongly.

Alternative scenario:

if the price breaks through the resistance level of 1.0768 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2480
• Prev. Close: 1.27471.2407
• % chg. over the last day: -0.59%

The British pound declined yesterday due to the strengthening of the dollar. The Dollar Index rose by 0.59% on Thursday and hit a 6-month high on the back of better-than-expected US economic reports. Weekly US initial jobless claims rose by 3,000 to 220,000, indicating a robust labor market. US retail sales for August rose by 0.6% m/m, stronger than expectations of 0.1% m/m. All these data point to the fact that the US Fed will still manage to make a “soft landing” of the economy. But taking into account that the probability of the US Fed rate hike this year has fallen below 40%, the dollar growth is limited.

Trading recommendations

• Support levels: 1.2392,1.2307
• Resistance levels: 1.2461,1.2503,1.2547,1.2611,1.2659,1.2712,1.2733

According to technical analysis, the GBP/USD currency pair trend on the hourly time frame is bearish. The price is trading below the moving averages. The MACD indicator is in the negative zone with no signs of divergence. Buying can be considered on intraday time frames from the support level of 1.2392, provided buyers react to the level. Sell trades are best considered from the resistance level of 1.2461 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks through the resistance level of 1.2547 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 147.40
• Prev. Close: 147.60
• % chg. over the last day: +0.14%

Real wages in Japan have been declining for the last 16 months since July last year, which complicates the situation for the normalization of monetary policy, which the Bank of Japan actively seeks. Japanese Prime Minister Fumio Kishida said after Wednesday’s cabinet reshuffle that the government would support the economy by ensuring that wage growth exceeds inflation over the long term. But until that happens, the divergence in interest rates between the Bank of Japan and other central banks will continue to weigh on the yen.

Trading recommendations

• Support levels: 146.92,145.88,145.39,145.00
• Resistance levels: 147.85,148.80

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. After the price closed the gap, which was formed from the week opening, consolidation followed. Now, the price is trading in a corridor with signs of buying pressure intraday. The MACD indicator has become positive. There is a high probability of a liquidity test above the resistance level of 147.85. Buy trades should be sought intraday from moving average levels. Sell trades can be sought from the resistance level of 147.85 but with confirmation in the form of sellers’ reaction and changes 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: 1908.80
• Prev. Close: 1909.39
• % chg. over the last day: +0.03%

Yesterday, gold hit a 3-week low, and silver fell to a one-month low. The dollar index rally to a 6-month high on Thursday was negative for metals. In addition, the rise in T-note bond yields on Thursday had a negative impact on precious metals. But there are also positive factors that keep gold from falling too much and will help prices recover. A positive factor for gold is the ECB’s signal that it will pause its rate hike cycle. In addition, higher-than-expected data on the US final producer price index for April contributed to the demand for gold as an inflation hedge.

Trading recommendations

• Support levels: 1903.87,1893.80
• Resistance levels: 1915.25,1918.98,1930.77,1934.71,1941.96,1947.81,1961.06

From the point of view of technical analysis, the trend on the XAU/USD currency pair is bearish. But yesterday, the price reached the daily support level and, at the same time, tested the liquidity below. This was followed by a buyers’ reaction, meaning that the grabbed liquidity will now be distributed above the resistance levels. The MACD indicator becomes positive, with intraday buyers prevailing. As the price has reached resistance levels, buy trades are best sought after a pullback to the moving averages. Sell trades are best sought from the resistance level of 1915.25 or 1918.98 but with confirmation in the form of a reverse initiative.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 1930.77, the uptrend will likely resume.