The dynamics of the EUR/USD pair remain subdued for the second week in a row, as market players remain cautious ahead of the ECB meeting this week.
Possible technical scenarios:
As we can see on the daily chart, the pair continues to consolidate below 1.0888. From this position, EUR/USD quotes may continue to weaken to the level of 1.0801 or break out 1.0888 and continue to rise to the target of 1.1000. The ECB's rhetoric will most likely set the price direction.
Fundamental drivers of volatility:
The main event that may have an impact on the dynamics of the euro in the pair will be the announcement of the results of the ECB meeting on Thursday at 1:15 p.m. (GMT). According to the forecast, the main interest rate will be left at 4.50%. In this case, the tone of the monetary policy statement and rhetoric during the ECB press conference at 1:45 p.m. (GMT) will play an important role. Market players will look for clues in statements about the timing and prospects of rate cuts.
From the US side, the major event this week will be the release of personal consumption expenditures and the US GDP report on Thursday at 1:30 p.m. (GMT). The US economy is expected to grow 2.0% in the fourth quarter, up from previous growth of 4.9%.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart of EUR/USD, a local level of 1.0910, marked with a dotted line, has formed as a local resistance. It may locally lead to a downward reversal and a return of quotes to the lows of the Tuesday trading session.
The GBP/USD pair is currently trading within a broad sideways range formed in December. Prices are hovering around five-month highs due to expectations of an earlier interest rate cut by the Federal Reserve compared to the Bank of England.
Possible technical scenarios:
Examining the daily chart of GBP/USD reveals that the pair is nearing the upper boundary of the range between 1.2608 and 1.2792 range. Once this level is reached, there is a high likelihood of a downward reversal unless new fundamental drivers of volatility emerge.
Fundamental drivers of volatility:
The fluctuation in the GBP/USD pair is influenced by the contrasting expectations regarding interest rate cuts by the US Federal Reserve and the Bank of England. Despite a delay in market expectations for the Fed's monetary policy easing, the anticipation for rate cuts by the Bank of England has diminished even further.
In the upcoming week's meeting, the British central bank is expected to provide clues about the possible timing of the initial stage of monetary easing, potentially influencing the direction of the pound in the pair.
In the meantime, the dollar's dynamics this week may be shaped by personal consumption expenditures and the US GDP, scheduled for release on Thursday at 1:30 p.m. (GMT).
Intraday technical picture:
Based on the look of things on the 4H chart of GBP/USD, it is evident that the pair has a small room to move towards the resistance at 1.2792. From a technical perspective, there is a possibility of a downward rebound and a gradual descent towards the nearest support level at 1.2656.
The USD/JPY pair experienced a decline this week due to the strengthening of the Japanese currency, influenced by the statements from the Japanese central bank.
Possible technical scenarios:
According to the daily chart, the USD/JPY pair pulled back from the upper boundary of the range between 146.37 and 148.80. It currently has room to travel toward its support, and for a further decrease, the pair must surpass the lows recorded on January 23.
Fundamental drivers of volatility:
The Japanese yen saw an increase in value this week, prompted by indications from the Bank of Japan on Tuesday suggesting a potential phase-out of its ultra-loose monetary policy later this year.
Despite this, the US dollar remains stronger than the yen, potentially limiting the extent of the pair's decline. The dynamics of the US currency this week could be locally influenced by the release of personal consumption expenditures and the US GDP report on Thursday at 1:30 p.m. (GMT).
Intraday technical picture:
Analyzing the 4H chart of USD/JPY, it is clear that the pair remains in a consolidation phase in the upper section of the sideways range between 146.37 and 148.80. There is a possibility of a localized trading corridor forming between the highs and lows observed during Tuesday's trading session.
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