The Analytical Overview of the Main Currency Pairs on 2023.10.03

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0564
• Prev. Close: 1.0476
• % chg. over the last day: -0.84%

Eurozone economic news on Monday was favorable for the euro. The index of business activity in the manufacturing sector remained at the level of 43.4, while in the main Eurozone countries (Germany, France, Italy, and Spain), this indicator increased and was better than expected. But in the US session, the situation changed dramatically after the yield on 10-year US bonds rose to a 16-year-high, which strengthened the differential of dollar interest rates against the euro. As a result, the euro fell to almost a 9-month low.

Trading recommendations

• Support levels: 1.0412,1.0223
• Resistance levels: 1.0523,1.0568,1.0617,1.0673,1.0697,1.0713,1.0736

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price continues to decline and is now trading below the moving averages. The MACD indicator is in the negative zone with no signs of reversal. Buyers are dominating inside the day, so it is best to consider trades to continue the bearish trend. At the moment, market conditions point to a continuation of the decline to 1.0412. Selling can be sought after a pullback to the resistance level at 1.0523, subject to a reverse reaction. Buy deals can be looked for after an impulsive move above 1.0487.

Alternative scenario:

if the price breaks through the resistance level of 1.0617 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2187
• Prev. Close: 1.27471.2086
• % chg. over the last day: 0.83%

The British Pound managed to find some support at the end of last week after the British economy grew faster than expected. However, this support proved to be short-lived. The US dollar continued to rise yesterday on the back of hawkish comments from FOMC representative Bowman and after the US manufacturing activity index for September rose more than expected. The US economy is showing much more resilience compared to other leading economies, allowing the US Fed to maintain its hawkish stance for longer. Interest rate differentials continue to play in favor of the US dollar, even if markets do not rule out the possibility of another rate hike in the UK this year.

Trading recommendations

• Support levels: 1.2009
• Resistance levels: 1.2160,1.2189,1.2270,1.2369,1.2420,1.2504,1.2547

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. Selling pressure remains throughout the day. Market conditions suggest a further price decline to the level of 1.2009. Selling can be sought from the resistance level of 1.2111 or 1.2160, but only with confirmation in the form of sellers’ reactions. There are no optimal entry points for buying now.

Alternative scenario:

if the price breaks through the resistance level of 1.2270 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 149.58
• Prev. Close: 149.84
• % chg. over the last day: +0.17%

On Monday, the yen fell to an 11-month low against the dollar. The rise in US T-note bond yields on Monday was a bearish factor for the yen. In addition, the BOJ’s action on Monday announcing an additional 5 to 10-year bond purchase plan this week dragged the yen lower. The yen’s losses were somewhat contained after Tankan’s measure of business activity in Japan’s manufacturing sector for Q3 rose more than expected.

Trading recommendations

• Support levels: 149.13,148.87,147.78,147.32,147.02,146.76,145.88,145.39,145.00
• Resistance levels: 149.70,149.92

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The MACD indicator has become positive again, and intraday buying pressure remains, but there are signs of divergence in several time frames. Trades in the continuation of the uptrend should be sought from the moving averages but with confirmation. It should be remembered that the yen has approached the levels of last year’s interventions, and the Bank of Japan may re-enter the market to support the currency. Sell trades can be looked for after an impulsive bearish reaction to the 149.92-150.00 zone.

Alternative scenario:

if the price consolidates below the support level of 148.52, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1848.19
• Prev. Close: 1829.34
• % chg. over the last day: -1.03%

Precious metals prices declined sharply on Monday. Both metals, gold and silver, fell to 6-month lows. The rise in the dollar index to a 10-month high on Monday had a negative impact on metal prices. The volume of long positions in gold ETF funds continues to shrink. Fundamentally, gold has no factors for strengthening now, as the growth of the dollar index leads to the growth of government bond yields, and gold has an inverse correlation with government bonds, as investors tend to invest in bonds to receive guaranteed interest from the government when yields rise.

Trading recommendations

• Support levels: 1820.89
• Resistance levels: 1857.80,1885.75,1901.05,1910.40,1921.31,1928.93,1933.94

From the point of view of technical analysis, the trend on the XAU/USD is bearish. The price has reached the support level of 1820.89, but there is no buyer’s reaction at the moment. The MACD indicator is in the negative zone with signs of oversold and divergence. A technical correction is looming, but traders need to wait for confirmation in the form of buyers’ reactions. Under such market conditions, it is best to sell from moving averages with intraday confirmation. For buy deals, traders should wait for buyers’ reaction to the support level of 1820.89.

Alternative scenario:

if the price breaks above the resistance level at 1880.00, the uptrend will likely resume.