The EUR/USD pair surged on Wednesday amid a decline in the U.S. dollar after the Fed hinted at the approaching end of the monetary tightening cycle, having hiked the interest rate by 0.25% as it was expected.
Possible technical scenarios:
On the daily chart, the EUR/USD pair broke out the resistance at 1.0808 and is now halfway to 1.0958. Once this boundary is reached, there may either be a downward reversal or the price may attempt to break out the level and consolidate above the horizontal line at 1.0958. To be able to grow in the area of 1.11, the pair will have to consolidate above the February 2 highs.
Fundamental drivers of volatility:
Following the announcement of the Fed decision on Wednesday, the dollar in the pair is likely to continue to take the lead from the central bank’s soft rhetoric. Meanwhile, United States Initial Jobless Claims released at 12:00 pm GMT may have a local impact on Thursday’s volatility. According to the forecast, the figures are projected at 197 thousand claims against 192 thousand in the earlier period.
Intraday technical picture:
On the 4H chart, the EUR/USD pair has a small room to move toward the resistance of the sideways range between 1.0808 and 1.0985. From a technical perspective, quotes can locally travel to any of their boundaries from the middle of the range.
This week, the GBP/USD pair has demonstrated an increase following an inflation surge in the United Kingdom which boosted expectations of an interest rate hike by the Bank of England. The weakening of the U.S. dollar in response to the Fed’s soft rhetoric acted as the second catalyst for strengthening.
Possible technical scenarios:
The GBP/USD pair rose to the resistance at 1.2323 and put its strength to the test on Thursday. If it consolidates higher, 1.2146 will be the nearest growth target. That said, against the backdrop of the Bank of England’s rhetoric on Thursday, a surge in the pound sterling's volatility may cause technical benchmarks to change.
Fundamental drivers of volatility:
The key catalyst for sterling’s volatility in the pair was the release of the Bank of England meeting results on Thursday at 12:00 pm GMT. According to the forecast, the basic interest rate hike was expected to be raised from 4.00% to 4.25%.
On Friday, there may be a local increase in the pound sterling's volatility following the release of UK retail sales figures at 7:00 am GMT. Retail sales MoM are expected to drop from 0.5% to 0.2%, with retail sales figures YoY being at -4.7% compared to -5.1% previously.
Another batch of U.S. stats was released on Thursday, with the most critical news being the Initial Jobless Claims released at 12:00 pm GMT. 197 thousand claims were expected compared to 192 thousand in the previous period.
Intraday technical picture:
On the 4H chart of the GBP/USD pair, we see a test of resistance at 1.2323; however, it is still unclear whether or not this level will be broken out. The position of the price in terms of this horizontal line will most likely become more distinct following the Bank of England meeting.
The USD/JPY pair is trading under pressure as the U.S. dollar is losing its footing due to the Fed's mild rhetoric and hints at the ending of the interest rate hike cycle.
Possible technical scenarios:
Consequently, the USD/JPY pair continues to trade at the support level of 131.25, putting its strength to the test. As the price is currently at a crossroads, two scenarios are likely in this case. The first one is a recovery in the sideways range between 131.25 and 133.59. The second one is a breakout of 131.25 and consolidation below it, which will enable the quotes to travel toward the next support at 129.40.
Fundamental drivers of volatility:
Until the end of the week, market players will most likely continue to experience the effects of the Fed's decision to hike interest rates and its softer rhetoric, which will reflect on the U.S. dollar’s dynamic.
On Thursday, a local volatility spike is possible amid the release of the U.S. Initial Jobless Claims at 12:00 GMT. 197 thousand claims are expected compared to 192 thousand previously.
Intraday technical picture:
On the 4H chart of the USD/JPY pair, a local trading range between 130.58 and 132.90 has formed between two green dotted lines. A bounce off of its support upwards creates technical prerequisites for further price growth.
181
