After a significant increase last week due to the general decline in the US dollar, the EUR/USD pair is consolidating this week.
Possible technical scenarios:
The EUR/USD quotes are currently trading 1,1228 level on the daily chart. Depending on which side of this horizontal line the price eventually settles, the future direction of the pair will be determined. If the EUR/USD pair is able to consolidate above it, 1.1383 will serve as the next potential area of strength. In that case, the price may return back to the support at 1.1121.
Fundamental drivers of volatility:
A critical US retail sales report this week was met with muted reaction from the US dollar, as more than 90% of market players remain confident that the Federal Reserve will hike rates at its July meeting.
The US dollar's decline last week after a stronger-than-expected drop in inflation drove the pair's rise, while this week, against a reasonably tranquil news background, the US currency is consolidating—a trend that may continue in the coming days.
The Initial Jobless Claims in the United States and the Philadelphia Fed Manufacturing Index for July will be announced on Thursday, which may have a local impact on the volatility of the US dollar this week.
Intraday technical picture:
As can be seen on the 4H chart of EUR/USD, the 1.1228 level demonstrates the sideways trend. However, there are no signs of consolidation above or below this boundary so far, and we have to wait for the price to decide where it stands in terms of this horizontal line.
Following the increase shown during the prior week, the GBP/USD pair has moved to a correction. The United Kingdom's inflation data came in lower than anticipated, which contributed to the pound's slide, while the United States dollar is currently consolidating following a recent drop brought on by the anticipation of a meeting of the Federal Reserve.
Possible technical scenarios:
As evidenced by the daily chart, the GBP/USD pair dropped to the support of the range between 1.2957 and 1.3200. If 1.2957 is broken out and the price consolidates below it, the next targets to the south will be 1.2848 marked with dotted lines, and 1.2785.
Fundamental drivers of volatility:
The pound could be affected this week by Friday's retail sales report for the United Kingdom, scheduled for release at 6:00 a.m. GMT. The previous decline of 2.1% in retail sales is predicted to be followed by a decline of 1.5% year-over-year. The increase of 0.2% month-over-month is anticipated, compared to the 0.3% increase seen previously.
The subsequent movement of the US dollar in the pair may be muted in the coming days depending on market anticipation of the Fed's upcoming meeting.
Intraday technical picture:
The 4H chart of the GBP/USD shows that the breakout of support at 1.2957 could be either true or false. If the price ends up consolidating below it, it may travel to the support at 1.2848 marked with dotted lines. At the same time, a recovery to last week's highs is likely if the level holds.
The AUD/USD pair moved down last week after reaching the upper boundary of its long-term consolidation corridor. The current technical scenario points to a price drop being likely.
Possible technical scenarios:
AUD/USD bounced off of the resistance at 0.6893 downward and is currently putting the next southward level at 0.6798 to the test. The support at 0.6567, the lower green dotted line, which the pair still has enough room to travel to, remains a mid-term target for the decline.
Fundamental drivers of volatility:
This week, the Australian dollar may trade with a local increase in volatility in response to the release of Australian labor market data for June on Thursday at 1:30 a.m. GMT. According to the projections, there will be a 17.0 thousand change in the level of employment, which compares to a change of 75.9 thousand in the level of employment in the preceding period. The unemployment rate will not change from its current level of 3.6%.
Following a decline during the previous week, the dynamics of the US currency may stay subdued in anticipation of the Federal Reserve meeting scheduled for July 26, at which a hike in the basic interest rate is expected to take place.
Intraday technical picture:
The price is attempting to consolidate below 0.6798 on the 4H chart of the AUD/USD pair. If the consolidation does happen, the support area of 0.6669 to 0.6698 will serve as the nearest target to the south.
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