The EUR/USD pair is currently facing downward pressure from the robust dollar, a trend that is anticipated to persist over the next few trading sessions.
Possible technical scenarios:
EUR/USD has reached the support level within the sideways range between 1.0801 and 1.0888. Here, the price could either reverse upwards or, if it breaks out the 1.0801 level and consolidates below it, continue its downward trajectory toward the target of 1.0749.
Fundamental drivers of volatility:
The US dollar has seen an uptrend this week, exerting downward pressure on the pair. During Wednesday's meeting, the Federal Reserve maintained its key interest rate at 5.25-5.5%. However, Fed Chair Jerome Powell indicated that three interest rate cuts are still under consideration for this year. That being said, he emphasized a cautious approach, delaying any actions until there is more confidence in achieving sustainable inflation at 2%.
Market sentiment now suggests an anticipated rate cut of 80 basis points this year, significantly lower than the approximately 160 basis points projected at the beginning of the year.
Intraday technical picture:
The 4H chart of EUR/USD indicates uncertainty regarding the sustainability of the 1.0801 level. Depending on whether the price manages to consolidate above or below this level, we could witness either an upward movement towards the resistance of 1.0888 or a downward movement towards 1.0749.
The strengthening US dollar is exerting downward pressure on GBP/USD. Dovish tones from both the Fed and the Bank of England have further reinforced this prevailing trend.
Possible technical scenarios:
As evidenced by the daily chart of GBP/USD, the pair has broken out the 1.2608 level. Should consolidation occur below this level, it may pave the way for further downward movement towards the next support at 1.2500.
Fundamental drivers of volatility:
GBP/USD is experiencing downward pressure due to a weakening pound and a strengthening dollar. The British pound depreciated following the Bank of England's decision to leave interest rates unchanged on Thursday. Notably, two members of the Monetary Policy Committee who had previously advocated for a rate hike softened their stance, while Bank of England Governor Andrew Bailey suggested that interest rates could potentially be lowered in the near future.
Meanwhile, the US dollar has been on the rise after the Federal Reserve reaffirmed its intention for three rate cuts this year. However, the Fed remains cautious, indicating that it will refrain from taking action until there is greater confidence in achieving a steady decline in inflation to 2%.
Intraday technical picture:
As we can see on the 4H chart of the GBP/USD pair, there are indications suggesting the potential for price consolidation below the 1.2608 level. If this consolidation occurs, the price could potentially extend its downward movement towards the 1.2500 range.
The USD/JPY pair experienced an uptick, driven by the strengthening US dollar and a decline in the Japanese yen, which weakened in response to the Bank of Japan's monetary policy tightening.
Possible technical scenarios:
Examining the daily chart of USD/JPY, we observe that the upward momentum was halted by resistance at 151.71. If the price manages to surpass the 152 yen per dollar threshold, it could pave the way for further growth towards the next psychological and technical level at 153.00.
Fundamental drivers of volatility:
This week, the Bank of Japan made a significant shift away from negative interest rates and long-term yield caps. Despite this monetary policy tightening, the yen depreciated following the announcement and is currently trading near multi-year lows around 151 yen per dollar. This depreciation is attributed to the substantial interest rate differential between the Federal Reserve and the Bank of Japan.
Conversely, the strengthening US dollar is adding pressure on the pair. While the Federal Reserve expressed openness to three rate cuts this year, Jerome Powell emphasized that any action would be contingent upon greater confidence in achieving sustained inflation decline to 2%.
Intraday technical picture:
In the four-hour chart of USD/JPY, the price is consolidating below the resistance level of 151.71. This consolidation may lead to a local reversal and retracement towards the 150 yen per dollar range, or alternatively, an attempt to breach the 152 yen per dollar level.
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