The Analytical Overview of the Main Currency Pairs on 2023.12.12

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0757
• Prev. Close: 1.0764
• % chg. over the last day: +0.06%

The US inflation report will be released today. Overall consumer inflation is expected to decline from 3.2% to 3.1% y/y, while core inflation (excluding food and energy prices) is expected to remain unchanged at 4% y/y. Such data will increase the Fed’s comfort level for keeping rates on hold at tomorrow’s meeting. At the same time, a stronger fall in inflation will help convince officials to accelerate the expected interest rate cuts in their forecast for next year. The prospect of accelerated rate cuts is positive for stock indexes and negative for the US dollar. However, if core inflation unexpectedly shows signs of growth, this would cause officials to keep rates on hold for a longer period, and the rate cut would be delayed. In such a scenario, the dollar index will get temporary support.

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. Compared to yesterday, the situation has not changed much. On Friday, the price tested the support level of 1.0728, where the buyers took the initiative. Now, the price is forming a flat accumulation before the CPI news, which means we should expect an impulsive movement. Taking into account divergence on MACD, there is a high probability of growth up to 1.0817. Selling can be looked for from the resistance level of 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: 1.2532
• Prev. Close: 1.2554
• % chg. over the last day: +0.17%

Labor market data will be released in the UK today. The unemployment rate is expected to remain at 4.2%, while average wages are expected to fall from 7.9% to 7.7%. A fall in wages is usually accompanied by a fall in inflation. This may end up giving the Bank of England a breath of fresh air as it will somewhat reduce the aggressive attitude of policymakers. However, for the British currency, it will be a negative factor, as it will increase the likelihood of lowering rates earlier.

Trading recommendations

• Support levels: 1.2544,1.2506,1.2478,1.2448,1.2347,1.2309
• Resistance levels: 1.2584,1.2612,1.2651,1.2687,1.2723,1.2745.

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The price is trading between the levels of 1.2544 and 1.2584, forming a flat accumulation. It is quite difficult to predict where the movement out of the flat will occur. Only the lower time frames will come to the help here. At the moment, there is buyers’ pressure inside the day. Selling can be sought from the resistance level of 1.2584 or 1.2612, but it is subject to a pullback. Buying is best looked for from 1.2544, but also 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: 144.97
• Prev. Close: 146.16
• % chg. over the last day: +0.82%

The Bank of Japan gave the market a roller coaster ride. At the end of last week, BoJ Governor Ueda’s statements heated up speculations about the end of the zero rate period, collapsing government bonds and provoking the growth of the yen. Then, on Monday, he said that it was too early to abandon the soft policy, which caused the yen to fall, while government bond yields did not recover. So far, there is an opinion that the Bank of Japan wants to delay the moment of a rate hike as much as possible, but at the same time, it does not want the yen to get cheaper against other currencies so as not to carry out expensive interventions to maintain the exchange rate.

Trading recommendations

• Support levels: 145.06,144.51,142.59
• Resistance levels: 146.04,146.50,147.35,147.83,148.51,149.32,149.75,150.14

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. Yesterday, the price found the resistance level at 146.50, where sellers showed a moderate reaction. The MACD indicator has become inactive, with the price trading below the moving averages. If today’s US inflation data shows a decline, the US dollar may weaken, giving confidence to the yen. Sell trades can be sought from the resistance level of 146.04, subject to sellers’ initiative on the lower time frames. Buying should be looked for from support levels 145.06 or 144.51, but also with confirmation from 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: 2003
• Prev. Close: 1981
• % chg. over the last day: -1.11%

Gold and silver prices on Monday continued last Friday’s sharp losses, with both metals hitting 3-week lows. Gold is pressured by the negative impact of last Friday’s stronger-than-expected November payrolls report, which weakened expectations of Fed monetary easing. The US inflation report will be released today. Falling indicators may collapse the dollar and return confidence to precious metals.

Trading recommendations

• Support levels: 1979,1949
• Resistance levels: 1990,2007,2027,2040,2058,2079,2145

From the point of view of technical analysis, the trend on the XAU/USD is bearish. The price corrected to the support level of 1978, where buyers showed a moderate reaction. The MACD indicator is in negative territory, with divergence being observed. The 1979 support level can be considered for buying but with a short stop loss. Buying can also be considered after breaking the resistance level of 1990. 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.