This week, the EUR/USD pair continues to be under pressure due to data released from the euro area on Monday indicating a downturn in corporate activity.
Possible technical scenarios:
The daily chart shows that the EUR/USD pair is halfway to the support of the sideways range between 1.0958 and 1.1121. The price still has room to move toward its lower boundary.
Fundamental drivers of volatility:
The upcoming meetings of the US Federal Reserve and the ECB will be the primary drivers of the pair's movement this week.
On Wednesday at 6:00 PM GMT, the Federal Reserve will publish the outcome of their most recent meeting, wherein a hike from 5.25% to 5.50% is widely anticipated. The Federal Open Market Committee statement will be issued simultaneously.
The further direction of the US dollar will be heavily influenced by Chairman Jerome Powell's comments during the FOMC press conference, which is to start at 6:00 PM GMT.
The decisions of the European Central Bank are expected at 12:15 PM GMT on Thursday. The projections suggest that the central bank will announce a rate hike (from 4.0 to 4.225%) and release a statement on monetary policy.
The European Central Bank will hold a press conference at 12:45 PM GMT, while ECB President Christine Lagarde is scheduled to speak at 2:15 PM GMT.
Intraday technical picture:
There are no additional technical benchmarks on the 4H chart of the EUR/USD pair. It is on the way to the lower boundary of the range between 1.0958 and 1.1121.
The rise in the value of the US dollar has halted the fall in the value of the British pound, which was prompted by a more significant decline in British inflation. The Federal Reserve will determine the course that the price will take moving forward during this week.
Possible technical scenarios:
As we can see on the daily chart, 1.2785 has stopped the GBP/USD pair. If this level holds, the price may recover, with the resistance at 1.2957 acting as the immediate target to the north. Should there be a breakout and consolidation below 1.2785, the price may continue to decline to the support at 1.2601.
Fundamental drivers of volatility:
This week, the US dollar's volatility, which is expected to rise after the release of the outcomes of the US Federal Reserve meeting on Wednesday at 6:00 PM GMT, will largely determine the direction of the GBP/USD pair.
The market already accounts for the interest rate increase from 5.25% to 5.50%; therefore, the market's focus will be on the tone of Fed Chairman Jerome Powell's statements during the press conference at 6:00 PM GMT.
Intraday technical picture:
Judging by the look of the unfolding situation on the 4H chart of the GBP/USD pair, the price proceeded to consolidate in a narrow range between 1.2785 and 1.2848. After the Fed meeting, it's likely that the direction of an exit from it will be decided.
Maintaining the medium-term sideways dynamics, the AUD/USD pair has continued its continuous drop. There is every reason to expect the decline to continue from a purely technical standpoint, but the dynamics of the US dollar will play a deciding role this week.
Possible technical scenarios:
The technical boundaries for the AUD/USD pair are the support at 0.6567 and the resistance at 0.6893 marked with dotted lines. In local terms, the movement is accompanied by rollbacks and the price is currently being adjusted within the internal corridor between 0.6669 and 0.6798.
Fundamental drivers of volatility:
Aside from the Australian inflation report, the movement of the pair this week will primarily be determined by how the US dollar responds to the decision that will be made by the Fed on Wednesday at 6:00 PM GMT.
The market players are anticipating an increase in the interest rate to 5.50%, up from 5.25% currently. During a news conference that will begin at 6:00 PM GMT, the FOMC statement as well as the rhetoric of Fed Chairman Jerome Powell will be of particular interest. Investors will be searching for clarification over whether or not the current rate-hiking cycle has ended and whether or not the Federal Reserve is prepared to raise interest rates one more before the end of the year.
Intraday technical picture:
A bearish channel has formed between 0.6567 and 0.6893 on the 4-hour chart for the AUD/USD. The price may find temporary support at 0.6798, where the current uptrend could end.
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