The Analytical Overview of the Main Currency Pairs on 2023.09.27

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0592
• Prev. Close: 1.0571
• % chg. over the last day: -0.20%

The strengthening of the dollar on Tuesday had a negative impact on the euro. “Hawkish” comments from Minneapolis Fed President Kashkari supported the dollar on Tuesday when he said he expects another Fed interest rate hike this year. Also bullish for the dollar were dovish comments from ECB Governing Council representative Müller when he said that he does not currently expect further interest rate hikes from the ECB. Thus, the interest rate differential between the US and European central banks may increase again, which puts downward pressure on EUR/USD quotes.

Trading recommendations

• Support levels: 1.0543
• Resistance levels: 1.0614,1.0624,1.0673,1.0697,1.0713,1.0736,1.0768

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is trading below the moving averages, but there is a narrowing of liquidity. The MACD indicator is in the negative zone. Selling pressure remains, but the divergence is seen on the higher time frames. These market conditions suggest an impending impulse move. Sell deals can be looked for after a pullback to the resistance levels of 1.0614-1.0624, with the opposite reaction. Buying can be looked for from the support level of 1.0543, with confirmation in the form of buyers’ reaction. Buying can also be considered after a true breakout of the downtrend line.

Alternative scenario:

if the price breaks through the resistance level of 1.0673 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2207
• Prev. Close: 1.27471.2156
• % chg. over the last day: -0.42%

Last week’s weak economic data on retail sales and PMIs suggest a slowdown in the UK economy, especially after the recent disappointing GDP data. Rate rises are clearly taking their toll on consumers, and fears of a global recession are weighing on sterling. Stagflation is becoming a real problem for the UK as inflation remains high and growth rates are falling, in contrast to the US, where growth rates remain high. The likelihood of another rate hike from the Bank of England is currently estimated by money markets at 14%. This dovish overvaluation, together with weak economic data, leaves the pound with no chance to counter the rising US dollar.

Trading recommendations

• Support levels: 1.2112
• Resistance levels: 1.2198,1.2368,1.2424,1.2461,1.2503,1.2547,1.2611

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, and there is a divergence, but the selling pressure remains. There is a narrowing of liquidity. As a rule, this is a harbinger of a sharp, impulsive movement. Selling can be looked for only on intraday time frames. Buy deals can be considered after breaking through the descending trend line and fixing the price above the resistance level of 1.2198. Buying can also be considered from the support level of 1.2112, provided buyers react.

Alternative scenario:

if the price breaks through the resistance level of 1.2424 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 148.87
• Prev. Close: 149.05
• % chg. over the last day: +0.12%

The Japanese PPI for August rose by 2.1% y/y, which was stronger than expectations of 1.8% y/y and was the biggest increase in the last 11 months. This is a positive factor for the Yen, but against the dollar’s rise, the Japanese Yen now has nothing to provide but currency intervention. Japanese Finance Minister Suzuki said yesterday that he is closely watching market trends, hinting that the government may intervene at any time to support the currency. The number of yen buyers is growing on this background, but they, without realizing it, are the fuel for further growth of USD/JPY. Economists believe that the Japanese government will intervene when the rate passes the 150 mark.

Trading recommendations

• Support levels: 148.87,147.78,147.32,147.02,146.76,145.88,145.39,145.00
• Resistance levels: 149.92

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading above the moving averages, and price pullbacks are very weak, which indicates the strength of buyers. The MACD indicator is positive, and momentum is ascending. Trades in the continuation of the uptrend should be sought from the moving averages but with confirmation. Sell trades can be looked for after the price returns below 148.87. At the moment, market conditions point to a continuation of the uptrend to 149.92

Alternative scenario:

if the price consolidates below the support level of 147.32, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1915.49
• Prev. Close: 1900.52
• % chg. over the last day: -0.78%

Yesterday’s rally of the dollar index to a 9-month high had a bearish effect on metal prices. Gold fell to a 2-week low. Gold prices are also under pressure from long position liquidators after the volume of long positions in gold ETF funds fell to a 3-year low on Monday. In addition, hawkish comments from Minneapolis Fed President Kashkari, who said yesterday that he expects the Fed to raise interest rates one more time this year, also pressured precious metals. For gold buyers, it is now important to wait for any easing in US Fed policy, but in the meantime, gold and silver will be under pressure from rising government bonds, which are being boosted by the US Fed’s tightening policy.

Trading recommendations

• Support levels: 1901.05,1884.66
• Resistance levels: 1910.40,1921.31,1928.93,1933.94,1941.56,1947.81,1961.06

From the point of view of technical analysis, the trend on the XAU/USD has changed to a downtrend. Buyers failed to hold the important level of 1913. The price broke it and is now trading below the moving averages. The MACD indicator is in the negative zone with oversold signs but without signs of reversal. Now, the price is testing the liquidity below the support level of 1901.05. If there is a reaction of buyers in the form of impulse growth in the form of price fixation above the level, the price will probably make a corrective movement up to the 1910.40 level. Until this happens, it is better to look for sales from moving averages with intraday confirmation.

Alternative scenario:

if the price breaks above the resistance level at 1928.93, the uptrend will likely resume.