The Analytical Overview of the Main Currency Pairs on 2023.12.22

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.0935
• Prev. Close: 1.1010
• % chg. over the last day: +0.68%

The dollar came under pressure on Thursday due to weaker-than-expected US GDP and Philadelphia Fed reports, which proved to be dovish for the Fed’s policy. In addition, hawkish comments from ECB Vice President Guindos boosted the Euro when he said that Eurozone inflation needs to get closer to 2% before the ECB can cut interest rates.

Trading recommendations

• Support levels: 1.0955,1.0929,1.0906,1.0891,1.0827,1.0791,1.0766,1.0728
• 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 rose yesterday on the US GDP report. At the moment, the price has reached the resistance level of 1.1008, but the sellers’ reaction to the level is weak, which increases the probability of further growth. Under such market conditions, buy trades can be considered from the support level of 1.0955 but are subject to buyers’ reaction. In case of a breakout of 1.1008, it can be used mirrored as a support level. Sales can be sought from the resistance level of 1.1008 but also with confirmation and short targets, as these will be counter-trend positions. The resistance level of 1.1046 would also be suitable for selling.

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: 1.2624
• Prev. Close: 1.2688
• % chg. over the last day: +0.51%

Today, investors’ interest will be attracted by the Q3 UK Retail Sales and GDP data. Stronger-than-expected retail sales growth could lower the bets for a Bank of England rate cut in 1H 2024, as consumer spending could drive demand-driven inflation. As for GDP, the UK economy will show a plateau at 0% in Q3.

Trading recommendations

• Support levels: 1.2628,1.2572,1.2548,1.2499
• Resistance levels: 1.2694,1.2712,1.2762,1.2796

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish. Yesterday, the British pound formed a demand zone, which will now act as a support area. Now, the price is trading near the resistance level of 1.2694, and given the weak reaction of sellers, there is a high probability of growth up to 1.2712. A breakout of 1.2712 will open the way for the price to 1.2762. Therefore, it is better to buy after the breakout. For sell deals, we can consider the level of 1.2712, provided the sellers react accordingly.

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: 143.50
• Prev. Close: 142.12
• % chg. over the last day: -0.97%

The nationwide core CPI declined from 2.9% to 2.5% y/y in Japan, as predicted. However, a more detailed report showed that there were signs in the services sector that the underlying price increase was spreading wider in the economy. This is a key trend being watched by the central bank amid continued speculation that it will scale back stimulus measures in the coming months.

Trading recommendations

• Support levels: 141.91,141.44,140.95,140.07,139.34
• Resistance levels: 142.63,143.32,143.98,144.71,145.99

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. Today, at the Asian session, the price reached the support level of 141.91, where the buyers showed a strong reaction. The MACD indicator remains negative, but there is weak buying pressure intraday. Under such market conditions, sell deals can be sought from the resistance level of 142.63, provided sellers take the initiative on the lower time frames. Buying should be sought from the support level at 141.91, but also subject to reaction from buyers, as the level has already been tested.

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: 2030
• Prev. Close: 2044
• % chg. over the last day: +0.69%

The weakening of the dollar on Thursday supported metal prices. However, the rally in equities reduced demand for gold. Today, the US will release the PCE inflation report, which is favored by the US Fed over CPI. Economists expect the PCE price index to be unchanged for a second month in November, while the core index, which excludes volatile food and energy costs, is expected to rise by 0.2%. A rise in the PCE index could temporarily restore confidence in the US dollar and be a headwind for gold. But if the PCE report unexpectedly shows signs of decline, it will, on the contrary, become a tailwind for further growth of gold and silver.

Trading recommendations

• Support levels: 2046,2034,2027,2015,2008,1997,1987,1973
• Resistance levels: 2058,2081,2142

From the point of view of technical analysis, the trend on the XAU/USD has changed to an upward trend. The price has consolidated above the priority change level. Support level 2046 can be considered as support for further growth, but the price can spike to 2034 on the news publication. Going below 2034 is undesirable for buyers as it may trigger a wave of sell-offs. Selling can be looked for from the resistance level of 2057, but only with confirmation. Intraday sales should be made only with short targets, as they will be positioned against the main trend.

Alternative scenario:

if the price breaks below the support level of 2015, the downtrend will likely resume.