The EUR/USD pair has climbed this week due to a weaker dollar ahead of key macroeconomic events.
Possible technical scenarios:
The EUR/USD pair hit resistance at 1.1138 and is now pulling back. The target for this downward correction is the nearest support at 1.1064. If the pair manages to consolidate above 1.1138, the next target for growth could be 1.1247.
Fundamental drivers of volatility:
On Tuesday, the dollar dropped to a seven-month low as traders anticipated comments from Fed Chair Jerome Powell, which may shed light on the Fed’s future monetary policy easing. This boosted the Euro, which hasn’t seen much influence from eurozone macroeconomic news this week.
This week, all eyes will be on Powell's speech at the Jackson Hole Economic Symposium and the minutes from the latest Fed meeting. Analysts believe the upcoming weeks will be crucial in determining whether the Fed will cut rates by 50–75 basis points this year, or possibly even more. The Jackson Hole Symposium will be key in assessing the chances of a 50-basis-point rate cut at one of the remaining meetings.
Intraday technical picture:
As we can see on the 4H EUR/USD chart, there’s a reversal from the resistance at 1.1138, suggesting a possible pullback to the 1.1064 level.
The GBP/USD pair has been on the rise, boosted last week by strong UK data and this week by a weaker US dollar.
Potential technical scenarios:
Judging by the unfolding situation on the daily chart, GBP/USD is attempting to consolidate above 1.2989. If this level holds as support, the next target for the upside could be 1.3141.
Fundamental drivers of volatility:
The pound hit a one-month high on Tuesday thanks to the weaker dollar. This week, the pound’s movement may be influenced by UK business activity data due on Thursday and comments from the Governor of the Bank of England Andrew Bailey at the Jackson Hole Symposium on Friday. Recent data indicates a recovery in the UK retail sector despite high inflation.
Meanwhile, the US dollar dropped to a seven-month low, further supporting GBP/USD as traders await more clarity on the Fed's easing cycle at the Jackson Hole Symposium. Markets are currently pricing at a 40 basis point rate cut by year-end, with the potential for a second 25 basis point cut.
Intraday technical analysis:
According to the 4H GBP/USD chart, price growth is being held back by local resistance at 1.3944. If the pair breaks out the 1.2989 level after a pullback, the decline could extend toward the 1.2846 target.
The USD/JPY pair rose slightly as the Japanese yen’s recent rally came to an end and will remain sensitive to US data through the end of the week.
Possible technical scenarios:
On the daily chart, USD/JPY has held above 145.21, suggesting potential growth toward 146.31 and 148.80.
Fundamental drivers of volatility:
The Japanese yen dipped slightly on Wednesday but remains near its recent highs. That being said, it is still below the seven-month peak of 141.675 reached in August.
Tokyo’s interventions and an unexpected interest rate hike have helped the yen recover from a 38-year low of 161.96, surprising investors who had bet against it.
Economists expect the yen to gradually strengthen as speculative short positions are unwound, with leveraged funds now holding a net long position. Investors will be closely watching the Bank of Japan’s speech this week, which may confirm the recent hawkish stance.
Intraday technical picture:
The 4H USD/JPY chart suggests that the pair is currently trading within a narrow range between 145.21 and 146.31. The future direction will depend on whether the price breaks out of this range to the upside or downside.
USD/CAD remains under pressure amid the decline in the US dollar and the previous rise in the Canadian dollar.
Possible technical scenarios:
On the daily chart, the USD/CAD price reached support at 1.3605. If it holds, a recovery to resistance at 1.2753 is possible. Otherwise, the pair will continue to decline to the target at 1.3544.
Fundamental drivers of volatility:
The Canadian dollar weakened locally against the greenback on Tuesday as falling oil prices and inflation data confirmed expectations for more interest rate cuts from the Bank of Canada.
Canada’s annual inflation fell to 2.5% in July, a 40-month low, confirming economists’ forecasts. Inflation pressures have eased after two small surprises in May and June, easing concerns. The Bank of Canada has already cut rates by 25 basis points twice since June, and another 25 basis points is expected in September.
The swap market is pricing in the September rate cut and an additional 76 basis points of easing through the end of 2024.
Intraday technical picture:
On the 4-hour chart of USD/CAD, it is unclear whether support at 1.3605 will hold. If there is a reversal upwards from it, the nearest target for recovery will be the resistance of 1.3690 marked with dotted lines.
Gold prices pulled back from record highs on Wednesday following a recent rally fueled by Western investment and expectations of interest rate cuts in the United States.
Possible technical scenarios:
On the daily XAU/USD chart, gold is consolidating near the resistance level of 2542.00, from which it could retreat to the support level of 2430.00. If the upward momentum continues and the price consolidates above 2542.00, gold may extend its rally toward the target of 2659.99.
Fundamental drivers of volatility:
Gold has surged 22% since the start of the year, driven by geopolitical tensions, uncertainty surrounding the US elections, and expectations of interest rate cuts, making it more attractive. Market expectations suggest a potential 25 basis point rate cut in September, which would boost demand for gold while putting pressure on the dollar, given their inverse correlation.
The dollar has dropped to its lowest level this year, while 10-year Treasury yields have also fallen, further enhancing gold's appeal. Traders are now looking ahead to the release of the latest Fed meeting minutes and Chairman Jerome Powell's speech at Jackson Hole on Friday for more clarity on US economic policy.
Intraday technical picture:
As we can see on the 4H XAU/USD chart, gold has reversed from the 2542.00 level and is now approaching support at 2483.70 marked with dotted lines. The next price move will depend on whether this support holds or the price breaks below and consolidates.
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