EUR/USD remains under pressure, hovering near an eight-week low amid expectations of an ECB rate cut.
Possible technical scenarios:
The EUR/USD pair on the daily chart seems to have finalized a bearish double top reversal pattern and has broken out the support level at 1.1001. The price now has room to drop to 1.0888.
Fundamental drivers of volatility:
The euro in the pair continues to face pressure as traders anticipate a 50 basis point reduction in the ECB deposit rate to 3% by year-end. This suggests a 25 basis point cut in the upcoming meetings next week and in December.
The ECB has already reduced its key borrowing rates by 50 basis points this year, expecting inflation to return to its 2% target by 2025. The decline in price pressures and the economic fragility of the eurozone enhance the case for further monetary policy easing.
The dollar's performance in the pair will also hinge on macroeconomic data this week. On Wednesday, the FOMC minutes will be released, potentially shedding light on the future direction of Federal Reserve policy. On Thursday, US inflation data for September is anticipated, with a forecasted drop in the consumer price index from 2.5% to 2.3% year-over-year and from 0.2% to 0.1% month-on-month. On Friday, producer price index (PPI) data for September will be published, with core PPI expected at 0.2%, down from 0.3% previously, and overall PPI predicted at 0.1%, a decrease from 0.2% previously.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart of EUR/USD, the pair is showing a downward trend after consolidating below the resistance level of 1.1001, and it still has a small room to move toward the level of 1.0934. If this level is broken out, the next target for the decline will be the support at 1.0888.
The GBP/USD pair is falling amid a strong dollar, while the pound is losing ground amid expectations of a rate cut by the Bank of England.
Potential technical scenarios:
Signs of a head and shoulders reversal pattern continue to develop on the daily GBP/USD chart, with the price reaching the neckline at the dotted level of 1.3044. If this level is broken out, the next target within the pattern will be the support at 1.2846.
Fundamental drivers of volatility:
The pound sterling is under pressure due to the strengthening US dollar. Market participants are evaluating the chances of a 50 basis point Fed rate cut in November, which will either be confirmed or adjusted after the FOMC minutes are released on Wednesday.
The risks of a slowdown in the US economy have diminished, thanks to positive labor market data for September, which indicated solid job growth and favorable wage trends.
Meanwhile, expectations regarding the Bank of England's actions are influencing sterling, with a 25 basis point rate cut anticipated in one of its remaining meetings this year. Investors will also keep an eye on UK GDP and manufacturing data for August, set to be published on Friday.
Intraday technical analysis:
As we can see on the 4H chart, the GBP/USD pair is nearing the dotted support at 1.3044. If the price fails to break out this level, a local pullback toward the resistance at 1.3141 may occur.
USD/JPY is trading under pressure amid a rise in the US currency, while the yen is falling as expectations of a rate hike by the Bank of Japan have weakened.
Possible technical scenarios:
The daily chart shows that USD/JPY has reached resistance at 148.80, from which a pullback to support at 146.37 is plausible. However, if the 148.80 level is broken out, the pair is likely to ascend to the next target at 150.17.
Fundamental drivers of volatility:
The Japanese yen is depreciating against the US dollar on Wednesday, returning to its lowest levels since August 16. Data released on Tuesday indicated that real wages in Japan fell by 0.6% in August following two months of growth, while household spending decreased by 1.9%. These figures raise concerns about the strength of private consumption and the economic recovery, adding uncertainty to the Bank of Japan’s monetary policy.
Additionally, comments from new Japanese Prime Minister Shigeru Ishiba stating that further rate hikes are not feasible undermine the central bank’s plans for tightening monetary policy.
In the meantime, the US dollar continues to strengthen, nearing a seven-week high as expectations for more aggressive Fed easing diminish. Investors are anticipating the release of the FOMC minutes for September, as well as data on the consumer price index and producer price index in the US, which could influence the dollar’s dynamics in the pair.
Intraday technical picture:
As evidenced by the 4H chart of USD/JPY, the pair's movement below the 148.80 level does not clarify whether this strong resistance will be overcome, so it is essential to wait for the price to establish itself in relation to this boundary.
The NZD/USD pair fell after the RBNZ cut the rate and indicated its readiness to further ease monetary policy.
Possible technical scenarios:
On the daily chart, the NZD/USD pair is putting the strength of the support level at 0.6083 to the test. A consolidation below this level will pave the way for the price to drop to 0.6048. Conversely, if the price remains above the horizontal level of 0.6083, a recovery to 0.6175 could occur.
Fundamental drivers of volatility:
The New Zealand dollar has declined to levels near its lowest since mid-August after the Reserve Bank of New Zealand (RBNZ) predictably reduced its official cash rate by 50 basis points to 4.75%.
The market's reaction to this decision prompted sellers to enter, exacerbated by the absence of significant stimulus from Chinese authorities. This lack of support is detrimental to the kiwi, often viewed as a proxy currency for China due to close trade ties.
Market participants will be closely monitoring the FOMC minutes on Wednesday, with further attention shifting to US CPI data for September on Thursday. If the inflation report turns out weak, it could pressure the US dollar and help mitigate the kiwi's losses.
Intraday technical picture:
According to the 4H chart of NZD/USD, there are indications of the pair consolidating below the level of 0.6083, which would open the path for quotes to reach the support level at 0.6048.
Oil prices weakened due to a decrease in geopolitical tensions. But seasonal hurricanes in the US may return quotes to growth amid fears of a decrease in supply.
Possible technical scenarios:
On the daily chart of Brent, the price is consolidating below the level of 77.25, which opens the pathway for quotes to reach support at 75.18. If the breakout of the horizontal line at 77.25 turns out to be false, a rise to resistance at 79.70 could occur.
Fundamental drivers of volatility:
On Wednesday, oil prices fell following news of a possible ceasefire between Hezbollah and Israel. However, concerns about a potential strike on Iranian oil infrastructure are limiting the price decline. Investors are reducing war risks as the lack of escalation in the Middle East alleviates fears of oil supply disruptions.
Additionally, data from the American Petroleum Institute (API) revealed that US crude inventories rose by 10.9 million barrels, significantly exceeding market expectations. This increase in inventory, combined with the absence of new stimulus measures from China—the largest oil importer—is exerting additional pressure on prices.
Consequently, weak demand fundamentals and rising inventories are hindering oil prices, despite the potential risks of supply disruptions due to geopolitical tensions and Hurricane Milton in the US.
Intraday technical picture:
The 4H chart of Brent shows that it remains uncertain whether the 77.25 level will hold as resistance, so price movements in either direction from current levels cannot be ruled out.
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