The Analytical Overview of the Main Currency Pairs on 2023.10.11

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0558
• Prev. Close: 1.0604
• % chg. over the last day: +0.43%

Atlanta Fed President Bostic believes that the rate is at a restrictive enough level to bring inflation down to 2%. There is a 14% probability that the FOMC will raise the lending rate by 25 bps at its next meeting on November 1 and a 31% chance of a rate hike at the December 13 meeting. As recently as Friday, the probability was over 50%. Such rhetoric of the Fed policymakers will contribute to the decline of the dollar index, which will open a great opportunity for the euro to rise. The European currency was supported yesterday on the background of hawkish comments of the representative of the ECB Governing Council, Holtzman, who said that the supply shock may force the ECB to continue raising interest rates.

Trading recommendations

• Support levels: 1.0543,1.0476,1.0412,1.0223
• Resistance levels: 1.0617,1.0673,1.0697,1.0713,1.0736

The trend on the EUR/USD currency pair on the hourly time frame has changed to a bullish one. The price broke through the priority change level and consolidated above. The MACD indicator is positive, but the momentum is descending. Now, the price has reached the resistance level at 1.0617, and there is a high probability of testing the liquidity above the level. Selling can be looked for from the resistance level of 1.0617 on the condition of a false breakout and a reversal on the lower time frames. Buying can be looked for from the support level of 1.0543 or 1.0476, but it is also subject to buyers’ reactions.

Alternative scenario:

if the price breaks through the support level of 1.0475 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2229
• Prev. Close: 1.27471.2285
• % chg. over the last day: +0.46%

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame changed to an upward trend. The price has consolidated above the priority level and is now trading above the moving averages. The MACD indicator is in the positive zone, but there are signs of buyers’ weakness in the form of divergence. Buying can be looked for from the support level of 1.2190, but it is subject to buyers’ reactions. Selling can be looked for in case of an impulsive return below 1.2271.

Trading recommendations

• Support levels: 1.2190,1.2104,1.2083,1.2009
• Resistance levels: 1.2384,1.2420,1.2504,1.2547

Alternative scenario: if the price breaks through the support level of 1.2104 and consolidates below it, the downtrend will likely resume.

Alternative scenario:

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 148.49
• Prev. Close: 148.70
• % chg. over the last day: +0.14%

The yen declined on Tuesday amid weaker safe-haven demand after the Nikkei 225 stock index (JP225) rose more than 2%. A decline in Japanese government bond yields also weighed on the yen, with the 10-year JGB yield falling to a one-week low of 0.767%. But by the end of the trading day, the yen strengthened after the Kyodo agency reported that the Bank of Japan at its meeting on October 30-31 will consider raising its inflation forecast for fiscal year 2023 to around 3.0% from 2.5%, announced in July.

Trading recommendations

• Support levels: 148.15,147.32,147.02,146.76,145.88,145.39,145.00
• Resistance levels: 148.92,149.53,149.65,150.16

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. Now, the price is forming a broadly volatile flat with the boundaries of 148.15-149.54. Yesterday, the price tested the liquidity below 148.25, which was followed by the reaction of buyers with confirmation on the lower time frames. The MACD indicator became inactive. Sell trades can be looked for from the resistance level of 148.92, but they are subject to sellers’ reactions to this level. Buying can be sought on the lower time frames after the breakout of the downtrend line with the price consolidation above.

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: 1863.22
• Prev. Close: 1860.10
• % chg. over the last day: -0.17%

Gold prices rose to a one-week-high yesterday. The bullish factor for the precious metals was the dovish comments from Fed President Atlanta Bostic that interest rates are at their peak. Gold also got a boost in demand as an inflation hedge after the IMF raised its global inflation forecast for 2024 to 5.8% from its July forecast of 5.2%. However, the escalating conflict in the Middle East should not be missed, leading some investors to be inclined to buy gold as a safe haven asset. At the same time, the correlation between the dollar index and gold has grown significantly in recent days.

Trading recommendations

• Support levels: 1852.22,1833.55,1820.89,1815.47,1804.83
• Resistance levels: 1868.25,1880.07,1885.75,1901.05,1910.40

From the point of view of technical analysis, the trend on the XAU/USD is bearish but close to change. Now, the price is correcting to the nearest resistance levels. The MACD indicator is in the positive zone, but there are signs of overbought and divergence. Under such market conditions, it is better to sell from the resistance level of 1868.25 or 1880.00 with confirmation in the form of sellers’ reactions. For buying, it is worth waiting for buyers’ reaction at the support level of 1852.22 or 1833.68 if there is a stronger decline.

Alternative scenario:

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