The U.S. dollar keeps strengthening this week as the overall rhetoric of the Federal Reserve Board members boosts expectations that the Fed may continue hiking interest rates. Meanwhile, euro remains under pressure against the U.S. currency.
Possible technical scenarios:
According to the daily chart, the EUR/USD pair broke out the support of the 1.0808-1.0958 sideways range and consolidated below it. If the new lows are hit since the May 19 lows, the price will be able to continue growing weaker toward the support at 1.0694 marked with green dotted lines.
What can affect this technical scenario is the tone of the statements in the FOMC minutes. If the U.S. currency eventually goes down, the price may return back into the range between 1.0808 and 1.0958.
Fundamental drivers of volatility:
Wednesday's dynamic of the euro may be sensitive in response to the German data. The German Ifo Business Climate Index for the month of May will be released at 8:00 am GMT, with the anticipated decline from 93.6 to 93.0.
The day’s main event will be the FOMC minutes expected at 6:00 pm GMT, which may have an impact on the dynamics of the dollar.
Intraday technical picture:
The 4H chart of the EUR/USD pair evidences that the price has not consolidated below the May 19 lows yet. This does not rule out a local pullback upwards and continued consolidation below 1.0808. A true breakout of the boundary of Friday's lows (1.0759) will pave the way toward support at 1.0694.
The GBP/USD pair keeps trading under pressure amid the overall strengthening of the U.S. dollar. In local terms, the change in this dynamic may be caused by the pound sterling’s reaction to the UK inflation data and the volatility of the U.S. dollar in response to the tone of the statements in the FOMC minutes.
Possible technical scenarios:
The GBP/USD pair has been putting the strength of the 1.2410-1.2601 sideways corridor’s support to the test. If the level manages to remain standing, the price may proceed to recover, with the mirror resistance at 1.2525 serving as the growth target. Consolidation below 1.2410 will pave the way toward the target of 1.2323.
Fundamental drivers of volatility:
We are expecting the UK inflation data for the month of April on Wednesday at 6:00 am GMT. The forecast suggests that the Consumer Price Index MoM will remain at 0.8% and will decline YoY from 10.1% to 8.3%.
Andrew Bailey, Bank of England Governor, is expected to speak at 9:30 am and 1:00 pm GMT.
FOMC minutes will be released at 6:00 pm GMT.
Intraday technical picture:
As evidenced by the the 4H chart of the GBP/USD pair, it is yet unclear whether the breakout of 1.2410 will be true or false. In the meantime, the support at 1.2343 serves as a local target for the decline.
The AUD/USD pair continues to fall as the rising U.S. dollar is putting pressure on commodity currencies.
Possible technical scenarios:
AUD/USD quotes are headed toward the lower boundary of a wide sideways range between support at 0.6567 and resistance at 0.6798. Quotes proceeded to consolidate below 0.66690 which acts as an intermediate resistance. From this area, the pair has a room to move toward support at 0.6567.
Fundamental drivers of volatility:
On Wednesday at 6:00 pm GMT, we are expecting FOMC minutes which may have an impact on the U.S. dollar in the pair, while the Australian dollar may be sensitive to the Australia’s retail sales on Friday.
Intraday technical picture:
As can be seen from the 4H chart, the AUD/USD pair has formed a local downtrend. A pullback from its resistance paves the way to the south, where the target coincides with the horizontal support at 0.6567.
181
