The Analytical Overview of the Main Currency Pairs on 2023.10.23

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0576
• Prev. Close: 1.0594
• % chg. over the last day: +0.17%

“Dovish” comments from Philadelphia Fed President Harker and Cleveland Fed President Mester dragged the dollar lower on Friday when they said they favored a continuation of the Fed’s pause at the upcoming FOMC meeting. The euro took advantage of the dollar’s weakness on Friday, but traders should not expect strong gains as the ECB is also scheduled to keep interest rates unchanged this week. At the same time, the economic indicators of the Eurozone countries lag behind the US in a number of parameters.

Trading recommendations

• Support levels: 1.0548,1.0522,1.0495,1.0483
• Resistance levels: 1.0616,1.0634,1.0697,1.0713,1.0736

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. At the end of last week, 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 became inactive, and intraday momentum is behind sellers. Selling can be looked for from the resistance level of 1.0616 with a target of 1.0548. Buying can be looked for from the support level of 1.0548 or after a false breakdown of 1.0522, provided that the reaction is reversed and confirmed by 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: 1.2141
• Prev. Close: 1.27471.2162
• % chg. over the last day: +0.17%

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 already tested the priority change level 2 times but failed to consolidate below. In both cases, a sharp, bullish reaction followed. The MACD indicator has become inactive. Under these market conditions, buys can be looked for on intraday time frames, but with confirmation. Selling can be looked for after testing the resistance level of 1.2192, but also with confirmation in the form of sellers’ reactions.

Trading recommendations

• Support levels: 1.2104,1.2083,1.2009
• Resistance levels: 1.2192,1.2224,1.2273,1.2332,1.2384,1.2420,1.2504,1.2547

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: 149.74
• Prev. Close: 149.86
• % chg. over the last day: +0.08%

The yen fell to a 2-week low against the US dollar on Friday. The yen was pressured by dovish comments from Bank of Japan (BoJ) Governor Ueda, who said that the BoJ will patiently continue to ease monetary policy to achieve the 2% inflation target. But Ueda reiterated his view that while inflation may slow somewhat in the short term, inflation is expected to accelerate gradually in the longer term, supported by wage growth and inflation expectations. Analytical metrics continue to point to the Bank of Japan ending its negative interest rate policy next year.

Trading recommendations

• Support levels: 149.66,149.48,148.94,148.15,147.32,147.02,146.76,145.88,145.39
• 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: 1974.35
• Prev. Close: 1979.68
• % chg. over the last day: +0.26%

Gold prices reached a 2-month high on Friday. Rising geopolitical risk is creating demand for gold as a “safe haven.” Despite the fact that the release of two American hostages from the Gaza Strip gave hope for the de-escalation of the Israeli-Palestinian crisis, the risk of conflict escalation in the Middle East remains high. At the same time, gold is supported by “dovish” comments of the US Federal Reserve and ECB politicians that no rate hikes are expected at the next meetings.

Trading recommendations

• Support levels: 1962.98,1961.06,1939.19,1928.08,1907.71,1887.63,1867.89
• Resistance levels: 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 at the level of moving averages. The MACD indicator has become inactive, but intraday buying pressure remains. 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 and 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.