The Analytical Overview of the Main Currency Pairs on 2023.11.21

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0906
• Prev. Close: 1.0939
• % chg. over the last day: +0.30%

ECB Governing Council representative Wunsch said yesterday that the ECB may have to raise interest rates again if investors’ bids for monetary easing undermine the Central Bank’s position. For now, markets are taking an “optimistic” view, discounting the possibility of further rate hikes and expecting an ECB rate cut as early as April. At the moment, the ECB still maintains a tight stance on monetary policy, but according to economists, if the pace of wage growth starts to change downward in the near future, the current ECB stance will soften sharply, and the door for a rate cut will be open.

Trading recommendations

• Support levels: 1.0882,1.0822,1.0756,1.0729,1.0700,1.0664,1.0634,1.0609
• Resistance levels: 1.0945,1.0983,1.1004

The trend on the EUR/USD currency pair on the hourly time frame is bullish. At the moment, the price is testing liquidity above the resistance level of 1.0945. The MACD indicator remains positive, but the divergence is getting stronger. Buyers are running out of fuel for further rally, and conditions for correction are forming. Under such market conditions, it is better to consider buy deals after testing liquidity void zones near the support level of 1.0882. Selling could be considered if the price impulsively returns under 1.0945, which would confirm buyers’ liquidity grab.

Alternative scenario:

if the price breaks the support level of 1.0824 and consolidates below it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2445
• Prev. Close: 1.27471.2506
• % chg. over the last day: +0.49%

Yesterday, Bank of England Governor Andrew Bailey warned that the central bank may have to raise interest rates again because food and energy costs continue to pose upside risks to inflation forecasts. Bailey also emphasized that it was too early to think about cutting rates, warning that services inflation remained too high and wage growth elevated. These comments were a rebuttal to forecasts that the Bank of England would cut rates by 0.75% next year.

Trading recommendations

• Support levels: 1.2444,1.2401,1.2373,1.2347,1.2309,1.2186
• Resistance levels: 1.2504,1.2547

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The situation is very similar to the euro. The price is testing liquidity above 1.2504, and there is a high probability of testing liquidity above 1.2547. But taking into account the divergence on the MACD indicator, a technical correction is coming. It is best to buy from the liquidity hollow zones near the moving averages. For selling, it is worth waiting for a sellers’ reaction to test one of the resistance levels.

Alternative scenario:

if the price breaks the support level of 1.2373 and consolidates below, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 149.65
• Prev. Close: 148.35
• % chg. over the last day: -0.87%

Global inflation is starting to seep into the economy, forcing investors to drastically reconsider their positions on USD/JPY. The Bank of Japan’s transition to a new policy is slow, but the process is underway, and economists believe that a rate hike next year is an inevitable scenario. At the same time, the end of the tightening cycle on the part of the US Fed leads to the decline of the dollar and the strengthening of the Japanese yen, as the interest rate differential will only decrease in the future.

Trading recommendations

• Support levels: 147.32,147.02,146.76
• Resistance levels: 148.15,149.19,149.71,150.15,150.93,151.43,151.91

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price is steadily declining, with moving averages acting as dynamic resistance lines. At the moment, the price has reached the support level of 147.32, where the buyers’ reaction followed. The MACD indicator is indicating a divergence, but selling pressure remains. For sell deals, it is best to wait for a pullback to the moving averages as the price has deviated strongly from the lines. Buying can be looked for intraday, but only with confirmation in the form of a structure change and short targets.

Alternative scenario:

if the price consolidates above the resistance level of 151.43, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 1981
• Prev. Close: 1978
• % chg. over the last day: -0.45%

Today, in the US, the minutes of the November 1 FOMC meeting will be published. This time, the minutes will be released on Tuesday instead of Wednesday, as Thursday is Thanksgiving Day in the US. Most likely, the minutes will show nothing new and will only reinforce investor confidence that the US Fed will not raise rates again. Recent signs of falling inflation, cooling in the labor market, and recent comments from Fed officials only support this assumption. The only thing preventing the US Fed from halting the tightening cycle today is a strong economy, which is reflected in GDP growth. Therefore, if the minutes turn out to be soft, the dollar could face additional sell-offs, which would intensify the rally in gold. If the minutes indicate a strong economy and that the US Fed is still keeping the door open for another rate hike, this could have a temporary negative impact on precious metals.

Trading recommendations

• Support levels: 1985,1973,1968,1955,1933,1918
• Resistance levels: 1993,2004,2009

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Yesterday, the price reached the support level of 1968, which was followed by the buyers’ reaction. Today, in the Asian session, the price reached the resistance level of 1993 again. The bias remains bullish. Under these market conditions, buy deals can be considered intraday from the moving average lines or from the support level of 1985. Selling can be considered after testing liquidity above the 1993 resistance level, provided there is an opposite reaction back. If there are no sellers’ reactions to the level, the road to the 2004 level is open for the price.

Alternative scenario:

if the price breaks below the support level of 1955, the downtrend will likely resume.