The dovish comments made by the Federal Reserve on Monday contributed to a decline in the value of the US dollar, which in turn helped the EUR/USD pair to recover.
Possible technical scenarios:
In the course of its rise, the EUR/USD pair moved into the sideways range between 1.0958 and 1.1121, where it still maintains its technical growth potential.
Fundamental drivers of volatility:
The US inflation report, due out on Wednesday at 12:30 PM GMT, is likely to be the week's most significant source of volatility in the dollar. The Core Consumer Price Index is expected to drop from 0.4% to 0.3% month-over-month and from 5.3% to 5.0% year-over-year, respectively. Meanwhile, CPI YoY will decline from 4.0 to 3.1 percent, and CPI MoM will gain from 0.1 to 0.3 percent.
The European Central Bank is scheduled to release its minutes of the monetary policy meeting on Thursday at 11:30 AM GMT, which could have an effect on the value of the euro.
Intraday technical picture:
The 4H chart of the EUR/USD pair shows that the falling wedge has almost worked out, which is why a local correction is possible in the event that the values continue to rise from their current levels. The nearest local target for strengthening is the resistance at 1.1075 marked with dotted lines.
This week, the value of the US dollar has been on the decline as a result of comments made by Fed officials on Monday that hinted at the completion of the rate hike cycle. In the meantime, the value of the pound increased as a direct reaction to data on the British labor market that showed rising wages.
Possible technical scenarios:
As can be seen on the daily chart, the GBP/USD pair has broken out the resistance at 1.2848 and is now moving closer to the resistance at 1.2958. If this horizontal line gets broken followed by a consolidation above it, the next growth target will be the resistance at 1.3200.
Fundamental drivers of volatility:
U.S. June inflation data is due out on Wednesday at 12:30 PM GMT, which could affect the strength of the dollar in the pair. The Core Consumer Price Index is expected to drop from 0.4% to 0.3% month-over-month and from 5.3% to 5.0% year-over-year, respectively. In addition, the Consumer Price Index YoY will fall from 4.0% to 3.1%, while CPI MoM will rise from 0.1% to 0.3%.
UK GDP statistics for the month of May will be released on Thursday at 6:00 AM GMT, which may lead to an increase in the dynamics of the sterling locally. The economic growth is expected to decelerate to 0.4% month-over-month from the prior month's 0.2% increase, according to forecasts.
Intraday technical picture:
Judging by the look of things on the 4H chart of the GBP/USD pair, there is a current trading range between support at 1.2848 and resistance at 1.2958. When the price hits its upper boundary, the direction of the pair will depend on whether the price will be able to consolidate above it, or turn around and continue to form the sideways dynamics.
Consolidation in a sideways pattern has begun for the AUD/USD pair, which is moving toward a medium-term recovery. However, the possibility of further volatility in the US dollar as a result of the inflation news released this week could result in a breakout.
Possible technical scenarios:
The AUD/USD pair on the daily timeframe stopped below the local resistance at 0.6698 marked with dotted lines. A sequence of rising lows in the course of consolidation below it creates the preconditions for a breakout. This breakout will lead the way toward the resistance at 0.6798 in the medium term.
Fundamental drivers of volatility:
The main influence on the dynamics of the pair this week will be provided by data from the US. However, there is some possibility of the Australian dollar reacting to the speech of the head of the Governor of the Reserve Bank of Australia Philip Lowe and the meeting of the Reserve Bank of New Zealand (due to the correlation of commodity dollars).
U.S. inflation data for the month of June will be released on Wednesday at 12:30 PM GMT. The Core Consumer Price Index is expected to drop from 0.4% to 0.3% month-over-month and from 5.3% to 5.0% year-over-year, respectively. At the same time, the Consumer Price Index YoY will fall from 4.0% to 3.1%, while CPI MoM will rise from 0.1% to 0.3%.
Intraday technical picture:
As evidenced by the 4H chart of the AUD/USD pair, the price has been bouncing downward off of the resistance at 0.6698 marked with dotted lines. In this scenario, the June lows will act as a local target to the south.
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