The Analytical Overview of the Main Currency Pairs on 2023.09.08

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0719
• Prev. Close: 1.0695
• % chg. over the last day: -0.22%

The strengthening of the dollar on Thursday had a negative impact on the euro. EUR/USD hit a 3-month low yesterday. In addition, weaker-than-expected economic news from the Eurozone had a negative impact on EUR/USD after Eurozone GDP for the second quarter was revised downward, and German industrial production for July fell more than expected. But despite all this gloomy mood, ECB representatives are trying to convince the currency markets that they can still go for policy tightening next week.

Trading recommendations

• Support levels: 1.0702,1.0659
• 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 bearish. The price formed a false breakdown of the 1.0702 support level, while the price return was on the impulsive candles with the breakout of the descending trend line. The MACD indicator is in the negative zone, but selling pressure is weak, with divergence intensifying. Under such market conditions, buy trades can be looked for from the support level of 1.0702 but with confirmation on the lower time frames. Sell traders 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: 1.2498
• Prev. Close: 1.27471.2470
• % chg. over the last day: -0.22%

Halifax’s UK House Price Index report showed that prices fell by the largest amount since the beginning of the year. According to economic theory, this is a negative factor for the British pound, as lower house prices lead to a reduction in consumer spending, which leads to lower inflationary pressures and, consequently, less pressure on the Bank of England to maintain a hawkish stance on monetary policy.

Trading recommendations

• Support levels: 1.2458,1.2307
• Resistance levels: 1.2549,1.2611,1.2659,1.2712,1.2733,1.2746,1.2764

According to technical analysis, the GBP/USD currency pair trend on the hourly time frame is bearish. The British pound reached the next daily support level, and buyers’ reaction followed, but so far, it looks more like a rebound than a reversal. The MACD indicator is in the negative zone but with signs of divergence upward momentum. Buying can be considered from the support level of 1.2458 but with additional confirmation on the lower time frames in the form of an impulsive initiative of buyers. Sell trades are best considered from the resistance level of 1.2549 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 will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 147.61
• Prev. Close: 147.28
• % chg. over the last day: -0.22%

The yen strengthened slightly on Thursday. The yen was supported by comments from Bank of Japan (BoJ) board official Nakagawa, who said that the BoJ will coordinate closely with the government on exchange rate controls. Such “verbal” interventions lead investors to partially or completely close their long positions and fix profits in anticipation of possible currency intervention from the government.

Trading recommendations

• Support levels: 147.02,146.23,145.69,145.39,145.00
• Resistance levels: 147.81,148.80

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price continues to form a wide-volatility corridor with the boundaries of 147.02 and 147.81. At the same time yesterday, the price additionally formed a false breakdown zone. The MACD indicator became inactive. The false breakdown zone will act as a support area, but confirmation is needed for entry. A breakout of the downtrend line can act as confirmation. If it does not happen and the price continues to decline, traders should expect the price at the 146.23 support level. Sell trades can be considered from the resistance level of 147.81 but with confirmation in the form of a false breakout and a change of structure on the lower time frames.

Alternative scenario:

if the price consolidates below the support level of 145.00, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1916.64
• Prev. Close: 1918.73
• % chg. over the last day: +0.11%

US weekly jobless claims unexpectedly fell by 13,000 to a 7-month low of 216,000, indicating a strengthening labor market and may encourage the Fed to raise interest rates longer. Markets are pricing in a 7% chance of a 25 bps rate hike at the September 20 FOMC meeting, and a 50% chance of a 25 bps hike at the November 1 FOMC meeting. The likelihood of another hike is the stumbling block for gold and silver. But since the US Fed is at the end of its tightening cycle, in the long term, precious metals now have optimal points for accumulating a position.

Trading recommendations

• Support levels: 1921.58,1914.37,1903.87,1893.80
• Resistance levels: 1928.67,1934.71,1941.79,1947.81,1961.06

From the point of view of technical analysis, the trend on the XAU/USD currency pair is bullish. The price broke through the descending trend line yesterday and consolidated in the territory above the moving averages. The MACD indicator has become positive, and the upward momentum is gaining momentum. Under these market conditions, buy trades can be considered from the support level of 1921.58, but with confirmation in the form of buyers’ reactions. Sell trades are better sought from the resistance level of 1928.67 or 1934.71 but with confirmation in the form of a reverse initiative and change of structure on intraday time frames.

Alternative scenario:

if the price breaks through and consolidates below the support level of 1914.26, the downtrend will likely resume.