The US dollar has eased back from recent peaks, providing some support to the pair. That being said, the strength of the US currency may persist, exerting pressure on EUR/USD.
Possible technical scenarios:
As we can see on the daily chart of EUR/USD, the pair is currently maintaining its position above the dotted support level at 1.0616. There's a possibility for a rebound towards the nearest resistance level at 1.0672. An alternative scenario could entail a breakout of the 1.0616 level, followed by consolidation below it, paving the way for a southward movement towards the next target at 1.0478.
Fundamental drivers of volatility:
The prevailing pressure on the pair is attributed to diminishing expectations of a Federal Reserve interest rate cut. This sentiment was reinforced earlier this week by the retail sales data and the remarks made by Fed officials.
Notably, senior figures at the US Federal Reserve, including Chair Jerome Powell, refrained from indicating a specific timeline for potential interest rate reductions during Tuesday's discussions. They emphasized the need to maintain a moderate monetary policy for an extended period, tempering investors' anticipation of a significant rate cut within the year.
In the meantime, the European Central Bank hinted at a possible rate reduction last week, sparking speculation that it might act before the Fed does.
Intraday technical picture:
As evidenced by the 4H chart, the EUR/USD pair is currently in a consolidation phase between the dotted support at 1.0616 and the resistance at 1.0672. Exiting this sideways trend will likely require a significant fundamental catalyst.
The GBP/USD pair is cautiously rebounding from its recent decline, attributed to the broad strength of the US dollar.
Potential technical scenarios:
Judging by the unfolding situation on the daily chart of the GBP/USD pair, we observe that the price has found support at 1.2430, with the current resistance level at 1.2500. Alternatively, there's a possible scenario of consolidation below the 1.2430 level, potentially leading to a decline towards 1.2306.
Fundamental drivers of volatility:
Recent UK data has provided some support for the pair. Sterling experienced an uptick against the dollar on Wednesday following statistics indicating a decrease in inflation to a two-and-a-half-year low of 3.2% per annum in March.
Aside from that, the upcoming UK retail sales report, slated for Friday, is anticipated to show a month-over-month increase of 0.3% for March, compared to the previous reading of 0.0%. However, on an annualized basis, the previous period saw a decrease of -0.4%.
Despite these factors, the strength of the US dollar, bolstered by its status as a safe-haven asset amid geopolitical tensions and the postponement of Fed rate cuts, may lead to a downward movement in the pair after a temporary consolidation phase.
Intraday technical picture:
According to the 4H chart, the GBP/USD pair is currently trading within the range between 1.2430 and 1.2500. Given the Federal Reserve's resolute stance and the persistent strength of the dollar, a downward breakout from this range appears more probable.
The USD/JPY pair continues to mark new highs, although the Japanese authorities have currently refrained from active verbal interventions. However, their cautions regarding potential market interventions persist.
Possible technical scenarios:
Analyzing the daily chart of USD/JPY, we can clearly see the price nearing the resistance level at 154.83. From this point, a retracement to the support at 153.09 is possible, with the subsequent growth target set at $157 per coin.
Fundamental drivers of volatility:
The question remains unanswered as to why, despite the explicit warnings, the Bank of Japan is in no rush in terms of interventions aimed at counteracting the yen's depreciation.
Meanwhile, the US dollar garners support amid dwindling expectations of a Federal Reserve interest rate cut. The reinforcement of sentiments favoring a deferred adjustment in monetary policy this week came in the wake of Monday's retail sales data and the discourse from Fed officials.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart, we note the USD/JPY pair consolidating beneath the resistance at 154.83. Any potential concrete actions taken by the Japanese authorities could prompt a downward retracement in price. The support level remains steadfast at 153.09.
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