The EUR/USD pair is exhibiting hints of improvement despite the US Dollar's continuing decline. On the other hand, the volatility of the US dollar caused by the news may change this dynamic later today or tomorrow.
Possible technical scenarios:
After reaching the resistance of the 1.0592 - 1.0808 sideways range, the EUR/USD pair broke out of the symmetrical triangle upwards. The technical potential of the pattern sets the stage for the breakout of the resistance at 1.0808 and a further increase. That being said, a constant stream of news may ruin this scenario.
Fundamental drivers of volatility:
The opening half of the week will be heavily influenced by US data, which could increase USD volatility.
The May inflation report for the United States will be released on Tuesday at 12:30 pm GMT. The Core Consumer Price Index is forecast to fall from 5.5% to 5.3% year-over-year and to remain flat at 0.4% month-over-month.
At the same time, it is expected that the Consumer Price Index will fall from 0.4% to 0.2% month-over-month, and from 4.9% to 4.1% year-over-year.
On Wednesday, the Federal Reserve in the United States will announce its interest rate decision, which is anticipated to remain unchanged at 5.25%. The announcement will be made at 6:00 pm GMT. The FOMC statement and economic forecasts are scheduled for simultaneous release.
The Federal Open Market Committee (FOMC) will hold a press conference at 6:30 pm GMT, with the tone of speeches being the major catalyst for US dollar volatility.
Intraday technical picture:
As we can see on the 4H chart of the EUR/USD pair, the price seems to be stuck at the 1.0808 level for the time being. The local rebound from the level downward may contribute to the correction toward the triangle's upper boundary.
The GBP/USD pair’s three-week rally stalled below the level of multi-month highs. The strength of the US dollar throughout this week of monumental events will determine whether or not this barrier can be crossed.
Possible technical scenarios:
The daily chart indicates that the GBP/USD has hit, and is testing the resistance level at 1.2601. The price will be able to continue its ascent to the 1.2785 level once it breaks out and consolidates above this level. And if the price reverses downward, it could fall toward support at 1.2410.
Fundamental drivers of volatility:
US inflation figures for May will be revealed on Tuesday at 12:30 pm GMT, and if the actual readings differ from the projected ones, the US dollar may react volatilely. Core Consumer Price Index is expected to remain flat at 0.4% and fall from 5.5% to 5.3% year-over-year, as assumed by the forecast. Aside from that, Consumer Price Index is expected to fall from 0.4% to 0.2% month-over-month and from 4.9% to 4.1% year-over-year.
The release of UK GDP figures on Wednesday may have an effect on the value of the pound sterling.
On Wednesday at 6:00 pm GMT, however, the results of the US Federal Reserve meeting will be announced, and this is where most of the pair's volatility will originate. The FOMC is anticipated to maintain the benchmark interest rate at 5.25% and provide a statement and economic projections.
Fed Chair Jerome Powell will be speaking at a press conference at 6:30 pm GMT, and his words will be significant as well.
Intraday technical picture:
Judging by the look of the situation on the 4H chart of the GBP/USD pair, the price is going back to the resistance at 1.2601 following a corrective pullback. This increase may continue testing the level, and the probability of a reversal will rely on the reaction of the dollar and the pair to the news.
After a short-lived fall, the AUD/USD pair that had been trading in the sideways range since late February has returned back to the range.
Possible technical scenarios:
The AUD/USD quotes are currently approaching a strong resistance at 0.6798. The price may once again reverse downward from this level, having previously tested it with false breakouts.
In the event that this scenario plays out, the target to the south would be the support located at 0.6567, which is denoted by lower green dotted lines.
Fundamental drivers of volatility:
Since Australia is not expected to release any major economic data this week, the dynamics of the pair will be determined by the volatility of the US dollar, which will be active.
The US inflation report for May will be released at 12:30 pm GMT on Tuesday, which may alter forecasts for the Fed's interest rate decision on Wednesday.
The Federal Reserve of the United States will release its interest rate decision on Wednesday at 6:00 pm GMT; the rate is expected to be maintained at its current level of 5.25%. The FOMC statement and economic forecasts are scheduled for simultaneous release.
The Federal Open Market Committee will hold a news conference at 6:30 pm GMT, with the tone of speeches being the major reason for the volatility of the US dollar.
The report on US retail sales could potentially affect the dynamics of the US currency on Thursday.
Intraday technical picture:
The 4H chart of the AUD/USD pair reveals that there is still some opportunity for the pair to go into the area of resistance at 0.6798. Once it is achieved, there is a chance that there will be false breakouts, as well as a price reversal downward.
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