The EUR/USD pair experienced a decline following euro area business activity data that heightened concerns about a potential recession, while the US dollar regained strength.
Possible technical scenarios:
According to the daily chart of the EUR/USD pair, it's evident that the pair struggled to consolidate above 1.0592 and retreated back into the range between 1.0448 and 1.0592. This scenario creates preconditions that suggest a potential price decline. However, it's important to note that it may be influenced by how the euro responds to various news catalysts.
Fundamental drivers of volatility:
The trajectory of the euro for the upcoming week is closely tied to the market's reaction to decisions made at the ECB meeting scheduled for Thursday. The central bank's decisions will be disclosed at 12:15 p.m. GMT.
The interest rate is not anticipated to increase and is expected to remain at 4.50%. The monetary policy statement holds significance, as does the rhetoric of the central bank officials. The ECB press conference will occur at 12:45 p.m. GMT, and ECB Chairman Christine Lagarde is expected to speak at 2:15 p.m. GMT.
On the US side, the dynamics of the dollar in this pair on Thursday may be affected by data on the US Durable Goods Orders and the third-quarter GDP report, set to be released at 12:30 p.m. GMT. According to forecasts, the GDP is expected to be 4.1% compared to the previous figure of 2.1%.
Intraday technical picture:
According to the 4H chart, the EUR/USD pair remains within an upward trend. There's a likelihood that the support level of the channel around 1.0547 might prompt a reversal and allow the pair to continue its ascent, potentially aiming for the 1.0707 level.
The GBP/USD pair is currently trading under pressure, primarily due to the resurgence of the US dollar and the British pound's vulnerability resulting from the completion of the Bank of England's monetary tightening cycle.
Possible technical scenarios:
As evidenced by the daily timeframe, the GBP/USD pair once again rebounded lower from the resistance within the descending channel. Should the price manage to consolidate below 1.2146 and subsequently update the October 4 lows, there is potential for continued depreciation towards the support at 1.1934.
Fundamental drivers of volatility:
This week's labor market report had minimal impact on the pound. At the same time, market players are anticipating that, akin to the Federal Reserve, the Bank of England will refrain from hiking interest rates in the upcoming week.
In the United States, the dollar's volatility within this pair on Thursday may be impacted by figures of Durable Goods Orders and the third-quarter GDP report which will be released at 12:30 p.m. GMT. Projections indicate that GDP is expected to reach 4.1%, surpassing the previous figure of 2.1%.
Durable Goods Orders are also expected to demonstrate a month-over-month growth of 0.6%, an improvement from the previous increase of merely 0.1%. Similarly, Core Orders are forecasted to experience a 0.3% growth, compared to the previous level of 0.4%.
Intraday technical picture:
As we can see on the 4H chart of the GBP/USD pair, a local support level at 1.2101 marked with dotted lines has emerged. Confirmation of this level as resistance would potentially pave the way for the pair to reach the 1.1934 level. Alternatively, there's the possibility of a narrowed volatility range and a local price recovery within it.
The AUD/USD pair saw the Australian dollar strengthen in response to the prospect of higher interest rates, driven by an unexpectedly robust surge in inflation. However, these gains were somewhat limited as the US dollar received a boost from a survey revealing that US businesses were emerging from a five-month period of stagnation.
Possible technical scenarios:
Upon close examination of the daily chart, we see that the AUD/USD pair remains within a downtrend, remaining below the intermediate resistance at 0.6364 marked with dotted lines. From this area, the price has room for a southward movement toward the October lows and the support at 0.6255.
Fundamental drivers of volatility:
A report published on Tuesday revealed that inflation in Australia had displayed a surprisingly strong performance in the third quarter, increasing the risk of an interest rate hike as soon as next month.
The third-quarter Consumer Price Index (CPI) recorded a 1.2% rise, surpassing market expectations of 1.1% and exceeding the previous 0.8% increase. Although the annual inflation rate dipped from 6.0% to 5.4%, it still outperformed forecasts, which had projected a rate of 5.3%.
That being said, despite the positive inflation news, the Australian dollar struggled to maintain its early gains, as the strengthening of the US currency renewed downward pressure on the pair.
In terms of the US dollar, the pair's dynamics may be affected by data on Durable Goods Orders and the third-quarter GDP report, scheduled for release at 12:30 p.m. GMT on Thursday. Projections suggest an anticipated GDP growth rate of up to 4.1%, up from the previous figure of 2.1%.
Durable Goods Orders MoM are expected to increase by 0.6%, a notable improvement compared to the previous growth rate of 0.1%. Aside from that, forecasts indicate a probable increase of 0.3% for Core Orders, in contrast to the previous rise of 0.4%.
Intraday technical picture:
Judging by the look of things on the 4H chart of the AUD/USD pair, the price currently finds local support at 0.6286 marked with dotted lines. There remains some room for the price to potentially reach this support. Should this horizontal level remain intact, it could prompt a reversal in the pair's direction, possibly leading to a return to the highs observed during Wednesday's trading session.
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