The EUR/USD pair keeps trading near its March lows amid escalating geopolitical tensions and rising oil prices. The pair is facing downward pressure due to a strengthening US dollar, which is attracting demand as a safe-haven asset.
Possible technical scenarios:
As we can see from the daily chart, EUR/USD has held above the 1.1494 support level, leaving room for a potential recovery toward the dashed resistance at 1.1682. An upward exit from this range would clear the path toward the 1.1788 target. Otherwise, the pair is likely to remain in the sideways range.
Fundamental drivers of volatility:
The primary factor currently influencing the market is the risk of oil supply disruptions through the Strait of Hormuz. Iranian threats to restrict exports from the region are heightening fears of an energy shock, driving demand for the dollar as the most liquid safe-haven asset. Aside from that, rising oil prices weigh on the Euro's fundamentals, as the Eurozone remains a major net importer of energy.
The dollar is getting further support from shifted expectations regarding US monetary policy. Surging energy prices increase inflationary risks, making an imminent Fed rate cut less likely. Market focus remains on the upcoming US inflation data, which could recalibrate policy expectations and dictate the dollar's short-term trajectory.
Despite the pressure from energy-related factors, the market is not yet pricing in a sharp decline for the pair. Future dynamics will largely depend on developments in the Middle East and the market's reaction to US inflation figures.
Intraday technical picture:
As evidenced by the 4H chart, EUR/USD still has a bit of room to move toward the resistance of the 1.1494-1.1682 range. Its next direction will depend on whether the price can break and consolidate above the 1.1682 horizontal level.
The GBP/USD pair is holding above 1.3400 following a moderate uptick at the start of the week. Investors are bracing for a busy macroeconomic calendar, with a primary focus on US inflation data that could adjust expectations for the Federal Reserve's policy path.
Possible technical scenarios:
Given the unfolding scenario on the daily chart, the GBP/USD pair managed to hold above the 1.3339 support level and has moved into a recovery phase. The immediate local upside target is the dashed level of 1.3533. The pair's subsequent direction will be determined by whether the price can break out of the 1.3339-1.3533 range.
Fundamental drivers of volatility:
A key fundamental factor for the pound is the shift in Bank of England policy expectations. Due to rising energy costs and the risk of heightened inflationary pressure, the market has sharply scaled back expectations for near-term monetary easing. The probability of an imminent rate cut has dropped significantly, and interest rate futures now suggest very limited room for easing throughout the year, providing a floor for the pound.
Meanwhile, market focus is centered on the US Consumer Price Index (CPI) release. February inflation is projected at approximately 0.3% month-over-month and 2.4% year-over-year. Any deviation from these forecasts could spark major dollar volatility. Weaker-than-expected data could soften the Greenback and support a GBP/USD rally, while hotter inflation figures would reinforce the "higher-for-longer" rate narrative in the US.
Additional drivers this week include UK macroeconomic data, specifically industrial production and GDP for January, alongside a scheduled speech by BoE Governor Andrew Bailey. The combination of UK data and key US indicators—including the core PCE index and consumer sentiment—is expected to set the tone for GBP/USD in the coming sessions.
Intraday technical picture:
Locally, on the 4H chart, the price has formed a triple bottom reversal pattern near the 1.3339 support line. This confirms a change in the downtrend and points toward a medium-term recovery with immediate targets at 1.3533 and 1.3630.
USD/JPY is holding below 158.00 this Tuesday following a recent rally toward multi-month highs. The yen is finding support from upwardly revised Japanese GDP data and persistent concerns regarding potential currency interventions by Japanese authorities.
Possible technical scenarios:
The USD/JPY pair is currently trading just below the upper boundary of a broad 152.09-157.90 range, having failed to sustain an upward exit. The current technical setup does not rule out a downward reversal and a decline within this established range.
Fundamental drivers of volatility:
A key driver has been the growing expectation of further policy normalization by the Bank of Japan (BoJ). Revised data showed stronger economic growth in Q4, while resilient consumer spending and rising real wages suggest steady domestic demand. This supports forecasts for continued tightening, although the market largely expects the next rate hike to occur only by June, which is somewhat limiting the yen's appreciation.
Political factors also remain a focal point. Japanese Prime Minister Sanae Takaichi's stance has sparked debate following reports of her cautious view on further rate hikes, raising questions about potential political pressure on the BoJ. Any signals of political influence on monetary policy could shift investor expectations regarding the pace of tightening.
External macroeconomic conditions are applying additional pressure to the pair. A slight softening of the dollar is linked to hopes for a potential de-escalation in the Middle East, which has reduced demand for safe-haven assets. Moving forward, USD/JPY's direction will hinge on geopolitical updates and BoJ signals regarding the timing of the next interest rate hike.
