The Analytical Overview of the Main Currency Pairs on 2023.10.16

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0526
• Prev. Close: 1.0507
• % chg. over the last day: -0.18%

The US Consumer Price Index and Michigan Consumer Sentiment Report showed signs of impending inflationary pressures, which supported the US Dollar at the end of last week. The US Dollar also received support from escalating geopolitical tensions in the Middle East due to its appeal as a safe haven. There are several key data releases this week, including the US retail sales report and Eurozone core inflation. The retail sales data is expected to decline, which could lead to a downward revision of the Fed’s outlook. At the same time, economists are forecasting a slight decline in core inflation in the Eurozone. And since the European Central Bank (ECB) officials remain wary of a too rapid transition to an accommodated regime, this situation may have a negative impact on the Euro.

Trading recommendations

• Support levels: 1.0476,1.0412,1.0223
• Resistance levels: 1.0546,1.0571,1.0612,1.0634,1.0697,1.0713,1.0736

The trend on the EUR/USD currency pair on the hourly time frame is upward, but the price has corrected deeply enough, and there is a high probability of a trend change. The MACD indicator is in the negative zone, and there is a divergence. Selling can be looked for from the resistance level of 1.0546 on the condition of a reversal on the lower timeframes. Buying can be looked for on intraday time frames but with short targets.

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: 1.2174
• Prev. Close: 1.27471.2140
• % chg. over the last day: -0.28%

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish but close to change. The price has corrected quite deeply, and further price decline will lead to a change in the medium-term bias. At the moment, the price is trading below the moving averages. The MACD indicator is in the negative zone, but there are signs of divergence. Buying can be looked for after an impulsive price return above the level of 1.2162. Selling can be looked for from the resistance level of 1.2205 or after testing liquidity above 1.2225.

Trading recommendations

• Support levels: 1.2104,1.2083,1.2009
• Resistance levels: 1.2205,1.2273,1.2332,1.2384,1.2420,1.2504,1.2547

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: 149.76
• Prev. Close: 149.57
• % chg. over the last day: -0.13%

The yen rose moderately on Friday as rising geopolitical concerns in the Middle East contributed to a slight increase in demand for the yen. There won’t be much news for the JPY this week. The main report will be the inflation data on Friday. Economists forecast that inflation will fall from 3.1% to 2.7% year-on-year. This will be extremely negative for the Japanese yen, as it will further distance the Bank of Japan from the beginning of the process of monetary policy normalization, as the Bank of Japan, on the contrary, is trying its best to accelerate inflation to sustainable growth.

Trading recommendations

• Support levels: 149.21,148.75,148.15,147.32,147.02,146.76,145.88,145.39,145.00
• Resistance levels: 149.83,150.16

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish, but it is close to changing. On Friday, the price reached the shift level of 149.83 but failed to consolidate above it. At the moment, the price is trading at the moving averages, with slight selling pressure intraday. Under such market conditions, sell trades can be looked for on intraday time frames but with short targets. Buying can be looked for from the support level at 149.21 or after testing liquidity below 148.94.

Alternative scenario:

if the price consolidates above the resistance level of 149.83, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1868.35
• Prev. Close: 1928.33
• % chg. over the last day: +3.21%

Precious metals prices rose sharply on Friday, with gold reaching a 2-week-high. Fears that the conflict between Israel and Hamas could spill over into the Middle East triggered precious metals buying after Iran’s foreign minister said that Hezbollah militants could open a new front in the war with Israel if the blockade of the Gaza Strip continues. Gold also received additional support as demand for it as an inflation hedge increased after inflation expectations unexpectedly rose on the University of Michigan’s October forecast.

Trading recommendations

• Support levels: 1887.68,1862.32,1844.16,1833.16,1820.89,1815.47,1804.83
• Resistance levels: 1932.26,1939.19,1947.81,1961.06

From the point of view of technical analysis, the trend on the XAU/USD has changed to an upward trend. At the moment, the price is trading above the moving averages. The MACD indicator has turned positive with overbought signs. Under such market conditions, it is better to look for buy deals after a small correction, as the price has deviated strongly from the averages. The closest significant support level is 1887.68. There are no optimal entry points for selling now.

Alternative scenario:

if the price holds below the support level of 1844.16, the downtrend will likely resume.