The U.S. dollar has been consolidating in a narrow range this week as market players are keeping close tabs on the American stats to estimate the probability of a 25-basis-point interest rate hike implemented by the Fed in May. In this context, the EUR/USD pair has also proceeded to consolidate.
Possible technical scenarios:
As we can see in the daily chart, EUR/USD quotes are testing the resistance at 1.0958. If the price manages to consolidate above this level, the local resistance at 1.1032 marked with green dotted lines will serve as the next growth target.
Fundamental drivers of volatility:
The minutes of the ECB monetary policy meeting will be released on Thursday at 11:30 am GMT. The market players typically scrutinize this critical document and the statements contained in it, as they look for clarity regarding the central bank’s further monetary policy plans.
Meanwhile, the U.S. dollar’s volatility may increase in response to Thursday's figures if they end up not meeting expectations.
At 12:30 pm GMT, we are expecting the release of the United States Initial Jobless Claims with the projected 240,000 claims compared to 239,000 a week earlier.
The United States Philadelphia Fed Manufacturing Index for the month of April will be released at the same time. It is expected to increase to -19.2 as compared to -23.2 previously.
Intraday technical picture:
The 4H chart shows that the EUR/USD pair has been trading in an uptrend. The current consolidation near its support suggests a continued increase within the channel toward the resistance at 1.1121. If the trendline gets broken out, the movement of the pair toward 1.0808 may be an alternative scenario.
Thursday’s local weakening of the U.S. dollar has given the GBP/USD pair a boost. The pound sterling has been also growing stronger amid the expectation that the Bank of England would have to hike interest rates further in an attempt to curb double-digit inflation.
Possible technical scenarios:
As evidenced by the daily chart, GBP/USD quotes remain in the sideways range between 1.2343 and 1.2525, the two green dotted lines. From a technical standpoint, the pair still has enough room to move toward its upper boundary after consolidating above the intermediate level of 1.2410.
Fundamental drivers of volatility:
The U.S. dollar volatility may increase on Thursday following the release of macroeconomic statistics.
At 12:30 pm GMT, we are expecting the release of the United States Initial Jobless Claims with the projected 240,000 claims compared to 239,000 a week earlier.
The United States Philadelphia Fed Manufacturing Index for the month of April will be released at the same time. It is expected to increase to -19.2 as compared to -23.2 previously.
The pound sterling’s volatility on Friday at 6:00 am GMT may be affected by the United Kingdom Retail Sales report for the month of March. Their volume month-over-month is projected at -0.5% against 1.2% in the previous period. At the same time, figures year-over-year are expected to drop 3.1% against the previous 3.5% decline.
Intraday technical picture:
The 4H chart of the GBP/USD pair shows a consistent recovery of the pair in the sideways trend between 1.2343 and 1.2525, where the price still has a technical potential to climb to its upper dotted line.
USD/JPY has been trading in an uptrend as the Japanese yen remains weaker than the U.S. dollar. Kazuo Ueda, the new Governor of the Bank of Japan has no intention to abandon the ultra-loose monetary policy, which contrasts sharply with expectations of another interest rate hike by the Fed.
Possible technical scenarios:
USD/JPY quotes in the daily chart have hit the local resistance at 135.11 marked with dotted lines. Both a reversal and a return to support at 133.59 are likely from this area. An alternative scenario would be a breakout of 135.11 and consolidation above this level, which will pave the way to the next resistance at 137.89.
Fundamental drivers of volatility:
Presently, the further behavior of the pair depends chiefly on the U.S. dollar. On Thursday, the U.S. currency may be sensitive to stats that will either confirm or lower expectations of the Fed’s interest rate hike in May.
At 12:30 pm GMT, we are expecting the release of the United States Initial Jobless Claims with the projected 240,000 weekly claims compared to 239,000 a week earlier.
The United States Philadelphia Fed Manufacturing Index for the month of April will be released at the same time. It is expected to total -19.2 as compared to -23.2 previously.
Intraday technical picture:
As evidenced by the 4H chart of the USD/JPY pair, it is technically likely that the price will reverse downward from the resistance of the 133.59 and 135.11 range. If the support at 133.59 subsequently fails to remain standing and the price consolidates below it, USD/JPY pair may decline to the area of the April 14 lows.
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