The Analytical Overview of the Main Currency Pairs on 2023.10.05

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0464
• Prev. Close: 1.0503
• % chg. over the last day: +0.37%

The euro found support on Wednesday amid the weakening of the dollar. The dollar came under pressure on Wednesday after the ADP monthly employment report came in less than expected, pushing bond yields lower. In addition, on Wednesday, EUR/USD was supported by hawkish comments from ECB President Lagarde, who stated that the ECB will hold interest rates “for as long as necessary.”

Trading recommendations

• Support levels: 1.0487,1.0412,1.0223
• Resistance levels: 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. Yesterday, the price impulsively returned above the 1.0487 level, forming an accumulation zone below the level, and now this zone will act as support. The MACD indicator became positive. At the moment, the price has reached the resistance level, but the reaction of buyers is weak, so there is a high probability of further growth within the correction. Sell deals can be looked for after testing the resistance level at 1.0568 if the reaction is reversed. Buying can be looked for from the support level of 1.0487, but it is also subject to buyers’ reaction.

Alternative scenario:

if the price breaks through the resistance level of 1.0591 and fixes above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2068
• Prev. Close: 1.27471.2134
• % chg. over the last day: +0.54%

Yesterday, the price impulsively returned above the 1.2111 level, forming an accumulation zone below the level, and now this zone will act as support. The MACD indicator became positive. At the moment, the price has reached the resistance level, but the reaction of buyers is weak, so there is a high probability of further growth within the correction. Selling can be looked for after testing the resistance level at 1.2189 if the reaction is reversed. Buying can be looked for from the support level of 1.2111 or 1.2083, but it is also subject to buyers’ reactions.

Trading recommendations

• Support levels: 1.2111,1.2083,1.2009
• Resistance levels: 1.2189,1.2270,1.2369,1.2420,1.2504,1.2547.

Alternative scenario: if the price breaks through the resistance level of 1.2220 and consolidates above it, the uptrend will likely resume.

Alternative scenario:

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 149.04
• Prev. Close: 149.11
• % chg. over the last day: +0.05%

Despite the fact that Tokyo did not confirm or deny its involvement in the strengthening of the yen at the beginning of the week, the price dynamics show that any artificial intervention will not be able to significantly and permanently change the trend of currency devaluation. Looking at the situation as a whole, Tokyo still has few opportunities to counter the strengthening of the US dollar, as US rates have reached multi-year highs and Japanese bond yields are constrained by the Bank of Japan. And as long as there remains a significant monetary policy gap between the US Fed and the Bank of Japan, the yen will remain in a bearish trend. This may mean further strengthening of the USD/JPY pair in the coming weeks. However, traders should not rule out additional interventions from Japanese officials.

Trading recommendations

• Support levels: 147.32,147.02,146.76,145.88,145.39,145.00
• Resistance levels: 148.91,149.33,150.16

From the technical point of view, the medium-term trend on the currency pair USD/JPY changed to a downtrend. The price closed below the priority level of 148.52. The MACD indicator is in the negative zone, and there is selling pressure inside the day. Sell trades can be looked for from the resistance level at 148.91 or 149.33. Buying can be sought intraday but with short targets up to the resistance level.

Alternative scenario:

if the price consolidates above the resistance level of 150.16, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1823.90
• Prev. Close: 1823.24
• % chg. over the last day: -0.04%

The stock market’s growth on the background of the dollar decline on Wednesday reduced the demand for precious metals. In addition, gold is under pressure from the liquidation of long positions after the volume of long positions in gold ETF funds hit a 3-year low again on Tuesday. For gold to grow, it is necessary that the yields on government bonds begin to decline, but the fundamental conditions for such a scenario have not yet been formed. At the same time, it should be remembered that gold has long ago lost the status of a hedging instrument against inflation.

Trading recommendations

• Support levels: 1820.89
• Resistance levels: 1857.61,1868.32,1879.93,1885.75,1901.05,1910.40,1921.31

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 reaction of buyers is weak at the moment. At the same time, accumulation is formed right at the support level. As a rule, this leads to a breakdown and continuation of the trend. The MACD indicator has become positive, but with the MACD rising, the price is not rising, indicating that the buyers are weak. Under these market conditions, selling is best sought from moving averages with intraday confirmation. For buying, it is worth waiting 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.