The Analytical Overview of the Main Currency Pairs on 2023.12.15

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0869
• Prev. Close: 1.0991
• % chg. over the last day: +1.12%

On Thursday, the euro added to Wednesday’s gains and reached a 2-week-high. As expected, the ECB left the deposit rate unchanged at 4.00%. At the same time, the ECB lowered its 2023 Eurozone GDP forecast to 0.6% from a 0.7% forecast and its 2023 core inflation forecast to 5.0% from 5.1% annualized. The euro’s rise was accelerated by hawkish comments from ECB President Lagarde, who said ECB policymakers did not discuss interest rate cuts at the current meeting. Swaps tied to ECB meeting dates indicate a 9% probability of a 25 bps rate cut at the ECB’s January 25 meeting and estimate a 64% probability that the ECB will cut the benchmark rate by the same 25 bps at its March 7 meeting.

Trading recommendations

• Support levels: 1.0950,1.0904,1.0827,1.0791,1.0766,1.0728
• Resistance levels: 1.1008,1.1046,1.1100

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The price confidently broke through the resistance level of 1.0904 and rushed higher. The price has now reached the resistance level of 1.1008, where sellers have shown a reaction. Given that the price has deviated strongly from the moving averages, it is quite risky to buy here, and it is better to wait for a pullback to the nearest support levels. Selling can be looked for from the resistance level of 1.1008, but only with confirmation, as the level has already been tested. Buying can be considered from 1.0950, or the moving average lines, but also with confirmation in the form of buyers’ reaction.

Alternative scenario:

if the price breaks the support level at 1.0766 and consolidates above it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2614
• Prev. Close: 1.2764
• % chg. over the last day: +1.19%

As expected, the Bank of England (BoE) kept the interest rate unchanged at 5.25% on Thursday and said that rates should remain high for an “extended period.” The Monetary Policy Committee (MPC) voted 6-3 to keep rates at a 15-year high of 5.25%, as it did at its last meeting, and Governor Andrew Bailey said there was “still some way to go” in the fight against inflation. There was no talk of cutting rates as the Bank of England remains concerned that UK inflation will prove more resilient than in the US and Eurozone.

Trading recommendations

• Support levels: 1.2679,1.2652,1.2572,1.2548,1.2499
• Resistance levels: 1.2796

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 has confidently broken through all resistance levels and is now trading near the resistance level of the higher time frame at 1.2796. Since the MACD is not yet indicating a divergence, the price is likely to make one more update of the high before the correction starts. The MACD and moving averages show that the price has diverged a lot, so buy trades should be sought lower. The most suitable levels would be 1.2679 or 1.2652, but with intraday confirmation. Sell deals can be sought from the resistance level of 1.2796, but it is subject to sellers’ reaction.

Alternative scenario:

if the price breaks the support level at 1.2499 and consolidates below, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 142.81
• Prev. Close: 141.89
• % chg. over the last day: -0.64%

The Japanese yen strengthened on Thursday and reached a 4-month high against the dollar. Wednesday’s FOMC meeting triggered short covering in the yen as the Fed signaled the end of the tightening cycle. In addition, stronger-than-expected Japanese economic reports on core machinery orders and industrial production for October were positive for the yen. However, it is worth remembering that Japan’s Central Bank is likely to end the year as one of the most dovish in the world. With consumption showing signs of weakness and the wage outlook for next year remaining uncertain, the Bank of Japan is expected to maintain ultra-soft policy settings next week. This may cause the Yen to close positions by the end of the year, leading to an increase in USD/JPY quotes.

Trading recommendations

• Support levels: 141.69,140.95,140.07,139.34
• Resistance levels: 143.77,144.71,145.99

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. Yesterday, the yen found the support level at 140.95, where buyers showed a moderate reaction. At the same time, the nearest resistance level was broken, indicating that the price is planning a correction higher. The MACD indicator is in the negative zone, with no signs of divergence. There is still a probability of another update of the low. Sell trades can be looked for from the resistance level of 143.77, provided the sellers’ initiative on the lower time frames. Buying should be sought from the support level of 141.69 or 140.95, but also with confirmation from the buyers.

Alternative scenario:

if the price consolidates above the resistance level of 145.99, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2024
• Prev. Close: 2036
• % chg. over the last day: +0.59%

Gold and silver prices continued to rise yesterday, with both metals hitting their highs for the week. The FOMC meeting on Wednesday supported the precious metals after the Fed signaled the end of the rate hike cycle and predicted lower interest rates next year. In addition, the actions of the Bank of England and the ECB, which left interest rates unchanged on Thursday, boosted demand for gold as a store of value. The fundamental bias for precious metals remains on the bullish side.

Trading recommendations

• Support levels: 2028,2008,1997,1987,1973
• Resistance levels: 2043,2058,2081,2142

From the point of view of technical analysis, the trend on the XAU/USD is bearish, but it is likely to change to bullish in the coming days. The price has reached the priority change level and is trading near it. A flat accumulation with the boundaries of 2028 and 2042 is being formed at the moment. The support level of 2028 is keeping the price from correcting, and there is downside resistance on the MACD. Since the price is right in the center of the flat accumulation, there are no conditions for opening positions here. Buying should be considered in case of a breakout of the priority change level in 2042, with the first target in 2058. Selling can be looked for if support level 2028 is broken, but with short targets, as the bias remains for the bulls.

Alternative scenario:

if the price breaks and consolidates above the resistance level of 2043, the uptrend will likely resume.