The EUR/USD pair rose amid the U.S. dollar decline following the Fed meeting. As anticipated, the American central bank pushed interest rates up by 0.25 percentage points. However, it hinted that it may take a pause in further tightening of monetary policy. The markets are currently waiting for the ECB meeting, keeping a close eye on the rhetoric of the central bank’s officials as it may affect the behavior of the euro.
Possible technical scenarios:
As can be seen in the daily chart, the EUR/USD quotes failed to overcome the level of previous highs and the local resistance at 1.1067 marked with dotted lines. That being said, the strength of this level can be put to the test against the backdrop of eventful news background in the second half of the week. 1.0930 continues to act as support for the pair, while the next growth targets are 1.1121 and 1.1211.
Fundamental drivers of volatility:
Thursday's main event will be the ECB decision on interest rates to be announced at 12:15 pm GMT. An increase in the main interest rate from 3.50% to 3.75% and the release of the ECB’s statement regarding the monetary policy are expected.
The ECB press conference will start at 12:45 pm GMT.
In the meantime, President of the European Central Bank Christine Lagarde is to speak at 2:15 pm GMT.
On Friday, the U.S. dollar may react to the U.S. employment figures released at 12:30 pm GMT. Based on the forecast, the Non-Farm Payrolls in the United States for the month of April will drop from 236,000 to 180,000, whereas the unemployment rate will rise from 3.5% to 3.6%.
Intraday technical picture:
The 4H chart of the EUR/USD pair shows that the strength of the resistance at 1.1067 marked with dotted lines is being put to the test. From this level, the price may drop to the support at 1.0930 and attempt to exit the sideways trend upwards.
The GBP/USD pair rose, as it has been trading near a 12-month high amid the U.S. dollar decline. The U.S. currency remains under pressure after the Fed eased up on rhetoric. In the meantime, Friday's employment report may adjust the price direction locally.
Possible technical scenarios:
As can be seen in the daily chart, GBP/USD quotes are trading below the resistance level at 1.2601. From this technical position, the price may break out the level and consolidate above it, which will pave the way toward the next target at 1.2785, or it may reverse downward and fall to support at 1.2410.
Fundamental drivers of volatility:
The main macroeconomic stats that will act as volatility catalysts are expected on Friday.
The United Kingdom Construction PMI for the month of April will be released at 8:30 am GMT, with the anticipated rise from 50.7 to 51.0.
At 12:30 pm GMT, we are waiting for the U.S. job market data for April. The Non-Farm Payrolls in the United States for the month of April is expected to drop from 236,000 to 180,000, with an increase in the unemployment rate from 3.5% to 3.6%.
Intraday technical picture:
As evidenced by the 4H chart of the GBP/USD pair, there’s a local reversal of the pair from the resistance level at 1.2601 which creates prerequisites for a decline. That being said, this technical scenario may be adjusted based on how the currencies will react to the news.
The rise of the USD/JPY pair propelled last week by the weakening of the Japanese yen amid the dovish tone of the Bank of Japan got interrupted this week by the drop of the U.S. dollar. The Fed hinted at a possible pause in monetary tightening, which placed the U.S. currency under pressure.
Possible technical scenarios:
As we can see in the daily chart, USD/JPY quotes reversed downward from the resistance at 138.89 and now have a small room to move towards the support at 133.59. Once this level is reached, the price may either reverse upwards or break out the level which will be followed by a weakening toward 131.25.
Fundamental drivers of volatility:
The pair's volatility may intensify on Friday as the U.S. dollar reacts to the employment stats released at 12:30 pm GMT.
The Non-Farm Payrolls in the United States for the month of April are expected to drop from 236,000 to 180,000, with an increase in the unemployment rate from 3.5% to 3.6%.
Intraday technical picture:
The 4H chart suggests that the USD/JPY pair proceeded to consolidate in the middle of the range between support at 133.59 and resistance at 135.11. The price may locally move to any of its boundaries, while the response to Friday's stats may result in a change in technical benchmarks.
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