EUR/USD recovered this week as the US dollar lost ground amid renewed expectations of a Fed rate cut.
Possible technical scenarios:
The EUR/USD pair has consolidated above the 1.0801 level. From here, potential growth targets are 1.0842 and 1.0888. If the price fails to stay above the 1.0801 support, the next target for a decline will be 1.0766.
Fundamental drivers of volatility:
The euro was bolstered this week by a weakening dollar. US macroeconomic data, including the services sector and the ADP employment report, turned out to be weaker than expected, indicating a slowdown in economic activity.
The June Fed meeting minutes also confirmed the trend of a slowing economy and lower inflation. This backdrop has weakened the US dollar, with increased expectations for a rate cut in September.
At 12:30 PM GMT today, US labor market data for June will be released, traditionally adding to the volatility of the US dollar as the figures often differ from forecasts.
Average hourly wages are expected to increase by 0.3%, down from the previous 0.4% rise. Non-farm employment is projected at 191,000, compared to 272,000 in May. The unemployment rate is anticipated to hold steady at 4.0%.
Intraday technical picture:
As evidenced by the 4H chart, the EUR/USD pair still has some room to reach the resistance of the range between 1.0801 and 1.0842. If news-driven volatility increases, the price may move out of this range in either direction.
The GBP/USD pair found support this week from the declining US dollar and UK political developments.
Potential technical scenarios:
As we can see on the daily chart, the GBP/USD pair is approaching the resistance level of 1.2792. A downward reversal and a pullback to support at 1.2700 are possible from this point. If the pair breaks out and consolidates above 1.2792, it could pave the way for growth toward the target of 1.2846.
Fundamental drivers of volatility:
Sterling strengthened by 1% over the week, marking its best gain since mid-May. It gained support following the British elections amid expectations that the Labour Party would win an overwhelming majority of the vote.
The center-left Labour Party already holds more than 326 of Parliament's 650 seats, with exit polls predicting it could secure around 410 seats. This outcome gives investors confidence after years of market instability under the Conservatives.
In the meantime, the dollar remains under pressure, which could intensify if today's US labor market report is weaker than expected.
Average hourly wages are anticipated to rise by 0.3%, down from the previous increase of 0.4%.
The number of people employed in non-farm sectors is forecasted to be 191,000, compared to 272,000 in May. The unemployment rate is likely to hold steady at 4.0%.
Intraday technical analysis:
Judging by the unfolding situation on the 4H chart of the GBP/USD pair, consolidation above the level of 1.2760 sets the technical stage for price growth to resistance at 1.2792. That being said, increased volatility against the backdrop of the US jobs report today could lead to an adjustment of technical targets.
The weakening of the Japanese yen slowed by the end of the week, supported by the weakness of the American currency amid frustrating macroeconomic statistics.
Possible technical scenarios:
Based on the daily chart, USD/JPY shows that the pair pulled back to the support level of 160.21. From there, an upward reversal and a return to weekly highs is possible, or a breakout and consolidation below this level. In the latter case, the decline may continue toward the target of 157.98.
Fundamental drivers of volatility:
The yen's decline to 38-year lows was interrupted this week by a weaker US dollar.
This week’s reports from the services sector and the US ADP jobs report were weaker than expected, indicating a slowdown in economic activity and increasing expectations of a rate cut in September.
Today at 12:30 PM GMT, US labor market data for June may influence the pair's direction. Average hourly wages are anticipated to increase by 0.3%, down from the previous increase of 0.4%.
The number of people employed in non-farm sectors is forecasted to be 191,000, compared to 272,000 in May. The unemployment rate is expected to remain at 4.0%.
Intraday technical picture:
As seen on the 4H chart, the USD/JPY pair failed to stay above the local level of 161.28. The price now has limited room to move down to the support level of 160.21.
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