The EUR/USD pair remains within the same technical boundaries, poised for sideways movement until fundamental catalysts drive volatility.
Possible technical scenarios:
EUR/USD quotes hover near the support at 1.0801. Should this level hold, a potential rebound toward the 1.0888 resistance is likely. That being said, if the support at 1.0801 is broken out, the next downside target lies at the horizontal level of 1.0749.
Fundamental drivers of volatility:
While the US dollar demonstrated cautious strength towards the week's end, its overall momentum remains subdued, contributing to the pair's modest volatility. Recent data suggests a gradual decrease in US inflation, with annual inflation growth at its lowest in three years, potentially paving the way for a Federal Reserve interest rate cut in June.
Despite reports indicating robust US economic performance and persistent price pressures, traders are reassessing expectations regarding the Fed's monetary easing timeline, now projected to commence in June. Market data from CME's FedWatch indicates a 66% likelihood of this scenario.
Intraday technical picture:
According to the 4H chart of the EUR/USD pair reveals consolidation around the support at 1.0801. While a potential recovery from this level is possible, downward pressure persists, with the possibility of a breakout towards the target of 1.0749.
Towards the end of the week, the GBP/USD pair experienced a decline but is attempting to stage a recovery on Friday amidst a retreat in the US dollar.
Potential technical scenarios:
As evidenced by the daily chart of the GBP/USD pair, the price descended to the support level at 1.2608. Should this level hold and the price surpass the local resistance at 1.2656, there's potential for medium-term growth towards the resistance at 1.2792. If this scenario doesn’t play out, a breakout of support at 1.2608 and subsequent consolidation below it would pave the pair's path towards the level of 1.2525, indicated by a dotted line.
Fundamental drivers of volatility:
Recent data on the US Personal Consumption Price Index (PCE) revealed a 0.3% increase in January. Over the 12 months leading up to January, PCE inflation rose by 2.4%, marking its weakest performance in over a year, following a 2.6% increase in December.
A series of robust US economic indicators led traders to reassess the potential timing of a Fed rate cut, resulting in subdued local dynamics for the US currency in the pair.
According to CME's FedWatch tool, markets assign a 66% probability of a Fed rate cut in June, down from its initial projection in March of this year.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart, the GBP/USD pair, after rebounding from the support level of 1.2608, maintains a trajectory toward the nearest resistance at 1.2656.
The USD/JPY pair is currently in a consolidation phase, showing limited response to statements from Japanese regulators and developments in the United States. Despite this, it remains in proximity to a significant psychological threshold that has historically prompted currency interventions.
Possible technical scenarios:
Based on the daily chart, the USD/JPY pair is trading around the level of 150.17, lacking clear consolidation either above or below it. The breakout from this consolidation phase is expected to occur upon the emergence of significant fundamental catalysts.
Fundamental drivers of volatility:
The Japanese yen witnessed a temporary strengthening on Thursday following remarks from Japanese authorities regarding readiness for currency interventions in response to sharp currency devaluations by speculators. However, these gains were short-lived, and by Friday, losses were regained, leading to continued sideways movement in the currency.
Aside from that, the pair's performance is affected by cautious volatility in the US dollar, which has moderated in recent months. Strong reports of US economic performance and persistent price pressures have led traders to reassess expectations regarding the timing of the Federal Reserve's monetary easing cycle. According to the CME FedWatch tool, markets currently estimate a 66% probability of the first rate cut occurring in June.
Intraday technical picture:
As shown on the 4H chart of the USD/JPY pair, the price is trading within the dotted range between 149.46 and 150.88. Having reached its upper boundary, a potential downward reversal from this level is anticipated.
181