The Analytical Overview of the Main Currency Pairs on 2023.09.18

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0638
• Prev. Close: 1.0657
• % chg. over the last day: +0.17%

The ECB has probably ended the tightening cycle, and now traders have shifted their attention to how long rates will be kept at the current level and when the easing cycle will start. ECB head Christine Lagarde emphasized on Friday that the ECB may raise rates again if necessary, but the probability of such a scenario is extremely low. On Tuesday, traders will be interested in the final data on Eurozone inflation HICP. The revision of this data is infrequent, and as a rule, the revision changes are insignificant. At the end of the week, the flash PMI indices for the main Eurozone economies will be published, which will show the health of the economy in a period of high interest rates.

Trading recommendations

• Support levels: 1.0635
• Resistance levels: 1.0685,1.0730,1.0768,1.0842,1.0881,1.0943,1.1004

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is trading at the level of moving averages. The MACD indicator indicates the weakness of buyers. There is a high probability of another update of the minimum. Under such market conditions, buy trades can be looked for from the support level of 1.0635, but with confirmation in the form of a false breakdown and grabbing the liquidity below. Sell trades can be looked for intraday after a breakout of the rising trendline.

Alternative scenario:

if the price breaks through the resistance level of 1.0768 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2407
• Prev. Close: 1.27471.2382
• % chg. over the last day: -0.21%

It is going to be a volatile week for the British Pound. On Wednesday, the UK will release inflation data, and on Thursday, the Bank of England will hold its monetary policy meeting. Despite the fact that the Governor of the Bank of England, Andrew Bailey, unexpectedly took a soft stance and indicated that the central bank is already at the end of the tightening cycle, another rate hike on Thursday looks very likely, especially given the fact that inflation data is forecast to be unchanged. Friday will also see the release of retail sales and flash PMI data.

Trading recommendations

• Support levels: 1.2392,1.2307
• Resistance levels: 1.2461,1.2503,1.2547,1.2611,1.2659,1.2712,1.2733

According to technical analysis, the GBP/USD currency pair trend on the hourly time frame is bearish. The price is trading below the moving averages. The MACD indicator is in the negative zone, but there are the first signs of divergence, with liquidity starting to narrow. As a rule, such a formation occurs before an impulsive movement. Buy deals can be considered after the breakout of the descending trend line. Sell trades are best considered from the resistance level of 1.2461 but with confirmation in the form of sellers’ initiative.

Alternative scenario:

if the price breaks through the resistance level of 1.2547 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 147.46
• Prev. Close: 147.85
• % chg. over the last day: +0.26%

The yen fell to a 10-month low against the dollar on Friday. Friday’s rally in the Nikkei Stock Index (JP225) to a 1.5-month high reduced demand for the yen as a safe haven. The yen fell on information that the BOJ sees a discrepancy between recent comments from BOJ Governor Ueda and how traders interpreted those comments, saying that Ueda’s mention of the possibility of ending negative rates was more of a general statement than a policy signal. Later this week, inflation data will be released, and the Bank of Japan will hold its monetary policy meeting. No changes are expected, but there could be hawkish surprises in the form of a change in the yield curve control policy.

Trading recommendations

• Support levels: 147.59,146.92,145.88,145.39,145.00
• Resistance levels: 147.85,148.80

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. After the price closed the gap, which was formed from the opening of the last week, consolidation and high update followed. The price grabbed liquidity above 147.85 and is trading now in a corridor with signs of sellers’ pressure intraday. The price is likely to distribute the grabbed liquidity below 147.59. The MACD indicator has become inactive. Buy trades should be sought intraday from moving average levels, provided buyers react. Sell trades can be sought from the resistance level of 147.85 but with confirmation in the form of sellers’ reactions 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: 1909.36
• Prev. Close: 1923.73
• % chg. over the last day: +0.75%

Gold rose at the end of last week thanks to the slight depreciation of the US dollar and the deterioration in risk sentiment following the US economic data. One of the largest strikes led by the United Auto Workers (UAW) union began on Friday, weakening the auto industry, while news that TSMC asked suppliers to delay deliveries hit the tech-heavy Nasdaq index. Gold, which is a natural safe-haven asset, tends to rise on such news. But gold’s future movement will depend on this week’s Federal Reserve interest rate meeting and the FOMC’s inflation outlook. Better-than-expected consumer inflation in August may lead the FOMC committee to stay the course on interest rates. And this will be a limiting factor for gold growth.

Trading recommendations

• Support levels: 1919.01,1913.05,1893.80
• Resistance levels: 1930.71,1934.68,1941.96,1947.81,1961.06

From the point of view of technical analysis, the trend on the XAU/USD currency pair is bearish but close to a reversal. The price has approached the priority change level and is more likely to test the liquidity above 1930.71. The MACD indicator is in the positive zone. Intraday buyers prevail. Sell trades are better to look for after a false breakout of the resistance level at 1930.71, with sellers reacting. Buy trades are best sought after a pullback to the moving averages.

Alternative scenario:

if the price breaks through and consolidates above the resistance level of 1930.71, the uptrend will likely resume.