Intraday technical picture:
Judging from the look of things on the 4H chart, there are signs of a head and shoulders reversal pattern forming with a neckline at 156.75. A breakout of this level would serve as a signal for a price decline toward the 155.03 support level.
The USD/CAD pair is trading without a clear direction after its recent slide toward the 1.35 area. The pair’s dynamics remain mixed as it balances conflicting factors, namely volatile oil prices and steady demand for the US dollar.
Possible technical scenarios:
From what we observe in the daily chart, USD/CAD is approaching the support level of the 1.3503-1.3744 sideways range. The pair could reverse upward from this point unless new fundamental volatility catalysts emerge.
Fundamental drivers of volatility:
Oil remains the primary driver for the Canadian currency. Brent prices previously surged above $110 per barrel due to Middle East escalations and supply risks in the Strait of Hormuz, supporting the Loonie as a commodity-linked currency. That being said, a subsequent correction in oil—triggered by discussions of a potential G7 strategic reserve release—weakened support for the CAD and allowed USD/CAD to partially recover from its intraday lows.
Monetary expectations are also balancing the pair. Markets expect the Bank of Canada to maintain a wait-and-see stance as it evaluates the impact of high energy prices on inflation and economic growth. While expensive oil supports Canada's economy, it also heightens inflationary risks, making rapid policy easing less likely.
As far as the US side is concerned, the dollar is supported by a hawkish shift in Fed rate expectations. Market participants have scaled back bets on imminent rate cuts, assuming that an energy shock could complicate the US inflation fight. In the coming days, the market will focus on US inflation data (CPI and PCE) and Canadian labor market statistics to determine USD/CAD’s short-term direction.
Intraday technical picture:
Given the current developments in the 4H chart, it’s safe to say that the price still has a small amount of room to move toward the support level of the 1.3642-1.3744 range, after which an upward reversal is possible.
Gold is edging higher amid a weakening dollar and a dip in energy prices following signals of a possible de-escalation in the Middle East. The market is reassessing inflationary risks and the outlook for monetary policy, which is supporting demand for the precious metal.
Possible technical scenarios:
The price of gold remains in an uptrend while consolidating within a sideways range of 4939.80-5348.71. It currently retains room for growth toward the upper boundary of this corridor.
Fundamental drivers of volatility:
Dollar dynamics are the primary driver. The weaker dollar makes gold cheaper for holders of other currencies, promoting international demand. The market is also finding support from a correction in oil prices following comments from US President Donald Trump regarding a potentially quick end to the conflict, which has lowered global inflation expectations.
Easing inflationary risks are also impacting rate expectations. If energy pressures continue to fade, the likelihood of further aggressive tightening by major central banks will decrease—a scenario that traditionally supports non-yielding assets like gold.
However, geopolitical uncertainty persists. Risks of supply disruptions in the Strait of Hormuz and potential flare-ups continue to drive safe-haven demand. In the short term, the market is focused on US inflation data (CPI and PCE), which will clarify the Fed’s policy path and dictate gold's next move.
Intraday technical picture:
On the 4H chart, gold has held above the dashed support of the 5090.38-5348.71 range and appears poised to continue its climb toward the upper boundary.
Brent crude prices are correcting after a recent rally, pulling back from highs above $100 per barrel. The market is pricing out some of the geopolitical premium following signals of potential de-escalation in the Middle East.
Possible technical scenarios:
The daily chart suggests that Brent has found support at the 85.70 level. If this level holds, the next recovery target will be the 95.18 resistance. However, price targets remain subject to change given the dense geopolitical backdrop.
Fundamental drivers of volatility:
The main catalyst for the downward correction was US President Donald Trump’s statement that the conflict with Iran might end sooner than anticipated. This was reinforced by reports of diplomatic outreach and discussions on potential settlement scenarios, which eased concerns over prolonged regional supply disruptions.
Expectations of additional market stabilization measures have also weighed on prices. Traders are discussing the possible easing of sanctions on Russian oil and the use of G7 strategic reserves to curb price spikes. These factors bolster expectations that global oil supplies will remain stable despite the ongoing conflict.
That said, geopolitical risks have not vanished entirely. Iran continues to threaten export restrictions and attacks on energy infrastructure, keeping volatility high. While the market is shedding some of its panic premium, prices remain highly sensitive to any news regarding the conflict's progression or supply status.
Intraday technical picture:
The 4H chart demonstrates that the 85.70-95.18 local sideways range remains relevant. With the price currently in the middle of this range, a move toward either boundary is plausible.
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