The Analytical Overview of the Main Currency Pairs on 2023.10.31

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0570
• Prev. Close: 1.0615
• % chg. over the last day: +0.43%

The strengthening of the stock markets on Monday reduced the demand for liquidity for the US dollar. In addition, the dollar is pressured by the likelihood that the Federal Reserve will leave its monetary policy unchanged at Wednesday’s FOMC meeting. Markets are factoring in a zero probability that the FOMC will raise rates at its next meeting and an 18% probability of a 25 bps rate hike at its next meeting on December 12-13. The dollar’s weakening on Monday provided support for the euro. The European currency was also supported by the news that Germany’s GDP in the third quarter contracted less than expected, while the Eurozone’s economic confidence index also fell less than expected in October. Trading recommendations

Trading recommendations

• Support levels: 1.0567,1.0522,1.0495,1.0483
• Resistance levels: 1.0607,1.0678,1.0693,1.0736

The trend on the EUR/USD currency pair on the hourly time frame is a downtrend. Yesterday, the price tested the liquidity above the resistance level of 1.0608 and returned on an impulsive move, forming a false breakout zone above. The MACD indicator is in a positive zone with weak buying pressure prevailing intraday. Selling can be looked for from the resistance level at 1.0607, subject to sellers’ reaction to the level. Buying can be looked for from the 1.0567 support level, but it is also subject to buyers’ reactions.

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: 1.2119
• Prev. Close: 1.27471.2163
• % chg. over the last day: +0.36%

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is a downtrend. Similar to the Eurodollar, the pound sterling yesterday tested above Friday’s high of 1.2162, followed by the sellers’ reaction. The MACD indicator indicates weak selling pressure. Under such market conditions, sell trades can be looked for after testing the resistance level of 1.2162, but with confirmation in the form of sellers’ reaction. Buying can be sought intraday from the support level of 1.2104 but with short targets.

Trading recommendations

• Support levels: 1.2094,1.2069,1.2009
• Resistance levels: 1.2152,1.2175,1.2233,1.2289,1.2332,1.2384

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: 149.55
• Prev. Close: 149.04
• % chg. over the last day: -0.34%

On Tuesday, the Bank of Japan kept interest rates at ultra-low levels, slightly changed its rhetoric on the Yield Curve Control (YCC) policy, and predicted higher inflation in the coming years. The BoJ left the short-term interest rate at minus 0.1% and said it would use the upper end of the YCC range 1% — as the reference limit for its market operations. In addition, the BoJ said it will continue to buy assets and conduct quantitative easing to stimulate the economy, citing continued uncertainty over rising inflation and deteriorating global economic conditions. For the Japanese yen, the situation has not changed dramatically. The interest rate differential will continue to put pressure on the Japanese currency, forcing the Bank of Japan to conduct another intervention.

Trading recommendations

• Support levels: 149.75,149.45,148.80,147.32,147.02,146.76
• Resistance levels: 150.27,150.78,151.92

From the technical point of view, the medium-term trend on the currency pair USD/JPY is still upward. Yesterday, the Japanese yen strengthened at the end of the trading session on expectations that the Bank of Japan (BoJ) will gradually shift towards policy normalization. However, after the BoJ confirmed its continued stimulus policy, the JPY started to sell off actively. The MACD indicator turned positive, and there is strong buying pressure intraday. Buy trades are best considered from the support level of 149.75 or 149.45 but with confirmation in the form of buyers’ reactions. For selling, a resistance level of 150.27 can be considered, but with short targets, the price can easily go for updates of 150.78.

Alternative scenario:

if the price consolidates below the support level at 148.80, the downtrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2005.16
• Prev. Close: 1995.84
• % chg. over the last day: -0.47%

The weakening of the dollar on Monday was a favorable factor for metal prices. In addition, the ongoing conflict between Israel and Hamas is supporting demand for precious metals. A negative factor for gold yesterday was the stock market rally, which limited demand for precious metals from safe-haven investors. But in the medium term, for gold, all conditions for the continuation of the upward rally remain.

Trading recommendations

• Support levels: 1985.95,1971.40,1962.50,1953.40,1928.04,1907.78,1883.47
• 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 at the levels of moving averages. There was no impulse return below 1997.24, so there is a high probability of rally continuation. The MACD indicator has become inactive, and volatility has decreased ahead of the FOMC meeting. Under such market conditions, it is better to buy from moving averages with confirmation of buyers’ reaction on intraday time frames. Also, the support level of 1985.95 can be considered for buying. Sell deals can be considered only after breaking at least one support level.

Alternative scenario:

if the price breaks and consolidates below the support level of 1953.40, the downtrend will likely resume.