The Analytical Overview of the Main Currency Pairs on 2023.10.18

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0558
• Prev. Close: 1.0576
• % chg. over the last day: +0.17%

German economic growth expectations in the October ZEW survey rose by 11.4 to 1.1, a 6-month high. The Eurozone indicator was in positive territory, rising from minus 8.9 to plus 2.3. Dovish comments from Fed officials also supported EUR/USD. On Tuesday, FRB Richmond President Barkin gave a “bearish” comment for the dollar, saying that he is unclear about the path of inflation and needs time to assess whether rates have been raised enough. That raises the possibility that the Fed won’t raise rates again this year.

Trading recommendations

• Support levels: 1.0532,1.0495,1.0483
• Resistance levels: 1.0612,1.0634,1.0697,1.0713,1.0736

The trend on the EUR/USD currency pair on the hourly time frame is upward. At the moment, the price is trading above the moving averages. The MACD indicator has returned to the positive zone, but there is still buying pressure inside the day. Selling can be looked for from the resistance level of 1.0612, subject to the opposite reaction on the lower time frames. Buy deals can be looked for from moving average lines but with confirmation on intraday time frames.

Alternative scenario:

if the price breaks through the support level of 1.0483 and fixes below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2200
• Prev. Close: 1.27471.2182
• % chg. over the last day: -0.15%

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The price is forming a broadly volatile flat with small signs of bullish pressure inside. The MACD indicator has become inactive, which often happens before the publication of important news. Under such market conditions, buys can be sought from the support level of 1.2160, but with confirmation intraday. Selling can be looked for after testing liquidity above 1.2224 with confirmation in the form of an impulsive move back above the level.

Trading recommendations

• Support levels: 1.2160,1.2121,1.2104,1.2083,1.2009
• Resistance levels: 1.2224,1.2273,1.2332,1.2384,1.2420,1.2504,1.2547

Alternative scenario: if the price breaks through the support level of 1.2104 and consolidates below it, the downtrend will likely resume.

Alternative scenario:

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 149.50
• Prev. Close: 149.80
• % chg. over the last day: +0.87%

The yen initially rose yesterday on Bloomberg’s report that the Bank of Japan is likely to discuss raising its inflation forecast for fiscal years 2023 and 2024 at its meeting later this month. But the yen eventually returned to the downside and suffered moderate losses. A jump in T-note bond yields on Tuesday had a negative impact on the yen, along with weak economic news from Japan. Japan’s manufacturing sector business activity index for August unexpectedly declined by 0.1% m/m, which was weaker than expectations of 0.3% m/m growth.

Trading recommendations

• Support levels: 149.55,148.94,148.15,147.32,147.02,146.76,145.88,145.39
• Resistance levels: 149.83,150.16

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish, but it is close to changing. Now, the price is forming a narrowly volatile flat before the priority change level. A test of liquidity above the level of 149.83 is very likely to take place. And further, it is necessary to follow the reaction of the price. The consolidation behind the level of impulse candlesticks will change the trend to a bullish one, which will lead to further growth of quotations above 150.15. If the test is false and the price sharply returns under the level of 149.83, under such market conditions, it will be possible to look for sell deals, but with short targets.

Alternative scenario:

if the price consolidates above the resistance level of 149.83, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1918.98
• Prev. Close: 1922.60
• % chg. over the last day: +0.19%

Precious metals prices posted moderate gains on Tuesday amid increased demand for safe-haven housing as the conflict between Israel and Hamas intensified after Israeli Defense Minister Gallant said he expects a “long war” against Hamas. In addition, rising inflation expectations boosted demand for gold as an inflation hedge. Silver also found support on Tuesday amid stronger-than-expected reports on US retail sales and manufacturing, which were favorable for demand for industrial metals.

Trading recommendations

• Support levels: 1928.16,1907.71,1887.63,1867.89,1844.16,1833.16,1820.89
• Resistance levels: 1939.19,1947.81,1961.06

From the point of view of technical analysis, the trend on the XAU/USD has changed to an upward trend. At the moment, the price is trading above the moving averages. The MACD indicator is in the positive zone, and the buying pressure remains, but there are the first signs of divergence. Under such market conditions, it is better to look for buying on intraday time frames, as the price will probably not make deep pullbacks. The closest significant support level is 1928.16, but with confirmation. Selling can be looked for from resistance levels 1939.19 or 1947.81, but subject to a pullback and structure change on the lower time frames.

Alternative scenario:

if the price holds below the support level of 1844.35, the downtrend will likely resume.