The Analytical Overview of the Main Currency Pairs on 2023.10.02

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0557
• Prev. Close: 1.0573
• % chg. over the last day: +0.15%

The EUR/USD pair rose slightly on Friday due to the weakness of the dollar. But the gains were limited as economic news showed that Eurozone consumer prices for September fell more than expected, and German retail sales for August unexpectedly fell to an 8-month low, which is dovish for ECB policy. In addition, comments from ECB Governing Council representative Kazaks put pressure on the euro when he stated that interest rates are likely to remain stable for an extended period of time.

Trading recommendations

• Support levels: 1.0536,1.0482
• Resistance levels: 1.0608,1.0624,1.0673,1.0697,1.0713,1.0736,1.0768

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is correcting and is now trading at the level of moving averages. The MACD indicator has become inactive. Don’t forget that there is untested liquidity below the support level of 1.0482, so the bias is still bearish. Sell deals can be looked for after a pullback to the resistance level of 1.0624, provided the reaction is reversed. Buying can be looked for from the support level of 1.0536 or 1.0482, but with confirmation in the form of buyers’ reaction.

Alternative scenario:

if the price breaks through the resistance level of 1.0673 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2197
• Prev. Close: 1.27471.2201
• % chg. over the last day: +0.03%

On Friday, the British pound got some respite from both the weakness of the US dollar and the local UK GDP release. UK GDP beat forecasts for the core reading in annualized terms (fact +0.6% y/y, forecast 0.4% y/y) as well as for business investment. After the recent gloomy forecasts for the UK economy, these data brought some positivity. As a result, the Bank of England’s expectations have shifted slightly in favor of a higher peak and a smaller decline in interest rates by the end of 2024.

Trading recommendations

• Support levels: 1.2164,1.2111
• Resistance levels: 1.2242,1.2285,1.2368,1.2424,1.2461,1.2503,1.2547,1.2611

According to technical analysis, the GBP/USD currency pair trend on the hourly time frame is bearish. The price is correcting and is now trading at the level of moving averages. The MACD indicator has become negative. Selling can be looked for from the resistance level of 1.2242, but only with confirmation in the form of sellers’ reactions. Buying can be considered from the support level of 1.2164, but also with confirmation.

Alternative scenario:

if the price breaks through the resistance level of 1.2424 and consolidates above it, the uptrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 149.28
• Prev. Close: 149.37
• % chg. over the last day: +0.06%

Friday’s action by the Bank of Japan to announce an unscheduled bond-buying operation gave temporary confidence to the yen. The BoJ bought 300 billion yen ($2 billion) of five- and 10-year bonds in an attempt to keep long-term bond yields from rising. But by the end of the day, JGB 10-year bond yields still rose to a 10-year high of 0.774%, reinforcing the yen’s interest rate differential. At the market opening on Monday, the yen continued to fall and approached the 150 mark, which could provoke the Bank of Japan to intervene.

Trading recommendations

• Support levels: 149.13,148.87,147.78,147.32,147.02,146.76,145.88,145.39,145.00
• Resistance levels: 149.70,149.92

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. On Friday, the price corrected below the support level of 148.87 and, after liquidity grabbing, impulsively returned to growth. The MACD indicator became positive again. Trades in the continuation of the uptrend should be sought from the moving averages but with confirmation. Sell trades can be looked for after an impulsive price return below the resistance level of 149.70. At the moment, market conditions point to a continuation of the uptrend to 149.92-150.00.

Alternative scenario:

if the price consolidates below the support level of 148.52, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1867.12
• Prev. Close: 1848.80
• % chg. over the last day: -0.99%

Precious metals prices gave up early gains and suffered moderate losses on Friday, with gold falling to a 6-month low. Hawkish comments from New York Fed President Williams triggered the liquidation of long positions in metals when he said that the Fed would be forced to maintain restrictive rates “for some time.” The liquidation of positions caused the volume of long gold positions in ETF funds to hit a three-year low. For a reversal in gold, it is necessary to wait for the end of the tightening cycle by the US Fed.

Trading recommendations

• Support levels: 1843.69,1835.37
• Resistance levels: 1857.80,1885.75,1901.05,1910.40,1921.31,1928.93,1933.94.

From the point of view of technical analysis, the trend on the XAU/USD is bearish. The price has reached the 1849.69 support level, but there is no buyer’s reaction at the moment. The MACD indicator is in the negative zone with oversold and divergence signs. A technical correction is looming. Under such market conditions, it is better to sell from moving averages with intraday confirmation. For buy deals, traders should wait for the buyers’ reaction from the support level of 1835.37.

Alternative scenario:

if the price breaks above the resistance level at 1880.04, the uptrend will likely resume.