The Analytical Overview of the Main Currency Pairs on 2023.10.26

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0589
• Prev. Close: 1.0565
• % chg. over the last day: -0.22%

Weak corporate reporting data yesterday caused some demand for the dollar index, which put moderate pressure on EUR/USD quotes. But losses in EUR/USD were limited after the October German IFO Business Climate Index rose more than expected. The October’s German IFO Business Climate Index rose by 1.1 to 86.9, exceeding expectations of 86.0. The ECB monetary policy meeting will be held today. Economists expect the ECB to keep the rate at 4.5%, but if the ECB sticks to its hawkish course, keeping the door open for another rate hike in December, it may give temporary confidence to the European currency.

Trading recommendations

• Support levels: 1.0543,1.0522,1.0495,1.0483
• Resistance levels: 1.0594,1.0678,1.0693,1.0736

The trend on the EUR/USD currency pair on the hourly time frame has changed to a downtrend. The price broke through the priority change level and consolidated below. The MACD indicator became negative, and there is a sellers’ pressure inside the day, but there are signs of divergence also. Buying can be looked for from the support level of 1.0543, subject to buyers’ reaction. Sell deals can be looked for from the resistance level at 1.0594 or from the moving average lines, considering the sellers’ reaction.

Alternative scenario:

if the price breaks the resistance level of 1.0590 and consolidates above it, the uptrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2158
• Prev. Close: 1.27471.2110
• % chg. over the last day: -0.39%

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame has changed to a downtrend. Similar to the Eurodollar, the Pound Sterling yesterday consolidated below the moving average lines and below the priority change level. The MACD indicator became negative, and selling pressure remains intraday. Under such market conditions, buying can be sought from the support level of 1.2081, but with confirmation on intraday time frames. Selling can be looked for after testing the resistance level at 1.2113, but also with confirmation in the form of sellers’ reaction.

Trading recommendations

• Support levels: 1.2081,1.2009
• Resistance levels: 1.2113,1.2152,1.2233,1.2289,1.2332,1.2384

Alternative scenario: if the price breaks the resistance level at 1.2189 and consolidates above it, the uptrend will likely resume.

Alternative scenario:

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 149.86
• Prev. Close: 150.22
• % chg. over the last day: +0.24%

On Wednesday, at the end of the trading day, the Japanese yen once again reached the psychological mark of 150 yen per dollar. This level has caused the Japanese government to intervene more than once in order to keep the exchange rate from further decline. The Bank of Japan now faces a difficult choice — to start steps towards normalization of monetary policy now or to wait until the US Federal Reserve completes the tightening cycle. So far, the policymakers are going for the second scenario, but this way requires additional attention to maintain the exchange rate, as the interest rate differential is putting a lot of pressure on the Japanese yen.

Trading recommendations

• Support levels: 149.98,149.68,149.33,148.94,148.15,147.32,147.02,146.76
• Resistance levels: 150.47,150.78,151.92

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. Quotes are again growing steadily without significant pullbacks. The MACD indicator is in the positive zone, without signs of reversal but with signs of overbuying. Buy trades are best considered from the moving average lines but with confirmation on the lower time frame. For sell deals, traders can consider the resistance level of 150.47, but the reaction to the level is weak, and there is a high probability of further price growth to 150.78.

Alternative scenario:

if the price consolidates below the support level at 149.33, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1972.66
• Prev. Close: 1980.79
• % chg. over the last day: +0.41%

At the moment, gold pricing is very dependent on the geopolitical situation in the Middle East. Qatar’s foreign minister said yesterday that negotiations to free hostages held by Hamas are progressing well, and a breakthrough may be imminent. But Israel’s prime minister said yesterday that the army is preparing for a ground operation in Gaza despite diplomatic efforts to prevent the conflict between Israel and Hamas from spreading. This led to additional buying of gold as a safe-haven asset. Yesterday’s rise in government bond yields failed to keep gold from rallying, although these instruments are inversely correlated.

Trading recommendations

• Support levels: 1965.14,1953.29,1928.04,1907.78,1883.47,1867.89
• Resistance levels: 1997.24

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 and is aiming at the psychological level of 2000. The MACD indicator has turned positive, and there is buying pressure intraday. Under such market conditions, buying is better from moving averages with confirmation of the reaction of buyers on intraday time frames. Selling can be sought from the resistance level of 1997.24 but is subject to testing liquidity above the level with confirmation in the form of a change of structure on the lower time frames.

Alternative scenario:

if the price breaks and consolidates below the support level of 1953.29, the downtrend will likely resume.