With news catalysts expected for release on Wednesday and Thursday, the EUR/USD pair has proceeded to consolidate after sliding last week.
Possible technical scenarios:
As can be seen on the daily chart, the EUR/USD pair is currently trading at the support level of a narrow range between 1.0707 and 0.0808. In local terms, the price has room to travel to its upper boundary. Having said that, the response of the dollar to the US statistics and a possible spike in the volatility of the euro due to the ECB decision on Thursday could cause quotes to break out of this sideways trend.
Fundamental drivers of volatility:
On Thursday at 12:15 p.m. (GMT), the results of the ECB meeting will be announced, being the primary event that will affect the dynamics of the euro in the pair this week. It is expected that the base interest rate will remain unchanged at 4.25% as announced by the Federal Reserve. The European Central Bank (ECB) will hold a press conference at 12:45 p.m. (GMT), with President Christine Lagarde taking the stage at 2:15 p.m.
Meanwhile, this week's movement of the US dollar will depend on reports on inflation, retail sales, and the PPI.
On Wednesday at 12:30 p.m. (GMT), the inflation report will be released. The Core CPI is forecast to drop from 4.7% to 4.3%, with the monthly figure remaining stable at 0.2%. Month-over-month gains of 0.2% to 0.6% and year-over-year gains of 3.2% to 3.6% are predicted for the consumer price index (CPI).
The United States Retail Sales report and PPI for the month of August are scheduled for release this coming Thursday at 12:30 p.m. (GMT). We anticipate a slowing in retail sales, down from 0.7% to 0.2%. Core PPI MoM is also predicted to fall from 0.3% to 0.2%, while PPI will be 0.4%, up from 0.3%.
Intraday technical picture:
Judging by the look of things on the 4H chart of the EUR/USD pair, the consolidation range has grown even narrower and is currently between 1.0707 and 1.0765 marked with dotted lines. In local terms, the price reversed from its resistance and may go back to support until the released news creates higher volatility.
In preparation for potential fresh dynamics drivers, the GBP/USD pair has started to consolidate near last week's lows. This week's UK reports did not cause the technical picture to change.
Possible technical scenarios:
The daily chart demonstrates that the GBP/USD quotes proceeded to consolidate below 1.2525, a level marked with dotted lines. In the meantime, support remains at 1.2410. If the US dollar strengthens and there is a breakout of the 1.2410 level, 1.2323 will serve as the next target to the south.
Fundamental drivers of volatility:
Starting on Wednesday, the dynamics of the pair will be affected by news from the United States. The market players will be keeping a close eye on inflation reports, retail sales, and PPI.
On Wednesday at 12:30 a.m. (GMT), the inflation report will be released. It is anticipated that the Core Consumer Price Index will fall from 4.7% to 4.3%, with the monthly figure remaining unchanged at 0.2%. Furthermore, the CPI will rise from 0.2% to 0.6% month-over-month and from 3.2% to 3.6% year-over-year.
US Retail Sales and Producer Pricing Indices (PPI) for the month of August will be released on Thursday at 12:30 p.m. (GMT). We anticipate a slowing in retail sales, down from 0.7% to 0.2%. It is also predicted that the PPI will be 0.4%, down from the previous 0.3%, while the Core PPI MoM will fall from 0.3% to 0.2%.
Intraday technical picture:
As evidenced by the 4H chart of the GBP/USD pair, we can see that in order for quotes to continue falling, they need to drop below last week’s lows; this is something that may happen in the context of upcoming news releases. If this scenario does not play out, the price will move back toward resistance at 1.2525 marked with dotted lines.
Against the backdrop of a growing US currency and the gap between the strength of the American and Australian economies, the AUD/USD pair continues to trade near ten-month lows despite the fact that the US dollar is on the rise.
Possible technical scenarios:
As we can see on the daily chart, the AUD/USD pair continues to trade in the sideways range between 0.6364 and 0.6537, two green dotted lines. As prices have struggled to move above its midpoint, a return to the 0.6364 support level is not completely out of the question. However, if volatility spikes due to news releases, the technical picture may be revised.
Fundamental drivers of volatility:
The Australian employment figures for the month of August will be released on Thursday at 1:30 a.m. (GMT), which may affect the movement of the Australian dollar in the pair. As opposed to the -14.6k in the previous period, a rise of 24.3k jobs is expected this time around. In the meantime, the unemployment rate will not move from its current level of 3.7%.
The movement of the US dollar in the pair will be determined by the US economic figures, such as inflation, retail sales, and the PPI.
On Wednesday at 12:30 a.m. (GMT), the latest inflation figures will be made public. Core CPI is expected to fall from 4.7% to 4.3%. The monthly figure is expected to remain unchanged at 0.2%. It stands to mention that both the Consumer Price Index MoM and YoY will shift from 0.2% to 0% and from 3.2% to 3.6%, respectively.
The US Retail Sales report for the month of August will also be released on Thursday at 12:30 GMT. We anticipate a slowing in retail sales, down from 0.7% to 0.2%. Simultaneously, the PPI report is expected to be made public at the same time. The Core PPI rate will fall from 0.3% to 0.2% month-over-month, while the overall PPI rate will rise to 0.4% from 0.3%.
Intraday technical picture:
According to the 4H chart of the AUD/USD pair, the price rebound was stopped by local resistance at 0.6447. It marked the beginning of a downward trend with plenty of room to reach the 0.6364 support level.
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