The Analytical Overview of the Main Currency Pairs on 2023.09.29

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0500
• Prev. Close: 1.0564
• % chg. over the last day: +0.61%

The dollar weakness on Thursday gave temporary confidence to the European currency. At the same time, the euro’s growth accelerated amid hawkish comments from ECB Council representative Nagel, who said that the ECB could raise interest rates further “if the data show that further action is warranted.” The euro was also supported by Thursday’s better-than-expected Eurozone economic confidence data. A negative factor for the euro was Thursday’s report that German consumer prices fell sharply from 6.1% to 4.5% y/y, a dovish factor for ECB policy.

Trading recommendations

• Support levels: 1.0536,1.0482
• Resistance levels: 1.0589,1.0608,1.0624,1.0673,1.0697,1.0713,1.0736,1.0768.

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is correcting and is now trading above the moving averages. The MACD indicator has become positive, and the buyers have temporarily intercepted the initiative. Can this be considered a full reversal? Usually, a reversal occurs through a liquidity grab. In this case, there is still untested liquidity below the 1.0482 support level, so the bias is still bearish. Selling can be looked for after a pullback to the resistance level of 1.0589 or 1.0624, subject to a reverse reaction. Buy deals can be looked for from the support level of 1.0536 or 1.0482, but with confirmation in the form of buyers’ reaction.

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: 1.2128
• Prev. Close: 1.27471.2202
• % chg. over the last day: +0.61%

From a Bank of England (BoE) perspective, money markets have dovishly overestimated expectations for 2024 rate cuts next year. This leaves the door open for another rate hike, which is reflected in the bank’s new forecasts. Fed and Bank of England peak rate estimates are currently similar and could quickly shift in favor of the pound if the US shows signs of economic weakness while the UK finds some resilience in its economic data. But until that happens, the British pound is strengthening on the back of temporary dollar weakness. Today, the UK will release GDP data for the previous month, where the economy is expected to grow by 0.2%.

Trading recommendations

• Support levels: 1.2176,1.2112
• Resistance levels: 1.2284,1.2368,1.2424,1.2461,1.2503,1.2547,1.2611.

According to technical analysis, the GBP/USD currency pair trend on the hourly time frame is bearish. The price is correcting and is now trading above the moving averages. The MACD indicator is in the positive zone, and buyers prevail inside the day. Sell trades can be looked for from the resistance level of 1.2284, but only with confirmation in the form of sellers’ reactions. Buying can be considered from the support level of 1.2176, but also with confirmation.

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: 149.57
• Prev. Close: 149.30
• % chg. over the last day: -0.18%

The yen posted moderate gains on Thursday, recovering slightly from Wednesday’s 11-month low against the dollar. Short covering appeared in the yen on Thursday on comments from Japan’s Finance Minister Suzuki, who said authorities would take appropriate measures in case of excessive exchange rate fluctuations. According to Sakakibara, a former senior foreign exchange official, the Japanese government may intervene in currency markets if the yen’s exchange rate against the dollar exceeds 150.

Trading recommendations

• Support levels: 149.06,148.87,147.78,147.32,147.02,146.76,145.88,145.39,145.00
• Resistance levels: 149.69,149.92

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price has slightly corrected and is trading at the level of moving averages. A flat accumulation is being formed. The MACD indicator has become inactive. 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 tests the resistance level of 149.69. At the moment, market conditions point to the 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: 1876.72
• Prev. Close: 1867.11
• % chg. over the last day: -0.51%

Gold has an inverse correlation with government bond yields. Therefore, an increase in global bond yields has a negative impact on precious metals prices. Gold fell to a 6-month low yesterday. The pressure to liquidate long positions also had an impact on gold prices after the volume of long positions in gold ETF funds fell to a 3-year low on Wednesday.

Trading recommendations

• Support levels: 1854.17,1843.69
• Resistance levels: 1872.24,1885.64,1901.05,1910.40,1921.31,1928.93,1933.94

From the point of view of technical analysis, the trend on the XAU/USD is bearish. The price continues to break support levels and is aiming for the 1854.17 level. The MACD indicator is in the negative zone with oversold and divergence signs. Under such market conditions, it is best to sell from moving averages with intraday confirmation. For buying, traders should wait for a test of the support level at 1854.17.

Alternative scenario:

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