The Analytical Overview of the Main Currency Pairs on 2023.10.19

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0573
• Prev. Close: 1.0535
• % chg. over the last day: -0.36%

The euro weakened on Wednesday amid easing inflationary pressures in the region. The latest data showed that the overall inflation rate in the Eurozone fell from 5.2% to 4.3% year-on-year. Core inflation (excluding food and energy prices) declined from 5.3% to 4.5%. Undoubtedly, such figures are a “dovish” factor for the ECB. In addition, comments from a representative of the ECB Governing Council on Wednesday put additional pressure on the Euro when he stated that the conflict in the Middle East had shifted the balance against tightening the ECB’s monetary policy.

Trading recommendations

• Support levels: 1.0532,1.0495,1.0483
• Resistance levels: 1.0593,1.0612,1.0634,1.0697,1.0713,1.0736

The trend on the EUR/USD currency pair on the hourly time frame is upward. At the moment, the price is forming a wide-wave flat, with sellers’ pressure inside it. The MACD indicator has become negative, and the price is trading below the moving averages. Selling can be looked for after an impulsive breakdown of the support level at 1.0532 with a target of 1.0495. But deals can be looked for after a false breakdown of 1.0532, subject to a reversal reaction and with confirmation in the form of a change of structure on the lower time frames.

Alternative scenario:

if the price breaks through the support level of 1.0483 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2175
• Prev. Close: 1.27471.2139
• % chg. over the last day: -0.30%

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish, but the price is gradually approaching the priority change level. The MACD indicator has turned negative, and the seller’s pressure is inside the day. Under such market conditions, buying can be sought from the support level of 1.2121 but with confirmation intraday in the form of an impulse return above the level. Sell deals can be looked for after testing the resistance level at 1.2169, but also with confirmation in the form of a seller’s reaction.

Trading recommendations

• Support levels: 1.2121,1.2104,1.2083,1.2009
• Resistance levels: 1.2169,1.2224,1.2273,1.2332,1.2384,1.2420,1.2504,1.2547

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: 149.80
• Prev. Close: 149.90
• % chg. over the last day: +0.07%

The USD/JPY pair is targeting highs above 150 as the rise in Japanese government bond (JGB) yields outpaces the rise in Treasury yields amid the geopolitical environment, which is somewhat supportive of safe haven assets. The spread between bonds favors the US dollar and could put upward pressure on the exchange rate.

Trading recommendations

• Support levels: 149.48,148.94,148.15,147.32,147.02,146.76,145.88,145.39
• 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. Yesterday, the price tested liquidity above the 149.83 level but failed to consolidate higher. Price is now forming a narrowly volatile flat before the priority change level, with the moving averages doing an excellent job of keeping prices from declining. Another test of liquidity above the 149.83 level is likely. And then, traders need to watch the price reaction. A consolidation behind the level will change the trend to an upward one, which will lead to further growth of quotes above 150.15. If the test is false and the price sharply returns under the level of 149.83, it will be possible to look for sell deals, but with short targets.

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: 1922.67
• Prev. Close: 1950.37
• % chg. over the last day: +1.44%

Fears of escalating conflict in the Middle East boosted the demand for precious metals as hopes for a diplomatic resolution to the conflict faded after a deadly explosion near a Gaza hospital. In addition, rising inflation expectations boosted demand for gold as an inflation hedge after the US 10-year breakeven inflation rate rose to a 2-month high on Wednesday. In addition, precious metals were supported by dovish comments from Fed spokesman Waller, who said he favored a pause in rate hikes. In the medium term, gold now has numerous factors for strengthening.

Trading recommendations

• Support levels: 1939.19,1928.08,1907.71,1887.63,1867.89,1844.16,1833.16
• Resistance levels: 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 is in the positive zone, and the buying pressure remains, but there are signs of divergence. Under such market conditions, it is better to look for buying on intraday time frames, as the price will probably not make deep pullbacks. The closest significant support level is 1928.08, but with confirmation. Selling can be looked for from the resistance level 1961.06, but subject to a pullback and structure change on the lower time frames

Alternative scenario:

if the price holds below the support level of 1867.80, the downtrend will likely resume.