The Analytical Overview of the Main Currency Pairs on 2023.09.11

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0696
• Prev. Close: 1.0699
• % chg. over the last day: +0.01%

Stronger-than-expected economic news from France on Friday kept the euro from further declines. French manufacturing output for July rose by 0.7% m/m, which was stronger than expectations of 0.4% m/m. Also, industrial production for July rose by 0.8% m/m, stronger than expectations of 0.1% m/m. The euro was also supported by a slight increase in expectations of an ECB rate hike on September 14. The probability of a rate hike rose to 38% on Friday from 34%.

Trading recommendations

• Support levels: 1.0697,1.0659
• Resistance levels: 1.0743,1.0781,1.0827,1.0842,1.0881,1.0943,1.1004

The trend on the EUR/USD currency pair on the hourly time frame is a downtrend. After forming a false breakdown of the 1.0700 support level, the price tested this level twice, and in both cases, there was the buyers’ reaction. The MACD indicator became positive, buyers’ pressure is increasing, and corrective movement has started. Under such market conditions, buy trades can be looked for from the support level of 1.0700 or from the moving average lines, but with confirmation on the lower time frames. Sell trades can be considered from the resistance level of 1.0743 or 1.0781 but with confirmation in the form of a reverse initiative. By backward initiative, we mean the sellers’ reaction in the form of an engulfing candle 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: 1.2472
• Prev. Close: 1.27471.2460
• % chg. over the last day: -0.09%

The British Pound is going to have a busy trading week. Tuesday will see the release of labor market data, while Wednesday will see the release of UK GDP, industrial production, and trade balance data. With the Governor of the Bank of England unexpectedly taking a dovish stance on monetary policy last week, if the figures come in below par, the Bank of England may keep interest rates unchanged at the next MPC meeting later this month.

Trading recommendations

• Support levels: 1.2449,1.2307
• Resistance levels: 1.2511,1.2549,1.2611,1.2659,1.2712,1.2733,1.2746,1.2764

According to technical analysis, the GBP/USD currency pair trend on the hourly timeframe is bearish. The price is forming a wide-volatility corridor, and, probably, the price will remain trading in it until tomorrow’s news on the labor market. The MACD indicator became positive, and momentum is ascending, which increases the probability of breaking the resistance level of 1.2511. Buy deals can be considered on intraday timeframes from the moving averages. Sell trades are best considered from the resistance level of 1.2511 or 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: 147.23
• Prev. Close: 147.78
• % chg. over the last day: +0.37%

The Japanese economic news released on Friday was weaker than expected and had a negative impact on the yen. Japan’s second-quarter GDP figure was revised downward to 4.8% (q/q annualized) from the previously announced 6.0%, which was weaker than expectations of 5.6%. The yen exchange rate hit a 10-month low on Friday. But on Monday’s market opening, the Japanese yen jumped sharply on the back of comments by Bank of Japan Governor Kazuo Ueda over the weekend that the central bank may end its negative interest rate policy when the 2% inflation target is reached. Since the yen surpassed the key 145 per dollar mark last month, traders have been waiting for any sign of Japanese intervention to support the currency.

Trading recommendations

• Support levels: 146.23,145.69,145.39,145.00
• Resistance levels: 147.03,147.81,148.80

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. But now, a corrective movement to the nearest support levels is being formed. As there are no fundamental factors for the yen strengthening, after the correction is over, further growth of quotations is expected. The MACD indicator is in the negative zone, and the pressure of sellers within the day remains. Buy trades should be sought at the support levels of 146.23 or 145.69 but with confirmation on the lower time frames. Sell trades can be considered from the resistance level of 147.03 but with confirmation in the form of sellers’ reactions.

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: 1918.75
• Prev. Close: 1919.05
• % chg. over the last day: -0.02%

Dovish comments from Dallas Fed President Lorie Logan on Friday lent support to gold when she said she favored a pause in Fed rate hikes at the upcoming meeting. But by the end of the trading session, gold declined again after bond yields headed higher. Also bearish for gold was the continued liquidation of gold stocks by funds after long gold holdings in ETF funds fell to a 3-year low on Thursday. At the moment, precious metals are in search of positive catalysts, the main one being the end of the tightening cycle by the US Fed.

Trading recommendations

• Support levels: 1920.42,1914.26,1903.87,1893.80
• Resistance levels: 1928.55,1934.71,1941.79,1947.81,1961.06

From the point of view of technical analysis, the trend on the XAU/USD currency pair is bullish. The corrective movement seems to be coming to an end. At the moment, the price is trading in a wide-volatile corridor, within which the pressure of buyers prevails. The MACD indicator is inactive. Under such market conditions, buy trades can be considered from the support level of 1920.42, but with confirmation in the form of buyers’ reactions. Sell trades are better to look for from the resistance level of 1928.55 or 1934.71 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 1914.26, the downtrend will likely resume.