Because there hasn't been much happening in the headlines this week, the EUR/USD pair has been trading within a tighter range. There is a good chance that consolidation will carry on through the end of the week.
Possible technical scenarios:
The EUR/USD pair is consolidating near the midpoint of the 1.0592-1.0808 sideways range, as it continues to trade the intermediate level of 1.0707. Given this context, scenarios in which the price moves to either end of the 1.0592-1.0808 corridor are still viable options.
Fundamental drivers of volatility:
Now, as there won't be any significant news until the end of the week, the pair is likely to consolidate in a cautious manner, while investors formulate their expectations for the meeting of the Federal Reserve and the inflation report that will take place the following week.
Intraday technical picture:
As we can see on the 4H chart of the EUR/USD, a symmetrical triangle is forming within the range of the 1.0592 - 1.0808 corridor. Within the bounds of this pattern, the price still has room to consolidate, whereas the direction of exit from it can take any of several possible forms.
On Thursday, the GBP/USD pair showed some signs of improvement, but it is still trading within a tight technical range because the news environment is relatively quiet and investors are still cautious before the Fed meeting.
Possible technical scenarios:
When looking at the daily chart, we can see that the GBP/USD pair was able to stage a modest recovery after consolidating above the support at 1.2410. The price still has some room to move towards the resistance at 1.2525.
Fundamental drivers of volatility:
Neither the United Kingdom nor the United States has any significant fundamental events scheduled for the remainder of this week. The impending meeting of the Federal Reserve on May 14 has now been the primary focus of the market players. After the unexpected rate hikes by the Reserve Bank of Australia and the Bank of Canada, the likelihood of a rate increase in June has increased, but it is still only around 30% at this stage.
Intraday technical picture:
Judging by the look of the GBP/USD 4H chart, we are witnessing the upward dynamic of the pair inside the 1.2410 - 1.2525 corridor, laying the groundwork for further gains, possibly with pullbacks.
Within a wide ascending channel, the USD/JPY pair is currently on its way toward a bearish correction in the medium term. However, the rate of drop is minimal due to the quiet news background this week and the low volatility of the market.
Possible technical scenarios:
USD/JPY quotes are consolidating in a narrow sideways range of 139.38 to 140.22. The price may drop from here on out. The pair will have to overcome the intermediate mirror support at 138.90 for further weakness toward 137.89 to be possible.
Fundamental drivers of volatility:
Revised GDP figures released this week showed that Japan's economy avoided a technical recession in the first quarter. However, investors' attention is currently focused on the Federal Reserve's upcoming meeting in June, so this boost to the yen was largely regional. The dynamics of the US dollar in this pair are affected by market anticipation of a rate hike on June 14.
Intraday technical picture:
As evidenced by the 4H chart of the USD/JPY pair, the price has twice retreated from the resistance at 140.22, creating the conditions for a drop to the support at 138.90 marked dashed lines.
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