The EUR/USD pair is trading near 1.1700 despite the growing trade tensions between the US and the EU.
Possible technical scenarios:
As we can see on the daily chart, the EUR/USD pair remains in an uptrend. A breakout and consolidation above 1.1738 will open the way to the resistance at 1.1898.
Fundamental drivers of volatility:
EUR/USD is strengthening due to the dollar correction amid geopolitical risks and trade uncertainty. The pair is supported by the weakening US dollar.
The pressure on the American currency was increased by US President Trump's proposal to increase tariffs on European imports from 10% to 15-20%, as well as the refusal to ease the 25% auto tariffs. This caused a response from the EU, including a tightening of the stance by Germany.
Investors are also awaiting the ECB rate decision on Thursday and the Fed next week. Both central banks are expected to keep rates unchanged. Markets are focused on Christine Lagarde's rhetoric and the Fed's statements, which may provide signals on further monetary policy.
Intraday technical picture:
Given the unfolding situation on the 4H chart of EUR/USD, the local downtrend ended with an inverted head and shoulders reversal pattern. A change in trend to an uptrend may lead to strengthening of the pair at least to the level of 1.1738. And the further direction will depend on whether the price can break through this horizontal and consolidate above.
GBP/USD is under pressure from dollar strength, geopolitical uncertainty, and domestic factors in the UK.
Possible technical scenarios:
On the daily chart of GBP/USD, a reversal head and shoulders pattern with a neckline of 1.3378 has emerged at the top of the uptrend. From here, a recovery to the level of 1.3630 and the formation of another shoulder is possible before the level of 1.3378 is broken out from above.
Fundamental drivers of volatility:
The GBP/USD pair is falling amid a strengthening US dollar and increasing global risk aversion. Investors remain cautious ahead of the August 1 deadline, when new US tariffs will come into effect. Although negotiations between the US and trading partners will continue, the harsh rhetoric is increasing tensions.
Additional pressure on the pound is exerted by the situation inside the UK. The Bank of England may suspend the sale of long-term bonds due to weak demand, which signals a decrease in market interest in British assets. At the same time, expectations for monetary policy are softened: traders predict two rate cuts by the British central bank in 2025.
In the US, domestic political tensions around the Fed persist amid criticism of its independence and speculation about the possible resignation of Jerome Powell. This creates additional uncertainty for the American currency in the pair.
Intraday technical picture:
As evidenced by the 4H chart, the GBP/USD pair has consolidated above the 1.3436 level, which opens the way to resistance at 1.3630.
USD/JPY is gaining ground on Tuesday, paring yesterday's losses, thanks to a weaker yen amid political uncertainty in Japan and expectations for trade talks with the United States.
Possible technical scenarios:
На дневном графике пара USD/JPY отступила вниз от сопротивления 148,63, что создает технические предпосылки для снижения к поддержке 145,91.
Fundamental drivers of volatility:
USD/JPY is supported by the weakness of the yen and expectations for a trade agreement with the United States.
However, the outlook for a loose Fed policy limits the dollar's upside. Investors are concerned about the possible loss of control of the Liberal Democratic Party of Japan over the upper house of parliament, which creates risks to the stability of fiscal policy.
Additional attention is focused on the talks between Japan and the United States, where the parties intend to reach an agreement by August 1. This creates potential support for the dollar against the backdrop of a weaker yen. However, the "dovish" signals from the Fed remain a restraining factor for the growth of USD/JPY. Member of the Board of Governors Christopher Waller allowed for a rate cut already in July, and the markets estimate the probability of a rate cut in September at 59%..
Intraday technical picture:
Locally, on the 4H chart, the pair is trading in the middle of the range between 145.91 and 148.63, from where a movement to any of its boundaries is possible. At the same time, a decline looks like a preferable scenario.
The USD/CAD pair is under pressure due to political risks in the US and expectations of easing the Fed's policy, but losses are limited by the decline in oil prices, which is negatively affecting the Canadian dollar.
Possible technical scenarios:
The daily chart of USD/CAD demonstrates that the pair was unable to break out of the sideways range between 1.3503 and 1.3744, which creates preconditions for a decline in the price to the level of 1.3503.
Fundamental drivers of volatility:
The USD/CAD pair fell amid pressure on the US dollar caused by political instability around the Federal Reserve. Speculation about the possible resignation of Fed Chairman Jerome Powell is increasing investors' concerns about the independence of the regulator, which is having a negative impact on the US dollar.
Expectations of a Fed rate cut in September (probability about 59% according to CME FedWatch) are also pushing the dollar down. However, rising uncertainty may limit the USD's decline due to demand for safe-haven assets.
On the other hand, the pair is supported by falling oil prices, which puts pressure on the Canadian dollar, which depends on commodity markets. Given that Canada is the largest supplier of oil to the US, weakening oil prices may temporarily restrain the strengthening of the CAD.
Intraday technical picture:
There is no additional data for analysis on the four-hour USD/CAD chart, a return below the level of 1.3744 opens up room for the pair to decline to the dotted support of 1.3556.
Oil prices continue to decline amid rising trade tensions and concerns about slowing global demand.
Possible technical scenarios:
Considering the unfolding situation on the daily chart, the oil price fell below 68.52, from where there is still enough room to move down to support at 66.51. An alternative scenario could be a narrowing of the consolidation range and the formation of a triangle around 68.52.
Fundamental drivers of volatility:
Investors are concerned about the consequences of the possible introduction of new tariffs by the United States from August 1, which could negatively affect global trade and, accordingly, the demand for energy resources. A decrease in business activity, especially in the manufacturing sector, increases pressure on the oil market.
An additional negative factor is the expectation of weak macroeconomic data, especially for PMI in industry, as well as an increase in stocks in storage facilities. At the same time, geopolitical tensions in the Middle East and potential OPEC+ measures to limit supply may limit the scale of the decline, but for now, the market remains mostly under pressure.
However, price fluctuations are not excluded if the situation on the supply side worsens. The balance of supply and demand remains fragile, and any unexpected events related to supplies or decisions of large producers can quickly change the dynamics.
Intraday technical picture:
On the 4H chart, we see that the decline in quotes in the range between 66.51 and 68.52 may continue if quotes update the lows of July 16.
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