EUR/USD remains within its established range from last week, poised for potential volatility triggers that could prompt a breakout.
Possible technical scenarios:
EUR/USD remains within last week's range between 1.0672 and 1.0749. A breakout of the support at 1.0672 could lead to a further decline towards the level of 1.0616.
Fundamental drivers of volatility:
Early in the week, the US dollar initially weakened but recovered most losses by Wednesday's European session. The dollar, a key factor affecting EUR/USD volatility, gained support from hawkish comments by Fed officials. Michelle Bowman suggested that maintaining current interest rates could help curb inflation, with readiness to raise rates if necessary. Similarly, Lisa Cook indicated a potential future rate cut without specifying timing.
The dollar's trajectory towards the week's end hinges on US GDP data Thursday and the Producer Price Index (PPI) on Friday. Concurrently, EUR/USD remains sensitive to French political developments ahead of early elections.
Intraday technical picture:
As we can see on the 4H chart, the EUR/USD pair reversed downward from resistance of the corridor between 1.0672 and 1.0749, now eyeing support levels. Further price movement will be dictated by consolidation above or below the 1.0672 level.
The GBP/USD pair continues its downward trend, pressured by the strengthening US dollar.
Potential technical scenarios:
The GBP/USD pair on the daily chart is poised to test support within the range between 1.2656 and 1.2792. A breakout of 1.2656 could pave the way for further decline towards the next support at 1.2608.
Fundamental drivers of volatility:
This week, the primary driver affecting GBP/USD is the strength of the US dollar. Following hawkish comments from Fed officials, expectations for US interest rate cuts have cooled, bolstering the dollar's ascent. The market focus remains on Friday's release of the US Producer Price Index (PPI), crucial for gauging inflation dynamics.
Meanwhile, the pound may see heightened volatility in response to UK GDP data also scheduled for Friday.
Intraday technical analysis:
Judging by the unfolding situation on the 4H chart, the GBP/USD pair has approached the 1.2656 level. Reversal and a return to last week's highs are possible from this technical standpoint. That being said, sustained consolidation below 1.2656 could lead to a further decline towards 1.2608.
The USD/JPY pair is nearing the significant psychological level of 160 yen per dollar this week, making the yen susceptible to potential currency interventions by Japanese authorities.
Possible technical scenarios:
The USD/JPY pair is nearing the significant psychological level of 160 yen per dollar this week, heightening the vulnerability of the yen to potential currency interventions by Japanese authorities.
According to the daily chart, USD/JPY has approached resistance at 160.21. If Tokyo refrains from substantial measures to bolster its currency and 160.21 proves resilient, the next technical target for upward movement would be resistance at 163.65. Current support is seen at 157.107.
Fundamental drivers of volatility:
The yen has faced ongoing pressure since the Bank of Japan surprised investors by maintaining large bond purchases this month, contrary to expectations.
Japanese Chief Cabinet Secretary Yoshimasa Hayashi indicated readiness on Tuesday to address excessive currency fluctuations, prompted by the yen weakening to the critical 160 per dollar mark.
Although government officials have avoided labeling current market movements as excessive, market players remain cautious of potential Tokyo interventions in the currency market.
The US dollar's strength, fueled by hawkish remarks from Federal Reserve officials, further supports USD/JPY.
Intraday technical picture:
As evidenced by the 4H chart of the USD/JPY pair, consolidation below the 160.21 resistance could lead to either a downward reversal if Japanese authorities intervene or an attempt to test this level's strength.
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