The Analytical Overview of the Main Currency Pairs on 2023.12.28

The EUR/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.1040
• Prev. Close: 1.1104
• % chg. over the last day: +0.58%

The US economic news on Wednesday was weak and harmed the dollar. The Richmond Fed Manufacturing Sentiment Index for December unexpectedly fell to an 8-month low of minus 11, which was weaker than expectations of a rise from minus 6 to minus 3. Markets forecast the odds of a 25 bps rate cut at the next FOMC meeting on January 30-31 at 18% and fully discount the odds (100%) of a 25 bps rate cut at the March 19-20 meeting. Assumptions that the Fed will cut interest rates ahead of the ECB put pressure on the dollar and favor the euro.

Trading recommendations

• Support levels: 1.1072,1.1010,1.0956,1.0928,1.0888,1.0827
• Resistance levels: 1.1117,1.1171

The trend on the EUR/USD currency pair on the hourly time frame is bullish. The resistance level of 1.1046 was confidently broken yesterday. At the moment, the price has reached another important resistance level at 1.1117, but the reaction of sellers is weak. Divergence continues to form on the MACD indicator, which indicates a high probability of a corrective wave. Under such market conditions, buy trades can be considered from the support level of 1.1072 but are subject to buyers’ reactions. Selling can be sought from the resistance level of 1.1117, but also with confirmation and short targets, as these will be positions against the trend. A breakout of 1.1117 will open the way to 1.1171.

Alternative scenario:

if the price breaks the support level at 1.0928 and consolidates above it, the downtrend will likely resume.

The GBP/USD currency pair

Technical indicators of the currency pair:

• Prev. Open: 1.2711
• Prev. Close: 1.2797
• % chg. over the last day: +0.68%

At the moment, the US Fed’s policy is seen as dovish compared to other major central banks. Forecasts for a rate cut in March rose after Fed Chairman Jerome Powell showed unexpected softness at the December meeting of the US central bank. Other central banks, including the Bank of England (BoE), maintain a “higher and longer” stance. Thus, risk assets are strengthening against the dollar in the final weeks of the year.

Trading recommendations

• Support levels: 1.2758,1.2694,1.2682,1.2633,1.2611,1.2572,1.2548,1.2499
• Resistance levels: 1.2808,1.2881,1.2937

From the point of view of technical analysis, the trend on the GBP/USD currency pair on the hourly time frame is bullish. The fall of the dollar supports the growth of the British pound. The moving averages support the growth and do not allow the price to decline. At the moment, the price is trading near the resistance level of 1.2808, but the reaction of sellers is weak. The price looks overbought, so with the MACD divergence, the probability of correction increases. Buying is best sought on intraday time frames from the support level of 1.2758 but with confirmation. For sell deals, the 1.2808 level can be considered, provided the sellers react accordingly. A breakout of 1.2808 will open the way to 1.2881.

Alternative scenario:

if the price breaks the support level at 1.2682 and consolidates below, the downtrend will likely resume.

The USD/JPY currency pair

Technical indicators of the currency pair:

• Prev. Open: 142.35
• Prev. Close: 141.80
• % chg. over the last day: -0.39%

The Japanese yen initially declined on Wednesday following the dovish summary of the Bank of Japan’s (BoJ) December 18-19 meeting, in which several BoJ officials indicated that they see no rush to end the BoJ’s negative rate policy. But by the end of the day, the yen recovered and rose to a one-week high against the dollar when BoJ Governor Ueda said that the BoJ may change monetary policy before the release of full-wage data for small and medium-sized firms due in April 2024.

Trading recommendations

• Support levels: 140.95,140.07,139.34
• Resistance levels: 141.75,142.45,143.38,143.98,144.71,145.99.

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bearish. The price has left the 3-day range and rushed downward. The MACD indicator has turned negative, and there is selling pressure inside the day. Under such market conditions, sell trades can be sought from the resistance level of 141.75, subject to sellers’ initiative on the lower time frames. Buying should be sought from the support level of 140.95 but also subject to reaction from buyers, as the level has already been tested. A breakdown of 140.95 will open the way to 140.07.

Alternative scenario:

if the price consolidates above the resistance level of 144.96, the uptrend will likely resume.

The XAU/USD currency pair (gold)

Technical indicators of the currency pair:

• Prev. Open: 2068
• Prev. Close: 2078
• % chg. over the last day: +0.48%

Gold and silver posted moderate gains on Wednesday, with gold rising to a 3-week-high. Wednesday’s decline in the dollar index to a 5-month low is favorable for the metals. In addition, Wednesday’s decline in global bond yields supported precious metals. Gold has an inverse correlation to the yield of government bonds. In turn, bond yields are declining due to the growing probability of rate cuts in the spring of 2024.

Trading recommendations

• Support levels: 2081,2072,2060,2045,2027,2015,2008,1997,1987,1973
• Resistance levels: 2090,2142

From the point of view of technical analysis, the trend on the XAU/USD is bullish. Despite the growth, the gold price looks overbought. Currently, the price has deviated from the moving averages and is trading near the resistance level of 2090, with the MACD indicator indicating a divergence. The 2081 support level can be seen as support for further upside, but the price may correct to 2072. Selling can be looked for from the resistance level 2081, but only with confirmation. Intraday selling should be done only with short targets, as these will be positions against the main trend.

Alternative scenario:

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