The Analytical Overview of the Main Currency Pairs on 2023.12.11

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0791
• Prev. Close: 1.0756
• % chg. over the last day: -0.32%

Friday’s US economic news was hawkish for Fed policy and bullish for the dollar. Nonfarm payrolls for November rose by 199,000, exceeding expectations of 185,000. The November unemployment rate fell by 0.2% to a 4-month low of 3.7%, indicating a robust labor market. The US jobs report for November boosted the dollar and depressed the euro. That said, the market’s reassessment of the probabilities of central bank rate cuts now points to some parity between the euro and the dollar. Swaps tied to ECB meeting dates indicate a 64% probability that the ECB will cut the benchmark rate by 25 bps at its March 7 meeting. Meanwhile, markets are predicting a near 100% probability of a 25 bps rate cut at the March 19-20, 2024 FOMC meeting.

Trading recommendations

• Support levels: 1.0728,1.0700,1.0664
• Resistance levels: 1.0775,1.0798,1.0817,1.0847,1.0894,1.0961,1.0994,1.1004.

The trend on the EUR/USD currency pair on the hourly time frame has changed to a downtrend. On Friday, the price tested the support level of 1.0728, where the buyers took the initiative. At the same time, the price managed to grab liquidity below 1.0750. Taking into account the divergence on MACD, there is a high probability of growth up to 1.0817. Selling can be sought from the resistance level of 1.0775 or 1.0798, but only with confirmation. Buying can be considered from 1.0728, but also with confirmation as the level has already been tested.

Alternative scenario:

if the price breaks the resistance level at 1.0817 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2578
• Prev. Close: 1.2546
• % chg. over the last day: -0.25%

This week’s economic calendar is full of important releases and events for the British currency. The main events will be the monetary policy decision from the Bank of England, labor market data, GDP report, industrial production data, and business activity data. The Bank of England is doing its best to keep a balanced tone in the face of high inflation and lingering concerns about stagnant growth. However, BoE policymakers are adopting a more hawkish tone than the ECB and the US Fed, which may give the British currency more confidence to rise against the US dollar and the euro.

Trading recommendations

• Support levels: 1.2506,1.2478,1.2448,1.2347,1.2309
• Resistance levels: 1.2566,1.2612,1.2651,1.2687,1.2723,1.2745

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bearish. On Friday, buyers took the initiative from the support level of 1.2506, while the price made a liquidity grab below 1.2542. The price is likely to correct higher now to distribute this liquidity. Selling can be looked for from the resistance level at 1.2566. Buy deals are best looked for from 1.2506, but with intraday confirmation.

Alternative scenario:

if the price breaks the resistance level of 1.2651 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 144.11
• Prev. Close: 144.97
• % chg. over the last day: +0.60%

Japan’s Finance Minister Shunichi Suzuki said on Friday that the government is closely monitoring the currency market after the yen rose sharply against the US dollar amid market speculation of a change in Bank of Japan policy. The yen rose to its highest level in four months after Bank of Japan Governor Kazuo Ueda said on Thursday he expects a “challenging” time next year, a remark that was interpreted by financial markets to mean the BoJ intends to tighten monetary policy. But we should not forget that the strengthening of the yen occurred on expectations, while there have been no actual policy changes yet.

Trading recommendations

• Support levels: 145.06,144.51,142.59
• Resistance levels: 146.23,147.35,147.83,148.51,149.32,149.75,150.14.

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. On Friday, the Japanese yen found support, where the buyers took over and pushed the yen above the 145 price level. The MACD indicator returned to the positive zone, but the upward momentum is running out. Sell trades can be sought from the resistance level of 146.23, provided the sellers take the initiative on the lower time frames. Buying should be sought from the support levels of 145.06 or 144.51, but also with confirmation from the buyers.

Alternative scenario:

if the price consolidates above the resistance level of 147.40, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2029
• Prev. Close: 2004
• % chg. over the last day: -1.25%

Friday’s rally of the dollar index to a 3-week high was a bearish factor for metals. Gold and silver prices fell sharply, with gold falling to a 2-week low and silver falling to a 3-week low. The metals fell after Friday’s stronger-than-expected US November payrolls report weakened expectations of Fed monetary policy easing. Meanwhile, the University of Michigan’s US inflation expectations for December fell more than expected. The weakening of inflation expectations reduces the demand for gold as an inflation-hedging instrument, which also negatively affects prices. But in the medium term, gold is still on the side of the “bulls,” as lower rates by central banks next year will sharply increase demand for gold.

Trading recommendations

• Support levels: 1997,1979,1955
• Resistance levels: 2007,2027,2040,2058,2079,2145

From the point of view of technical analysis, the trend on the XAU/USD is bearish. The price corrected to the support level of 1997, where the buyers showed a moderate reaction. The MACD indicator is in negative territory, with divergence being observed. For buying, traders can consider the 1997 support level, but with a short stop-loss as the price may fall to the 1979 level. Selling can be looked for from resistance levels 2007 or 2027 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks and consolidates above the resistance level of 2040, the uptrend will likely resume.