The Analytical Overview of the Main Currency Pairs on 2023.10.30

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0561
• Prev. Close: 1.0565
• % chg. over the last day: +0.04%

Ahead of the FOMC meeting this week, the US dollar rally has paused. This is partly due to fixing positions ahead of the weekend after a week of gains but also due to the dovish rhetoric from Fed officials earlier this month indicating that the tightening of financial conditions as a result of the jump in yields has reduced the need for further tightening. Markets expect the Fed to leave rates unchanged this week on Wednesday. On the other hand, there were no major changes to the ECB’s outlook either, with ECB President Lagarde repeating key cautious messages on the outlook for the Eurozone economy. However, inflation risks remain for the Eurozone, which may force Europe’s central bank to reconsider its views at the December meeting. In terms of the fundamental picture, EUR/USD will trade in broad consolidation without any leadership of one of the currencies.

Trading recommendations

• Support levels: 1.0552,1.0522,1.0495,1.0483
• Resistance levels: 1.0594,1.0607,1.0678,1.0693,1.0736

The trend on the EUR/USD currency pair on the hourly time frame is a downtrend. On Friday, the price tested the resistance level of 1.0594, which was followed by the sellers’ reaction. The MACD indicator became inactive, while there is still a weak buying pressure inside the day. Selling can be sought from the resistance level at 1.0607, subject to liquidity testing above the level and followed by sellers’ reaction. Buy deals can be looked for from the support level at 1.0552, subject to buyers’ reaction.

Alternative scenario:

if the price breaks the resistance level of 1.0590 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2129
• Prev. Close: 1.27471.2118
• % chg. over the last day: -0.09%

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is a downtrend. Similar to the Eurodollar, the pound sterling found resistance on Friday at the 1.2152 level, followed by a sellers’ reaction. The MACD indicator became inactive. Under these market conditions, buy deals can be sought intraday from the support level of 1.2094 but with short targets. Selling can be looked for after testing the resistance level at 1.2175 but with confirmation in the form of sellers’ reaction.

Trading recommendations

• Support levels: 1.2094,1.2069,1.2009
• Resistance levels: 1.2152,1.2175,1.2233,1.2289,1.2332,1.2384

Alternative scenario: if the price breaks the resistance level at 1.2189 and consolidates above it, the uptrend will likely resume.

Alternative scenario:

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 150.39
• Prev. Close: 149.53
• % chg. over the last day: -0.57%

This week, the Bank of Japan and the Federal Reserve will hold their penultimate meeting in 2023. These high-profile events could trigger increased volatility in the FX market, which could mean sharp movements in the USD/JPY exchange rate in the coming days. The Bank of Japan is expected to leave interest rates unchanged at minus 0.10%, continuing its negative cost of borrowing policy. However, given another FX intervention last week, markets expect the BoJ to consider a change in yield curve management policy with an upward adjustment to the inflation forecast from 1.9% to 2.2%. This allows long-term government bond rates to drift moderately above the current 1.0% limit and is likely to have a positive impact on the yen.

Trading recommendations

• Support levels: 149.55,149.33,148.94,148.15,147.32,147.02,146.76
• Resistance levels: 150.00,150.78,151.92

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. After the intervention of the Bank of Japan, the Japanese yen strengthened slightly. The MACD indicator has turned negative, and there is a slight selling pressure intraday. Buy trades are best considered from the support level of 149.55 or after testing the liquidity below 149.33 with buyers’ reaction. For selling, a resistance level of 150.00 can be considered, but with short targets.

Alternative scenario:

if the price consolidates below the support level at 149.33, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1984.36
• Prev. Close: 2005.97
• % chg. over the last day: +1.09%

Gold is very sensitive to geopolitical factors, so it is not surprising that this asset has been growing exponentially in recent weeks. Tensions in the Middle East fueled the rise in gold prices on Friday. On Friday, an Israeli defense official said that Israeli troops are expanding ground activity. The expectation of an all-out Israeli ground invasion could lead to expanded military action, including Hezbollah in Lebanon and possibly other Iranian-backed groups. The US bond yields remain high, indicating that the dominant factor for gold is its attractiveness as a safe-haven asset.

Trading recommendations

• Support levels: 1971.40,1962.61,1953.36,1928.04,1907.78,1883.47,1867.89
• Resistance levels: 1997.24

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 and above the 1997.24 level. The MACD indicator is in the positive zone, and there is weak buying pressure intraday. Under such market conditions, buying is better from moving averages with confirmation of buyers’ reaction on intraday time frames. Sell deals can be looked for from the resistance level of 1997.24 but on the condition of an impulsive price return under the level with consolidation below.

Alternative scenario:

if the price breaks and consolidates below the support level of 1953.29, the downtrend will likely resume.