The U.S. dollar remains under pressure for the second week in a row. That being said, its weakening tendency is moderate, as market players are evaluating the likelihood of the Fed slowing down interest rate hikes.
This, in turn, encourages the growth of the European currency, as the European Central Bank takes a hawkish turn and is determined to fight inflation.
Possible technical scenarios:
On the daily chart, EUR/USD updated a high near the resistance of the 1.0808 - 1.0958 sideways range on Monday. That being said, the price failed to overcome this extremum by the end of the week. The likely scenarios include both a downward reversal and an attempt to reach the resistance at 1.0958 with a possible test of its strength.
Fundamental drivers of volatility:
There are several catalysts that may locally affect the pair’s volatility until the end of the week.
Christine Lagarde, the president of the European Central Bank is to speak at 10:30 AM GMT.
The United States Personal Consumption Expenditures for the month of December will be released at 1:30 PM GMT.
The Base Price Index is projected to increase from 0.2% to 0.3% with a simultaneous reduction in expenditures of individuals by 0.1% as compared to an increase of 0.1% a month earlier.
The United States Pending Home Sales Index for the month of December will be released at 3:00 PM GMT. It is projected at -0.9% on a monthly basis as compared to -4.0% a month earlier.
Intraday technical picture:
On the 4H chart of EUR/USD, the mirror level at 1.0866 marked with dots now serves as the local support for the pair, while the resistance remains at the highs of Monday's trading session. If the price is unable to overcome it, a pullback to support is likely.
Against the backdrop of the U.S. dollar’s moderate decline, the GBP/USD pair has been consolidating below the December highs this week. The likelihood of a breakout higher will depend on what the central bank’s rhetoric will be like next week.
Possible technical scenarios:
On the daily chart of the GBP/USD pair, we can see the price remaining in the range between the dotted support at 1.2269 and the resistance at 1.2410. If the price is unable to overcome the resistance, a pullback down is likely. A consolidation above the level at 1.2410 and a subsequent increase to 1.2601 could be an alternative scenario.
Fundamental drivers of volatility:
At the end of the trading week, the U.S. dollar’s volatility in the pair may spike in response to the release of the stats listed below, especially if the figures turn out to be significantly lower or higher than expected.
The United States Personal Consumption Expenditures for the month of December will be released on Friday, at 1:30 PM GMT.
The Base Price Index is projected to increase from 0.2% to 0.3% with a reduction in expenditures of individuals by 0.1% as compared to an increase of 0.1% a month earlier.
The United States Pending Home Sales Index for the month of December will be released at 3:00 PM GMT. It is projected at -0.9% on a monthly basis as compared to -4.0% a month earlier.
Intraday technical picture:
On the 4-hour chart, the GBP/USD pair is reversing for the third time in January following a false breakout of resistance at 1.2410. From a technical perspective, a decline is the most likely scenario in this case.
The AUD/USD pair has been increasing over the course of five trading sessions in a row, gaining support from both the Austrian macroeconomic stats and rekindled optimism about the Chinese economy.
Possible technical scenarios:
On the daily chart, AUD/USD quotes reached the resistance at 0.7138. From these figures, there may be either a downward reversal with a gradual drop 0.7066, 0.6967, and 0.6869, or an attempt at a breakout and consolidation above 0.7138. In the second instance, the 0.7283 horizontal line will serve as the next growth target.
Fundamental drivers of volatility:
The growth of the Australian dollar was encouraged by strong Australian inflation figures released this week which ruined hopes that the Reserve Bank of Australia would pause the interest rate hike at its next meeting.
Aside from that, the prices were also boosted by the drop in the U.S. dollar whose dynamics can be locally corrected by the end of the week due to the stats released on Friday.
The United States Personal Consumption Expenditures for the month of December are expected at 1:30 PM GMT.
The forecast suggests that the Base Price Index may increase from 0.2% to 0.3% with a simultaneous reduction in expenditures of individuals by 0.1% as compared to an increase of 0.1% a month earlier.
The United States Pending Home Sales Index for the month of December will be released at 3:00 PM GMT. It is projected at -0.9% on a monthly basis as compared to -4.0% a month earlier.
Intraday technical picture:
On the 4H chart, the AUD/USD pair attempts to reverse, forming a bearish engulfing below the resistance at 0.7138 which does not rule out the possibility of a local decline to 0.7066.
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