The Analytical Overview of the Main Currency Pairs on 2023.09.19

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0657
• Prev. Close: 1.0684
• % chg. over the last day: +0.25%

The revised inflation report for the Eurozone will be released today. Overall inflation is expected to remain at 5.3% in annualized terms, while core inflation (excluding food and energy prices) is expected to fall from 5.5% to 5.3% y/y. For the EUR, this could be a negative in the short term, as the ECB has probably already completed its tightening cycle, while the US Fed is still hawkish. Looking at the FOMC outlook, markets are factoring in a 31% probability that the FOMC will raise the rate by 25 bps at the November 1 meeting and a 14% probability that the rate will be raised by 25 bps at the December 13 meeting. Trading recommendations

Trading recommendations

• Support levels: 1.0662,1.0635
• Resistance levels: 1.0717,1.0730,1.0768,1.0842,1.0881,1.0943,1.1004

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is correcting to the nearest resistance levels. The MACD indicator is in the positive zone, but the buyers’ pressure is weak. But the price may test the resistance level at 1.0717, where traders can look for sell deals in case of a proper reaction. Buy trades can be looked for from the support level of 1.0662 but with confirmation in the form of buyers’ reactions. But it should be remembered that the probability of another update of 1.0635 low remains high.

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: 1.2381
• Prev. Close: 1.27471.2382
• % chg. over the last day: +0.01%

This week, the Bank of England will probably have to choose between raising rates now but with an earlier rate cut in 2024 or maintaining current levels but for a longer period of time. The extent to which the impact of the previous 14 monetary tightening measures has yet to play out will be crucial. Even if the vote is unambiguous, the difficult economic picture in the UK is likely to split the vote. Therefore, if rates do rise, their impact is likely to be partially mitigated by a softer policy statement.

Trading recommendations

• Support levels: 1.2371,1.2307
• 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 while liquidity continues to narrow. As a rule, such a formation occurs before an impulse movement. But an impulse needs a news trigger, and the nearest economic events for the UK are tomorrow. Buy deals can be considered after a breakout of the descending trendline. 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: 147.71
• Prev. Close: 147.59
• % chg. over the last day: -0.08%

The Federal Reserve (Fed) and the Bank of Japan (BoJ) will announce their latest monetary policy decisions this week on Wednesday and Friday, respectively, with both central banks expected to leave interest rates unchanged. However, both decisions could have an impact on markets, with the Bank of Japan’s reaction possibly being more hawkish. Recent remarks by Japan’s central bank governor, Kazuo Ueda, that the BoJ could end its negative interest rate policy by the end of the year have traders keeping a close eye on any post-decision comments. Traders are also concerned that the Bank of Japan or the Ministry of Finance may conduct currency intervention, as USD/JPY quotes are trading at levels where the Bank of Japan intervened last year to support the exchange rate.

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. The price continues to consolidate at the levels of moving averages. The MACD indicator has become inactive, and volatility has fallen. Buy trades should be sought intraday from the moving average levels, provided that buyers react. Sell trades can be sought from the resistance level of 147.85 but with confirmation in the form of the reaction of sellers and a change of structure on the lower time frames. It is not recommended to trade in the middle of accumulation.

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: 1922.43
• Prev. Close: 1933.24
• % chg. over the last day: +0.56%

Precious metals were supported on Monday by a slight decline in the dollar and a  3 bps drop in 10-year bond yields. Gold hinted at a continuation of the short-term uptrend, but further momentum will depend on the FOMC rate decision and updated quarterly forecasts, which could provide insight into the future trajectory of monetary policy. According to the fed funds futures market, the FOMC will almost certainly leave rates unchanged on Wednesday (99% probability). The Fed is also unlikely to change its estimate of the ultimate interest rate, providing maximum flexibility in the event of a further rise in inflation. Gold will react to the value of the US Dollar and US Treasury yields (inverse correlation) following the release of the statement, inflation update, and press conference.

Trading recommendations

• Support levels: 1918.98,1912.92,1901.08
• Resistance levels: 1934.78,1941.96,1947.81,1961.06

From the point of view of technical analysis, the trend on the XAU/USD currency pair has changed to an upward trend. The price broke through the priority change level and consolidated above. The MACD indicator is in the positive zone. Intraday buyers prevail, but there are signs of divergence. Now, the price is accumulating above the resistance level, and there is a high probability of a corrective move to the nearest support levels to distribute the grabbed liquidity. Sell trades are best sought after a false breakout of the resistance level at 1934.78 with sellers reacting. Buy trades are best sought after a pullback to 1918.98 or 1912.92 support levels.

Alternative scenario:

if the price breaks and consolidates below the support level of 1901.08, the uptrend is likely to resume.