The US dollar maintains a narrow trading range this week, allowing the EUR/USD pair to adopt a local sideways movement.
Possible technical scenarios:
As we can see on the daily chart, the EUR/USD consolidation is happening within the range between 1.0616 and 1.0672. Until significant fundamental catalysts emerge, this pattern is likely to persist. Should the level of 1.0616 be broken out and consolidate below, the pair may proceed southward towards the next target of 1.0478. Otherwise, an upward breakout from the sideways trend could propel the price toward 1.0723 marked with a dotted line.
Fundamental drivers of volatility:
The US dollar remains the primary influencer of the pair's volatility, bolstered by tempered expectations of an imminent Fed rate cut. Positive economic data and hawkish commentary from Fed officials could further reinforce this sentiment.
Several Fed members have recently advocated for delaying monetary policy easing, casting doubt on the possibility of rate cuts this year.
Meanwhile, ECB signals suggest a rate cut in June, potentially weakening the euro.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart of the EUR/USD pair, it has rebounded upward from the support of the range between 1.0616 and 1.0672, suggesting a potential recovery in the near term.
The GBP/USD pair exhibited sideways movement this week, with UK data offsetting expectations of a delayed Fed rate cut.
Potential technical scenarios:
Examining the daily chart of GBPUSD reveals the pair is putting the strength of support at 1.2430 to the test. Should breakouts prove to be false, a potential recovery towards the resistance of 1.2500 is likely. If this scenario doesn’t play out, consolidation below the 1.2430 level may lead to a decline towards 1.2306.
Fundamental drivers of volatility:
Macroeconomic data from the UK this week slightly tempered market expectations for the Bank of England's initial rate cut, making the possibility of monetary easing in August less probable.
Reports from Tuesday's UK labor market indicated a smaller decline in wage growth than anticipated by economists, albeit with an uptick in unemployment. Additionally, Wednesday's data showcased a decrease in annual consumer price inflation to 3.2% in March from 3.4% in February, slightly below expectations.
Aside from that, expectations of postponed Fed monetary easing are bolstering the dollar, supported by the robustness of the US economy.
Intraday technical picture:
According to the 4H chart of the GBP/USD, persistent attempts to move downward from the range between 1.2430 and 1.2500 remain unsuccessful. However, a downward trend has emerged within this corridor, setting the stage for a potential successful breakout of the 1.2430 level and subsequent decline.
The AUD/USD pair is currently facing downward pressure from the robust US dollar, with uncertainties surrounding the prospect of the first rate cut this year.
Possible technical scenarios:
Reviewing the daily chart of AUD/USD, we observe price consolidation below the 0.6458 level, with support identified at the horizontal level of 0.6362. A breakout of this level may lead to the next southern target at 0.6285.
Fundamental drivers of volatility:
Presently, prevailing expectations impacting the pair suggest that robust data from the US indicates the likelihood of the Fed delaying its initial interest rate cut until year-end.
Regarding the RBA, markets anticipate that interest rates have reached their peak, yet remain far from potential reduction. Swaps indicate only a 65% probability of a rate cut in December, emphasizing that a rate reduction this year is not assured.
Should the strength of the US dollar persist, the pair is expected to endure downward pressure.
Intraday technical picture:
As evidenced by the 4H chart of the AUD/USD, a retracement upward from the support of the sideways range between 0.6362 and 0.6458 lays the groundwork for a local recovery of the pair.
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