EUR/USD is under pressure from a strong dollar and weak eurozone inflation data.
Possible technical scenarios:
As we can see on the daily chart, EUR/USD appears to be forming a bearish double top reversal pattern, with support at 1.1001. However, before reaching this level, the pair would first need to overcome the support at 1.1064. If 1.1064 holds, a rebound toward the resistance at 1.1138 could occur.
Fundamental drivers of volatility:
EUR/USD dropped after Tuesday’s data showed the eurozone consumer price index rose by only 1.8% year-over-year, below both the previous reading of 2.2% and market expectations. This slowdown in inflation heightens the chances of an ECB rate cut, increasing pressure on the euro.
On the other hand, the dollar strengthened, driven by strong U.S. job openings data (8.04 million) and geopolitical tensions in the Middle East, as missile attacks from Iran on Israel spurred demand for the dollar as a safe-haven asset.
Later this week, EUR/USD could be influenced by ADP U.S. employment data and Friday's official U.S. labor market report. Fed comments will also be key, posing additional risks for the euro and supporting the dollar.
Intraday technical picture:
According to the 4H chart, EUR/USD is showing two bearish flags with support at 1.1064. The price's next move will depend on whether it can hold above or break below this horizontal support.
GBP/USD pulled back from multi-month highs amid a strengthening U.S. dollar and increased risk aversion.
Potential technical scenarios:
The daily GBP/USD chart is showing signs of a head and shoulders reversal pattern, with the neckline at the dotted level of 1.3044. If this pattern plays out, the price may fall to 1.3141 and, if broken out, could drop further toward 1.3044.
Fundamental drivers of volatility:
The pound remains under pressure from both geopolitical risks and high UK inflation. While the Bank of England's Financial Policy Committee notes financial stability, concerns about geopolitical threats persist. High interest rates are straining small businesses, despite overall household and corporate resilience. Meanwhile, the dollar is benefiting from strong U.S. economic data and comments from Fed Chair Jerome Powell, who emphasized the Fed will not rush to cut rates. Rising tensions in the Middle East, particularly missile strikes by Iran on Israel, are further driving demand for the dollar as a safe-haven asset. Upcoming U.S. employment data and UK inflation figures could impact both currencies this week.
Intraday technical analysis:
Judging by the unfolding situation on the 4H chart, GBP/USD shows an upward retreat from local support at 1.3229. The immediate target for recovery is resistance at 1.3359. If support at 1.3229 gets broken out, the pair may decline further toward 1.3141.
USD/JPY is trading under pressure as expectations of a Bank of Japan rate hike weaken while the U.S. dollar strengthens.
Possible technical scenarios:
The daily chart shows that USD/JPY is approaching resistance of the range between 143.39 and 145.21. An upward exit from it could target 146.37, while a downside move may pull back to the 140.69 support.
Fundamental drivers of volatility:
The Japanese yen continues to weaken against the U.S. dollar amid uncertainty about the Bank of Japan’s rate hike plans. The BOJ has not indicated any immediate rate hikes, maintaining an accommodative policy to support the economy. New Prime Minister Shigeru Ishiba has also stressed that it will take time to exit deflation, signaling no immediate policy changes.
Meanwhile, geopolitical tensions in the Middle East are boosting demand for safe-haven assets like the dollar while putting pressure on USD/JPY.
The dollar's performance will be sensitive to U.S. employment data, including the ADP report and Friday’s official labor market figures.
Intraday technical picture:
As we can observe on the 4H chart, USD/JPY is showing higher lows, potentially signaling the formation of an ascending channel. This may lead to further growth and a breakout of the 145.21 and 146.37 levels.
USD/CAD has been under pressure this week as the rally in the Canadian dollar, driven by rising oil prices, outpaces the strength of the U.S. dollar, which is benefiting from risk aversion.
Possible technical scenarios:
On the daily chart, USD/CAD has retreated from the 1.3544 resistance and may head toward the 1.3439 support. If this level is broken out, the next downside target would be the horizontal support at 1.3347.
Fundamental drivers of volatility:
The Canadian dollar has strengthened against the U.S. dollar this week, supported by rising oil prices, a key Canadian export, amid heightened tensions in the Middle East. Additionally, Canadian economic data showed a boost, with the manufacturing PMI rising to 50.4 in September, marking the first increase in 17 months.
On the other hand, the U.S. dollar is bolstered by positive economic reports and comments from Fed Chair Jerome Powell, who indicated that interest rate cuts are unlikely anytime soon. Geopolitical risks and this week’s U.S. labor market data will further influence the USD movement in the pair.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart, USD/CAD is consolidating in the range between 1.3439 and 1.3544. A move toward either support or resistance is possible, depending on how the price reacts around this corridor.
Gold remains near its all-time high as risk aversion intensifies in response to escalating geopolitical tensions in the Middle East.
Possible technical scenarios:
On the daily chart, XAU/USD is trading around the 2659.99 level. If it sustains above this and the highs from September 26, the price could continue climbing toward the next resistance level at 2762.44.
Fundamental drivers of volatility:
Gold demonstrated a slight dip on Wednesday after previous gains linked to heightened geopolitical risks, specifically Iran’s recent attack on Israel, which triggered a surge in safe-haven demand for the metal. The current pullback may be due to profit-taking following over 1% growth. A decline in interest rates makes gold more attractive, even as expectations for Fed rate adjustments fluctuate.
Long-term, gold remains supported by steady demand from central banks and the potential easing of global monetary policy.
However, XAU/USD could experience increased volatility this week as the market reacts to U.S. labor data and its impact on the dollar.
Intraday technical picture:
On the 4H chart, XAU/USD is still indecisive around the 2659.99 level. In the short term, the price could either pull back to the dotted support at 2623.38 or rise toward the highs of September 26.
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