The Analytical Overview of the Main Currency Pairs on 2023.10.04

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0476
• Prev. Close: 1.0465
• % chg. over the last day: -0.10%

The strengthening labor market in the US supported the dollar after the unexpected increase in the number of open jobs in August, according to JOLTS data. In addition, hawkish comments from Fed President Cleveland Mester and Atlanta Fed President Bostic on Tuesday pushed the 10-year T-note yield to a 16-year high and supported the dollar. In turn, the dollar’s strength on Tuesday was a major bearish factor for the euro. The jump in government bond yields strengthened the dollar’s interest rate differential against the euro.

Trading recommendations

• Support levels: 1.0412,1.0223
• Resistance levels: 1.0487,1.0523,1.0568,1.0617,1.0673,1.0697,1.0713,1.0736.

The trend on the EUR/USD currency pair on the hourly time frame is bearish. The price continues to decline and is now trading below the moving averages. A narrow volatile flat is formed. The MACD indicator is in the negative zone, but there are signs of divergence. At the moment, market conditions point to the continuation of the decline to 1.0412. Selling can be looked for after a pullback to the resistance level of 1.0487, provided the opposite reaction. Buy deals can be looked for after an impulsive price return above 1.0487.

Alternative scenario:

if the price breaks through the resistance level of 1.0617 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2088
• Prev. Close: 1.27471.2076
• % chg. over the last day: -0.09%

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 and is forming a narrow volatile flat. The MACD indicator is in the negative zone with no signs of divergence. There is still selling pressure inside the day. Market conditions suggest a further price decline to the level of 1.2009. Selling can be sought from the resistance level of 1.2111 or 1.2160, but only with confirmation in the form of sellers’ reaction. There are no optimal entry points for buying now.

Trading recommendations

• Support levels: 1.2009
• Resistance levels: 1.2111,1.2160,1.2189,1.2270,1.2369,1.2420,1.2504,1.2547

Alternative scenario: if the price breaks through the resistance level of 1.2270 and consolidates above it, the uptrend will likely resume.

Alternative scenario:

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 149.85
• Prev. Close: 148.99
• % chg. over the last day: -0.58%

It happened again. Yesterday, the Japanese Ministry of Finance conducted another currency intervention to support the exchange rate, although there was no official statement from the officials. A spokesman for Japan’s Ministry of Finance was not available to comment on whether Japan had intervened against the yen. But analysts pointed to other explanations, such as standing orders to sell dollars at the 150 level because of the threat of official action. Analysts also questioned: “If this was an intervention, why did the price return to the 149 level so quickly?”. Others speculate that there may have been a check by Japanese authorities on bank exchange rates – a move often seen as a prelude to further official action. There were several interventions in the previous time, so there is a high probability of new interventions in the following days.

Trading recommendations

• Support levels: 148.52,147.78,147.32,147.02,146.76,145.88,145.39,145.00
• Resistance levels: 149.45,149.65,149.92

From the technical point of view, the medium-term trend on the currency pair USD/JPY is still bullish, as the price failed to close below the priority change level. The MACD indicator has become negative, but there is buying pressure intraday. With positions in the continuation of the uptrend, traders should be very careful now because there is a high probability of new interventions. Sell trades can be looked for after an impulsive bearish reaction to the 149.45-149.65 zone.

Alternative scenario:

if the price consolidates below the support level of 148.52, the downtrend is likely to be resumed.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1829.34
• Prev. Close: 1823.83
• % chg. over the last day: -0.30%

The strengthening of the dollar on Tuesday had a negative impact on metal prices. In addition, the “bearish” factor for precious metals was the “hawkish” comments of central banks: Fed President Cleveland Mester, Atlanta Fed President Bostic, and ECB Governing Council representative Simkus stated their support for longer interest rate hikes. But unlike the euro and pound, gold did not renew the low, and by the end of the trading session, gold recovered slightly on buying, driven by the stock market sell-off. Since gold is inversely correlated with government bond yields, investors need to see signs of the end of the tightening cycle from the leading central banks for a full trend reversal in precious metals.

Trading recommendations

• Support levels: 1820.89
• 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 support level of 1820.89, but the buyers’ reaction is weak at the moment. The MACD indicator is in the negative zone with signs of oversold and divergence. A technical correction is looming, but traders need to wait for confirmation in the form of buyers’ reactions. Under such market conditions, it is best to sell from moving averages with intraday confirmation. For buying, traders should wait for buyers’ reaction to the support level of 1820.89.

Alternative scenario:

if the price breaks above the resistance level at 1880.00, the uptrend will likely resume.