The Analytical Overview of the Main Currency Pairs on 2023.10.20

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0533
• Prev. Close: 1.0581
• % chg. over the last day: +0.46%

On Thursday, the euro gained support amid comments from Fed Chairman Powell, who suggested that the Fed will keep interest rates unchanged for the second time in a row at the next FOMC meeting on October 31-November 1. This had a negative impact on the dollar and gave confidence to the European currency. Due to the apparent lack of important EU data this week, the euro had few local drivers, but despite this, EUR/USD is showing resilience in the face of rising US bond yields.

Trading recommendations

• Support levels: 1.0548,1.0532,1.0495,1.0483
• 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 broadly volatile flat. Yesterday, the price tested the upper boundary of the flat but impulsively returned, forming a false breakout zone and changing the structure on the lower time frames. The MACD indicator is in the positive zone, but the momentum is behind the sellers. Selling can be looked for from the resistance level of 1.0593 with a target of 1.0548. Buying can be looked for from the support level of 1.0548 or after a false breakdown of 1.0532, provided the reaction is reversed 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: 1.2139
• Prev. Close: 1.27471.2142
• % chg. over the last day: -0.02%

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish. Yesterday, the price tested the priority change level but failed to consolidate above it, while a sharp bullish reaction followed. The MACD indicator has become inactive. Under these market conditions, buying can be looked for from the support level of 1.2121, but with confirmation intraday. Selling can be looked for after testing the resistance level at 1.2162, 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: 1.2162,1.2224,1.2273,1.2332,1.2384,1.2420,1.2504,1.2547

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: 149.88
• Prev. Close: 149.77
• % chg. over the last day: -0.07%

Japanese 10-year government bond yields rose sharply on Thursday ahead of Friday’s inflation data. Yields are rising as the Bank of Japan prepares to exit its negative interest rate regime amid rising wages and price pressures. Officials continue to talk about currency intervention, but the relevance of such comments has diminished over the past week. The nationwide Core Consumer Price Index in Japan fell from 3.1% to 2.8% (2.7% expected) in annualized terms, which is a negative factor for the yen, as the Bank of Japan’s goal is to accelerate inflation to steady slow growth in order to exit the negative interest rate policy.

Trading recommendations

• Support levels: 149.48,148.94,148.15,147.32,147.02,146.76,145.88,145.39
• Resistance levels: 149.94,150.16

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish, but it is close to changing. Now, the price is forming a narrow volatile flat before the level of priority change, while the moving averages are perfectly keeping the prices from going down. Another test of liquidity above the 149.94 level is likely. And then, traders need to watch the price reaction. A consolidation behind the level of impulse candlesticks 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 149.94, under such market conditions, it will be possible to look for sell deals, but with short targets.

Alternative scenario:

if the price consolidates above the resistance level of 149.94, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1950.35
• Prev. Close: 1974.33
• % chg. over the last day: +1.22%

Precious metals prices rose again on Thursday, with gold reaching a 2-month-high. The weakening dollar on Thursday was a favorable factor for metals prices. In addition, worries about the intensifying conflict between Israel and Hamas increased the demand for precious metals as a “safe haven.” Israel is planning to launch a ground operation in Gaza in the near future. Rising inflation expectations also boosted demand for gold as an inflation hedge after the US 10-year breakeven inflation rate rose to a 7-month high on Thursday.

Trading recommendations

• Support levels: 1961.06,1939.19,1928.08,1907.71,1887.63,1867.89,1844.16
• Resistance levels: 1962.98,1982.00,1987.52

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 buying pressure remains, but the divergence is getting stronger. Under such market conditions, it is better to look for buying on intraday time frames, as the price is not likely to make deep pullbacks. The closest significant support level is 1962.98, but with confirmation. Selling can be looked for from the resistance level 1968 or 1987.52, but subject to a pullback and pattern change on the lower time frames.

Alternative scenario:

if the price holds below the support level of 1867.92, the downtrend will likely resume.