The Analytical Overview of the Main Currency Pairs on 2023.12.06

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0834
• Prev. Close: 1.0795
• % chg. over the last day: -0.36%

The US dollar found support on Tuesday amid increased demand for safe-haven housing after Moody’s Investors Service downgraded China’s credit outlook from stable to negative due to rising debt. Euro weakness also supported the dollar after dovish comments from the ECB dropped EUR/USD to a 3-week low on Tuesday. ECB executive board spokeswoman Schnabel said that inflation in the Eurozone is showing a marked slowdown, making another interest rate hike rather unlikely.

Trading recommendations

• Support levels: 1.0780,1.0729,1.0700,1.0664
• Resistance levels: 1.0847,1.0858,1.0894,1.0961,1.0994,1.1004,1.1063

The trend on the EUR/USD currency pair on the hourly time frame has changed to a downtrend. The price is trading below the moving averages but reached the support level of the older time frame, where buyers showed a moderate reaction. Now, the price has fumbled the support level at 1.0780, which is located at the center of the liquidity void. Taking into account the formed divergence on the MACD indicator, there is a high probability of correction to the nearest resistance levels. Selling can be considered intraday from the moving average levels around the resistance level of 1.0847, but with confirmation as the price may make a deeper correction around 1.0894. Buying can be looked for intraday but with a short stop loss behind the support level.

Alternative scenario:

if the price breaks the resistance level at 1.0894 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2624
• Prev. Close: 1.2590
• % chg. over the last day: -0.27%

Today, the minutes of the last FPC (Financial Policy Committee) meeting will be published in the UK. The November minutes will likely show that the Bank of England is not going to cut interest rates shortly, and given the recent economic data, which has been quite positive for the economy, the committee will keep rates at the current level for as long as possible. Along with the FPC minutes, the Financial Stability Report will be published, after which Bank Governor Bailey will give a speech. Any “hawkish” comments may bring back confidence in the British currency, which has been declining for the last 2 days.

Trading recommendations

• Support levels: 1.2589,1.2525,1.2478,1.2448,1.2347,1.2309
• Resistance levels: 1.2652,1.2688,1.2723,1.2745

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is still bullish but is close to change. Despite the resistance to the growth of the dollar, the British pound is slowly sliding towards the level of the shift in priority. At the moment, the price has fumbled for support at 1.2589, below which liquidity was tested. The MACD indicator is in the negative zone, and a divergence has formed on the current time frame. Selling can be sought intraday from the moving average lines or from the resistance level at 1.2652. Buying is better to look for from the support level of 1.2589, but also with confirmation in the form of buyers’ initiative. A break of 1.2652 could bring back the upside rally.

Alternative scenario:

if the price breaks the support level of 1.2575 and consolidates below, with a high probability the downtrend will resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 147.16
• Prev. Close: 147.14
• % chg. over the last day: -0.01%

The yen declined slightly on Tuesday after a weaker-than-expected November Tokyo CPI report weakened the BOJ’s monetary tightening outlook. The yen’s losses were limited thanks to a decline in T-note bond yields. In addition, the decline in the Nikkei stock index to a 3-week low on Tuesday contributed to a slight increase in demand for the yen.

Trading recommendations

• Support levels: 146.74,145.89
• Resistance levels: 147.34,147.79,148.29,149.32,149.75,150.14

From the technical point of view, the medium-term trend on the currency pair USD/JPY is still bearish. The price stuck to the resistance level at 147.35. As a rule, it happens before the breakout. The formation of flat accumulation between the levels 146.74-147.35 is observed. The MACD indicator has become inactive, while the moving average lines have become horizontal. Buying should be sought after breaking the resistance level of 147.35 with a target up to 147.78. With a stronger impulsive upward movement, the price may test liquidity above 148.51. Sell deals can be considered from the 147.35 level, subject to sellers’ initiative on the lower time frames, but the probability of this scenario is lower.

Alternative scenario:

if the price consolidates above the resistance level of 148.51, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2023
• Prev. Close: 2019
• % chg. over the last day: -0.19%

The rise in the dollar index to a one-week high on Tuesday put pressure on metal prices. As a result, gold and silver prices on Tuesday extended Monday’s sharp losses and hit one-week lows. The decline in the 10-year US breakeven inflation rate to a 4-month low also limited demand for gold as an inflation hedge. On the other hand, the October JOLTS Job Openings Index fell by 617,000 to a 2-year low of 8.733 million, indicating a weaker labor market and may return some confidence to precious metals.

Trading recommendations

• Support levels: 2020,2005,1998,1979,1955
• Resistance levels: 2041,2079,2145

From the point of view of technical analysis, the trend on the XAU/USD is bullish, but it is close to change. Volatility on gold is starting to subside. Yesterday, the price tested liquidity below the priority change level, and then the price showed a moderate bullish reaction. Now, the price is showing a weak bounce from the level, and there is a high probability of further price decline and priority change. Market conditions are not formed for buying at the moment, as there is no bullish initiative. Selling can be looked for from moving averages or from the resistance level of 2041, but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks below the support level of 2020, the downtrend will likely resume.