The Analytical Overview of the Main Currency Pairs on 2023.10.09

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0543
• Prev. Close: 1.0585
• % chg. over the last day: +0.39%

The dollar initially moved up on Friday on the back of a stronger-than-expected US Nonfarm Payrolls report for September. Employment rose by 336,000, well above expectations of 170,000 and the largest increase in eight months. In addition, the August employment data was revised upward by 40,000 to 227,000 from the originally announced 187,000. The unemployment rate for September was unchanged at 3.8%, which was slightly weaker than expectations of 3.7%. Average hourly earnings in the US for September rose by 0.2% m/m and 4.2% y/y, which was weaker than expectations of 0.3% m/m and 4.3% y/y. A negative factor for the dollar was the unexpected reduction in consumer credit in August by $15.62 billion. The euro was supported by a stronger-than-expected report on the volume of factory orders in Germany for August and “hawkish” comments of the representative of the Executive Board of the ECB Schnabel, who said that the ECB will continue to raise interest rates if inflation risks materialize.

Trading recommendations

• Support levels: 1.0522,1.0476,1.0412,1.0223
• Resistance levels: 1.0554,1.0568,1.0617,1.0673,1.0697,1.0713,1.0736.

The trend on the EUR/USD currency pair on the hourly time frame is bearish. On Friday, the price tested the liquidity below 1.0500 and then took it above the 1.0591 level, which is the level of priority change. Since no breakout occurred, the bias remains bearish. Selling can be looked for from the 1.0591 resistance level, subject to a pullback. Buying can be looked for from the support level of 1.0522 or 1.0476, but it is also subject to buyers’ reaction.

Alternative scenario:

if the price breaks through the resistance level of 1.0591 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2182
• Prev. Close: 1.27471.2235
• % chg. over the last day: +0.43%

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is still bearish. The situation is very similar to the euro. After testing the support level of 1.2104, the price rose sharply and tested liquidity above 1.2219. But today, at the opening, there was a gap down due to the strengthening of the US dollar on the background of events in the Middle East. Traders are buying the dollar as a safe haven asset. Selling can be looked for from the resistance level of 1.2219 but with confirmation on the lower time frames. Buying can be looked for from support at 1.2166 or 1.2083, but with buyers reacting. Note the triple bottom at 1.2104, below, which has generated a lot of liquidity.

Trading recommendations

• Support levels: 1.2166,1.2104,1.2083,1.2009
• Resistance levels: 1.2219,1.2270,1.2369,1.2420,1.2504,1.2547

Alternative scenario: if the price breaks through the resistance level of 1.2220 and consolidates above it, the uptrend will likely resume.

Alternative scenario:

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 148.41
• Prev. Close: 149.30
• % chg. over the last day: +0.60%

Friday’s weaker-than-expected Japanese economic reports on August household spending and workers’ cash income were dovish for BoJ policy and bearish for the JPY. As for the future outlook for the Japanese currency, the BoJ’s “ultra-soft” policy will remain a headwind for the Asian currency at the start of Q4, but as we get closer to 2024, the BoJ may start to signal preparations for policy normalization, which is planned for mid-2024. As investors try to get ahead of the normalization cycle, this could lead to significant Yen buying towards the end of the year, which could keep the Yen from falling.

Trading recommendations

• Support levels: 148.79,148.25,147.32,147.02,146.76,145.88,145.39,145.00
• Resistance levels: 149.33,149.65,150.16

From the technical point of view, the medium-term trend on the currency pair USD/JPY changed to a downtrend. Now, the price is forming a broadly volatile flat, while the price tested on Friday the liquidity above the upper boundary of the flat. The MACD indicator is in the positive zone, and there is weak buying pressure intraday. Sell trades can be looked for from the resistance level at 149.33 or 149.65, but they are subject to sellers’ reactions to these levels. Buying can be looked for after liquidity capture below one of the supports. At the moment, conditions for this are not formed yet.

Alternative scenario:

if the price consolidates above the resistance level of 150.16, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1820.37
• Prev. Close: 1831.84
• % chg. over the last day: +0.63%

Friday’s better-than-expected US jobs report for September pushed T-note bond yields higher and initially crashed gold prices to a 7-month low, but then gold prices recovered amid a sharp decline in the dollar and rising stock indices. Today, at the opening of the financial exchange, gold opened with a gap due to the escalating situation in the Middle East. On Saturday, militants of the Palestinian group Hamas made an unprecedented attack on Israel. In response, Israel declared war on Hamas and officially invoked the 40 Aleph clause for the first time since 1973, which means the army gets full freedom of action. According to analysts, rising geopolitical risk could lead to the buying of assets such as gold and the US dollar and potentially increase demand for US Treasuries.

Trading recommendations

• Support levels: 1833.58,1820.89,1815.47,1804.83
• Resistance levels: 1857.89,1868.32,1880.07,1885.75,1901.05,1910.40

From the point of view of technical analysis, the trend on the XAU/USD is bearish. Now, the price is correcting to the nearest resistance levels. The MACD indicator has become positive, and there is a buying pressure. Under such market conditions, it is better to sell from the resistance level of 1857.89 or 1868.32 with confirmation in the form of sellers’ reactions. For buying, it is worth waiting for buyers’ reaction at the support level of 1833.58.

Alternative scenario:

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