The Analytical Overview of the Main Currency Pairs on 2023.09.06

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0790
• Prev. Close: 1.0721
• % chg. over the last day: -0.64%

The strengthening of the dollar on Tuesday triggered technical selling of the euro, with it reaching a new low of almost three months. In addition, Tuesday’s weaker-than-expected economic news from the Eurozone proved dovish for ECB policy. The Eurozone Composite PMI for August was revised down by 0.3 to 46.7 from the previously announced 47.0, the sharpest rate of contraction in 3 years. But July’s Eurozone Producer Price Index (displays the inflation rate between factories and plants) fell to negative 7.6% y/y from minus 3.4% y/y in June, the sharpest decline in 14 years.

Trading recommendations

• Support levels: 1.0714,1.0659
• Resistance levels: 1.0767,1.0781,1.0827,1.0842,1.0881,1.0943,1.1004

The trend on the EUR/USD currency pair on the hourly time frame is a downtrend. The price reached the daily support level, where the buyers took the initiative. The MACD indicator is in the negative zone, but the selling pressure is weak, while the divergence has increased. Under such market conditions, buy trades can be looked for from the support level of 1.0714 but with confirmation on the lower time frames. Sell trades can be considered from the resistance level of 1.0767 or 1.0781 but with confirmation in the form of a reverse initiative. The reverse initiative means the sellers’ reaction in the form of an engulfing candlestick or when a pin bar is formed.

Alternative scenario:

if the price breaks through the resistance level of 1.0893 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2612
• Prev. Close: 1.27471.2563
• % chg. over the last day: -0.39%

The British pound fell yesterday due to the rise in the dollar index. But economic data is positive for sterling. The service sector business activity index rose from 48.7 to 49.5 (forecast 48.7), much better than expected, with the index approaching the 50 mark that separates contraction and expansion territory. The economic recovery in the service sector is a positive factor for the Bank of England, as it leaves room for further rate hikes.

Trading recommendations

• Support levels: 1.2549,1.2520,1.2491
• Resistance levels: 1.2612,1.2659,1.2712,1.2733,1.2746,1.2764

According to technical analysis, the trend on the GBP/USD currency pair on the hourly time frame has changed to a downtrend. The British pound fell below the priority change level and is trading below the moving averages. But now, it has formed a false breakdown zone below the 1.2549 level, and this zone will act as support. The MACD indicator is in the negative zone but with signs of divergence. There is a high probability of at least a technical correction upward. Buy deals can be considered from the support level of 1.2549 but with additional confirmation on the lower timeframes. Sell trades are best considered from the resistance level of 1.2612 or 1.2642 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks through the resistance level of 1.2642 and consolidates above it, the uptrend is likely to resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 146.40
• Prev. Close: 147.70
• % chg. over the last day: +0.88%

The yen fell to a 10-month low against the dollar on Tuesday. Rising T-note yields pressured the yen on Tuesday, as well as diverging central bank stances, with the US Fed, Bank of England, and ECB raising interest rates while the Bank of Japan maintains record low interest rates and a mild stimulus policy. Japanese economic news also pressured the yen after Japanese household spending fell more than expected. Japanese household spending for July fell by 5.0% y/y, which was weaker than expectations of 2.5% y/y and was the largest decline in 2.5 years.

Trading recommendations

• Support levels: 147.09,146.23,145.69,145.39,145.00
• Resistance levels: 147.40,148.80

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The yen continues to fall against the dollar and is at the levels where the intervention took place last time. Now, the price has formed a false breakout of the 147.40 resistance level, which can be used for selling but only with short targets. The MACD indicator is in the positive zone, but the momentum is behind the sellers. Buy trades should be sought on intraday time frames after a pullback to the support level of 147.08. In case of a stronger fall, expect the price to reach the 146.23 support level. Sell trades can be considered from the resistance level of 147.44 but with confirmation in the form of a reverse initiative.

Alternative scenario:

if the price fixes below the 145.00 support level, with a high probability that the downtrend will resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1938.29
• Prev. Close: 1925.82
• % chg. over the last day: -0.64%

The dollar index rally to a 5-month high on Tuesday was bearish for precious metals gold and silver. In addition, the rise in global bond yields on Tuesday also had a negative impact on precious metals prices. But there is a positive factor. The bullish factor for precious metals was the comments of FOMC representative Waller, who made it clear that he will vote for a pause in rate hikes at the next meeting of the US Fed.

Trading recommendations

• Support levels: 1924.31,1914.37,1903.87,1893.80
• Resistance levels: 1934.71,1941.79,1947.81,1961.06

From the point of view of technical analysis, the trend on the XAU/USD currency pair is bullish. The price has reached the support level of 1924.31 in the premium buying zone. The MACD indicator remains in the negative zone, but the sellers’ pressure has weakened. Under such market conditions, buy trades can be considered after the breakout of the descending “wedge .”Sell trades are better to look for from the resistance level of 1941.79 but with confirmation in the form of reverse initiative and change of structure on intraday time frames.

Alternative scenario:

if the price breaks through and consolidates below the support level of 1914.37, the downtrend is likely to resume.