The Analytical Overview of the Main Currency Pairs on 2023.09.25

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0655
• Prev. Close: 1.0643
• % chg. over the last day: -0.11%

The latest Eurozone business activity data was mixed. In the manufacturing sector, the index fell from 43.5 to 43.4 (forecast 44.0). In the services sector, the PMI rose from 47.3 to 49.8 (forecast 47.2). So, while manufacturing is suffering, the services sector has almost reached the 50 mark that separates growth from contraction. But this did little to help the European currency. The European currency is under pressure from the rise of the US dollar, which in turn is supported by the Fed’s policy. At the same time, the difference in interest rates (5.5% of the US Fed vs. 4.5% of the ECB) also puts additional pressure on the euro.

Trading recommendations

• Support levels: 1.0616,1.0519
• Resistance levels: 1.0672,1.0697,1.0713,1.0730,1.0768,1.0842,1.0881,1.0943.

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is forming a wide volatile flat with the boundaries of 1.0616-1.0672. And the price is in the middle of this flat, which makes it difficult to find good entry points. The MACD indicator has become inactive. Sell deals can be looked for after a false breakout of the 1.0672 resistance level, subject to a pullback. Buying can be looked for after another liquidity test below the support level of 1.0616.

Alternative scenario:

if the price breaks through the resistance level of 1.0736 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2294
• Prev. Close: 1.27471.2235
• % chg. over the last day: -0.48%

After the British pound lost the support of the Bank of England in the form of a further rate hike, the pound has been steadily declining against the dollar. And the Bank of England’s decision looked absolutely justified, given the latest economic data. According to official data, retail sales last month fell by 1.4% year-on-year, while the markets expected similar growth. The Purchasing Managers’ Index (PMI) for the month showed that all sectors of the economy were in contractionary territory. MPC downgraded its own forecast for the economy and now expects that in the third quarter of 2023, gross domestic product growth will be only 0.1%, so the threat of recession is once again looming over the UK.

Trading recommendations

• Support levels: 1.2229,1.2178
• Resistance levels: 1.2380,1.2425,1.2461,1.2503,1.2547,1.2611,1.2659,1.2712.

According to technical analysis, the GBP/USD currency pair trend on the hourly time frame is bearish. The price is trading at the support level of 1.2229, and with each test of the level, the reaction of buyers is getting weaker. There is enough liquidity formed under the level for the test, so the update of the low is almost inevitable. The MACD indicator is in the negative zone, and divergence is present. Since the price is in the discount zone, buy trades can be sought intraday, but only with confirmation in the form of a breakout of the descending trend line or after the price consolidation above the moving averages. Selling before the support level is not recommended, so for selling, you should wait for either a breakdown of the support level or a rise to the nearest resistance level.

Alternative scenario:

if the price breaks through the resistance level of 1.2425 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 147.54
• Prev. Close: 148.36
• % chg. over the last day: +0.56%

The Japanese yen extended losses on Friday after the Bank of Japan kept interest rates at a record low following Friday’s meeting, and BOJ Governor Ueda said that the distance to the possibility of a negative rate adjustment had not changed much. Another bearish factor for the yen was Friday’s data that Japan’s manufacturing PMI declined at the sharpest pace in 7 months. The Japanese manufacturing PMI for September from Jibun Bank decreased by 1.0 to 48.6. The JPY continues to be under pressure from the interest rate differential between the US Federal Reserve and the Bank of Japan. The probability that the Bank of Japan will again make currency intervention to support the exchange rate is increasing.

Trading recommendations

• Support levels: 147.77,147.30,147.02,146.76,145.88,145.39,145.00
• Resistance levels: 148.46,148.82

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is once again trading above the moving averages. The MACD indicator has become positive, and there is buying activity during the day. Buy trades should be sought from the support level of 147.77, but with confirmation. Sell trades can be sought from the resistance level of 148.46, but only after a false breakout and a seller’s opposite reaction. In case the price consolidates above 148.46, the road to 148.82 will be opened for the price.

Alternative scenario:

if the price consolidates below the support level of 146.76, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1919.72
• Prev. Close: 1925.30
• % chg. over the last day: +0.29%

On Friday, hawkish comments from several FOMC policymakers supported the dollar and limited the rise in gold. FOMC policymakers were almost unanimous in saying that the fight against inflation is not over and inflation will not reach the 2% target even by the end of 2024, so either further rate hikes will be needed or keeping rates high for a long time. Both will support the dollar and government bond yields. Since gold has an inverse correlation to government bond yields, it will be under pressure. But it should be noted that despite the hawkish stance of the US Federal Reserve System, gold behaves very stable against the growth of the dollar.

Trading recommendations

• Support levels: 1920.92,1913.00,1901.13
• Resistance levels: 1933.94,1941.56,1947.81,1961.06

From the point of view of technical analysis, the trend on the XAU/USD currency pair is bullish. Now, the price is trading at the level of moving averages. The MACD indicator has become negative, but the selling pressure is weak. Under such market conditions, buy trades are best-sought intraday from the support level of 1920.92, but with confirmation. Sell trades are best considered from resistance levels of 1933.94 or 1941.56, subject to sellers’ reactions.

Alternative scenario:

if the price breaks and consolidates below the support level of 1913.06, the uptrend will likely resume.