The EUR/USD pair successfully regained its footing by the week's end and seems primed to conclude on a high note, fueled by the weakening of the US dollar.
Possible technical scenarios:
EUR/USD has surpassed the 1.0749 level and is progressing towards the nearest resistance at 1.0801. An exit from this range may occur with increased volatility in the US dollar spurred by today's statistics.
Fundamental drivers of volatility:
The US dollar's late-week decline, fueled by weaker-than-anticipated US retail sales data, allowed the EUR/USD pair to reclaim some lost ground.
According to CME FedWatch data, traders currently assign a 53% probability of a rate cut in June, deviating from the initial expectation of the Fed's easing cycle beginning in March.
Today's release of the US Producer Price Index (PPI) report for January at 1:30 p.m. (GMT) may alter the dollar's dynamics in the pair. Forecasts anticipate a 0.1% increase in Core PPI, contrasting with the previous period's 0.0%. Additionally, Monthly PPI is projected to rise by 0.1%, diverging from December's figure of -0.1%.
Intraday technical picture:
According to the 4H chart of the EUR/USD pair, there is still room for the pair to reach the resistance of the corridor between 1.0749 and 1.0801. Quotes may locally shift towards either boundary from the middle of the sideways trend.
As the week drew to a close, the GBP/USD pair staged an impressive recovery, propelled by strong UK retail sales data and a dip in US retail sales, setting the stage for potential gains.
Potential technical scenarios:
By examining the daily chart of GBP/USD we can see that the pair found support at 1.2525 marked with dotted lines and rebounded towards resistance at 1.2608. At this point, either a downward reversal or a breakout above the 1.2608 level and subsequent consolidation may occur, paving the way for the pair toward the next target of 1.2656.
Fundamental drivers of volatility:
The pound experienced a modest uptick on Friday fueled by better-than-anticipated retail sales data, showcasing a 3.4% increase in sales volumes from December, surpassing the average forecast of a 1.5% rise.
That being said, anticipation looms over the release of US data today, particularly wholesale inflation dynamics, which may adjust expectations concerning Fed rates, consequently influencing dollar volatility in the pair.
The US Producer Price Index (PPI) for January is scheduled for release at 1:30 p.m. (GMT). Forecasts indicate a 0.1% rise in Core PPI, contrasting with the previous period's 0.0%. Additionally, Monthly PPI is expected to register a 0.1% increase, diverging from December's figure of -0.1%.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart of the GBP/USD pair, reaching the resistance of the range between 1.2525 and 1.2608 could prompt either a reversal or an attempt to break out and consolidate higher. Clarity regarding price positioning relative to this horizontal line is anticipated following the release of macroeconomic statistics.
The AUD/USD pair is set to finish the week on a high note, bouncing back from earlier losses.
Possible technical scenarios:
Based on the daily chart, we can observe AUD/USD nearing the dotted resistance at 0.6541. From this area, the price may either retreat and revert to support at 0.6458 or break out higher, paving the path toward the subsequent dotted resistance at 0.6619.
Fundamental drivers of volatility:
This week, Australian employment data unveiled a softening labor market, bolstering arguments against further interest rate hikes by the Reserve Bank of Australia.
Conversely, the US dollar, a dominant force shaping pair volatility, weakened towards the week's end. Initially propelled by robust inflation figures, the currency faced pressure due to mixed US data, with January's retail sales plunging beyond expectations and separate reports indicating labor market tensions.
As per CME's FedWatch tool, traders currently assign a 53% probability of a rate cut in June, deviating from the initial anticipation of the Fed's easing cycle commencing in March.
Scheduled for release today at 1:30 p.m. (GMT), the US Producer Price Index (PPI) for January holds significance as a gauge of wholesale inflation, with deviations from forecasted values potentially sparking increased dollar volatility.
Forecasts indicate a forecasted rise in Core PPI to 0.1%, up from the previous period's 0.0%. Additionally, the monthly PPI is anticipated to climb by 0.1%, differing from December's -0.1%.
Intraday technical picture:
As evidenced by the 4H chart of the AUD/USD pair, a downward trend in quotes suggests a possible downward reversal from resistance near the horizontal dotted line at 0.6541.
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