The EUR/USD pair continues to demonstrate upward momentum, trading around 1.1790 amid a weakening US dollar.
Possible technical scenarios:
As we can see on the daily chart, the EUR/USD pair rose above 1.1738. The next target for growth is the resistance at 1.1898.
Fundamental drivers of volatility:
The growing fiscal uncertainty in the US is putting pressure on the American currency. In particular, concerns about the budget deficit, which could increase by $3.3 trillion if Trump's large-scale bill is adopted. Additional pressure is provided by doubts about the unity of the Senate and potential trade frictions associated with the possible reintroduction of tariffs.
On the other hand, the euro receives only limited support from the macroeconomic data of the eurozone. Inflation in Germany was lower than expected (2.0% vs. 2.2% forecast), while retail sales fell by -1.6% month-over-month in May. This increases doubts about the sustainability of economic growth in the region and curbs excessive optimism about further growth in the EUR. ECB officials remain cautious and emphasize the high degree of uncertainty, leaving all policy options open.
The key events of the coming days will be the publication of ISM indices and employment data in the US. The expected weakening of the US labor market and weak inflation expectations may increase expectations of the Fed's easing policy. If the figures confirm a decline in economic activity in the US, this may become an additional catalyst for the pair's growth.
Intraday technical picture:
As evidenced by the 4H chart of the EUR/USD pair, the price move to the range between 1.1738 and 1.1898 opens the way for growth to its upper limit.
GBP/USD is holding above 1.3700, supported by a weaker US dollar on fiscal instability in the US and expectations of an imminent Fed rate cut.
Possible technical scenarios:
Given the unfolding situation on the daily chart, GBP/USD is testing the resistance level at 1.3752. A consolidation above this level will open the way for quotes to the next target at 1.3914. Otherwise, quotes may roll back down to the support at 1.3630.
Fundamental drivers of volatility:
Despite weak economic data from the UK, the pound remains resilient, as the market's attention is focused on the deteriorating US fiscal position and growing expectations of an imminent Fed rate cut. The dollar index fell to its lowest since February 2022, and the probability of the Fed easing in September exceeds 70%.
Market players are cautious and awaiting signals from Bank of England Governor Andrew Bailey and Fed Chairman Jerome Powell, who are scheduled to speak at the ECB forum in Sintra. Their rhetoric may set a new direction for the pair. Additional influence will be exerted by the upcoming ISM index data in the US and the JOLTS report, which may confirm the cooling of the US economy.
The general mood in favor of risk, reinforced by the weakening dollar and uncertainty around US trade policy, creates favorable conditions for further growth of GBP/USD.
Intraday technical picture:
Based on what is happening on the 4H chart of GBP/USD, we see a breakout of the resistance of 1.3752, but it is not yet clear whether the price will consolidate above it. In case of success, there is a possibility of continued growth to the level of 1.3914.
The USD/JPY pair remains under pressure amid a strengthening Japanese yen and weakness of the US currency.
Possible technical scenarios:
The daily chart shows that the USD/JPY pair is approaching the support level of 142.22 marked with a dotted line. In case of a breakout of this level and consolidation below, the quotes will continue to weaken to the next target of 140.18.
Fundamental drivers of volatility:
The Japanese yen received support after the publication of a strong Tankan report from the Bank of Japan, which showed an increase in business confidence and persistent inflationary pressure. These data increase expectations that the central bank will continue the path of normalization of monetary policy, which strengthens the yen.
At the same time, tensions in US-Japanese trade relations are increasing: the Trump administration hinted at a possible 25% tariff on Japanese cars and criticized Japan for trade imbalances. Despite this, JPY remains in demand as a safe haven amid global uncertainty.
The weakness of the dollar, caused by the expectation of a Fed rate cut in September, puts additional pressure on USD/JPY.
Another factor weakening the American currency is the expectation of an important report on the US labor market (Nonfarm Payrolls) on Thursday, since Friday is a holiday in the US on Independence Day. A slowdown in employment growth and a possible increase in unemployment are predicted, which may strengthen expectations of an imminent Fed rate cut. This will strengthen the bearish sentiment for the USD and may contribute to a further decline in the USD/JPY pair.
Intraday technical picture:
Locally, on the 4H chart, the pair still has some room to move to the dotted support level of 142.22. Further price direction will depend on which side of this horizontal the price will consolidate against the backdrop of upcoming macroeconomic news from the US.
USD/CAD is trading with moderate losses near 1.3600 amid a strengthening Canadian dollar and a weakening US dollar.
Possible technical scenarios:
On the daily chart, USD/CAD is halfway to the support of the sideways range between 1.3503 and 1.3744. In case of a breakout and consolidation below the 1.3503 level, the next target for the price weakening will be the horizontal 1.3384.
Fundamental drivers of volatility:
Strengthening of the Canadian dollar is supported by the resumption of trade talks between Canada and the United States. Ottawa temporarily abandoned the introduction of a digital services tax, which gave a start to negotiations aimed at reaching an economic agreement by July 21. This positive development supports the CAD.
On Tuesday, Canada has a holiday on the occasion of Canada Day, which may lead to reduced liquidity. Market participants will be closely watching the publication of the ISM business activity index in the US on Tuesday, as well as the key report on the US labor market (Nonfarm Payrolls) for June, which will be released on Thursday, as the US celebrates Independence Day on Friday. Expectations of weak data put additional pressure on the US dollar.
A decline in oil prices due to easing Middle East risk and expectations of an increase in OPEC+ production in August is holding back the growth of the Canadian currency. Since Canada is the largest supplier of oil to the US, lower oil prices traditionally have a negative impact on the Canadian dollar and limit the pair's downside potential.
Intraday technical picture:
The technical picture on the 4H USD/CAD chart shows that the pair has potential for a decline to local targets of 1.3539 (low of June 16) and 1.3503.
Gold prices are rising this week under the influence of technical factors and amid a weakening US currency.
Possible technical scenarios:
On the daily chart, the gold price has turned up from the support of the sideways range between 3246.72 and 3431.08, which has sufficient room to move to its upper boundary.
Fundamental drivers of volatility:
Expectations of an imminent cut in the Fed interest rate, which increased after weak data on consumer spending and fiscal uncertainty in the US, continue to put pressure on the dollar. This increases the attractiveness of gold as a safe-haven asset, which is traded in inverse correlation with the US currency.
Additional support for the precious metal is provided by geopolitical and trade tensions: Donald Trump is stepping up the rhetoric on trade tariffs, threatening to impose tariffs of up to 50% on countries that are not ready for negotiations. This is increasing demand for safe-haven assets, including gold, despite the positive sentiment in the stock markets.
Investors remain cautious ahead of key data from the US. The ISM and JOLTS indices are due on Tuesday. But the main focus is on the Nonfarm Payrolls report for June, which will be released on Thursday due to the Independence Day holiday in the US on Friday. This data could provide the next impulse for both the dollar and gold.
Intraday technical picture:
The local technical picture on the 4H chart shows that for further growth in quotes in a wide range between 3246.72 and 3431.08, gold needs to break out the level of 3347.47 and consolidate above. If this does not happen, the XAU/USD price may roll back to the support of 3246.72.
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