The EUR/USD pair has been steadily strengthening this week, as the demand for risky assets is rising and the U.S. dollar remains under pressure.
Possible technical scenarios:
On the daily chart, EUR/USD quotes consolidated above 1.0808. The resistance at 1.0958 is the current growth target for the pair.
Fundamental drivers of volatility:
Until the end of the week, the dynamics of the euro in the pair may be affected by data on German unemployment change expected at 7:55 am GMT, and the speech from the president of the European Central Bank Christine Lagarde at 3:00 pm GMT.
In Germany, the change in the number of unemployed is expected to hit 3,000 in March against 2,000 earlier, while the unemployment rate is likely to remain at 5.5%.
In addition, we expect the release of the Euro Area Inflation Rate on Friday at 9:00 am GMT. The CPI year-over-year may decline from 8.5% to 7.1% in March.
In the meantime, the U.S. dollar may be volatile in response to the figures of the Personal Consumption Expenditures to be released at 1:30 pm GMT. The forecast suggests a decline in the core index from 0.6% to 0.4%, while the increase in household spending will slow down from 1.8% to 0.3%.
Intraday technical picture:
On the 4H chart of the EUR/USD, the pair almost reached the March 23 highs. If it fails to renew them, a downward reversal in the sideways range between 1.0808 and 1.0985 is likely before the price reaches its resistance.
The GBP/USD pair slowed down since there have been no major UK volatility drivers so far. In the meantime, the U.S. dollar proceeded to consolidate against a basket of currencies.
Possible technical scenarios:
The GBP/USD pair is putting the resistance level at 1.2323 to the test. In this case, there are two technical scenarios of how things may unfold next: the 1.2323 level may be broken out with the price continuing to grow towards 1.2146, or the quotes will reverse downward and pull back to the support at 1.2146.
Fundamental drivers of volatility:
The UK GDP data for the Q4 will be released on Friday at 6:00 am GMT. There may be a local surge in the pound sterling’s volatility if the figures do not meet expectations. The forecast suggests that the GDP year-over-year will total 0.4% against 0.2% earlier on and 0.0% quarter-over-quarter.
As far as the United States goes, Personal Consumption Spending figures expected at 1:30 pm GMT may act as a critical volatility catalyst. The Core Personal Consumption Expenditure Price Index month-over-month in February is projected at 0.4% against 0.6% earlier. An increase in household spending is expected to slow down from 1.8% to 0.3%.
Intraday technical picture:
On the 4H chart of GBP/USD, the pair needs to overcome the March 29 highs to move further. At the same time, consolidation below 1.2269 marked with dotted lines will signal further decline.
The USD/JPY pair jumped this week as the Japanese yen has been trading under pressure amid the end of the fiscal year in Japan.
Possible technical scenarios:
USD/JPY rose above 131.25, whereupon its rise was stopped by intermediate resistance at 132.90.
If the price reverses from this level, the weakening is likely to continue toward support at 129.40. In this context, the breakout of resistance at 132.90 and consolidation above it will open the way for the pair toward the next target at 135.11.
Fundamental drivers of volatility:
Critical news from the United States will be affecting the behavior of the USD/JPY pair until the end of the week.
On Friday at 1:30 pm, we are expecting the figures for Personal Consumption Expenditures. If they do not meet the expectations, the volatility of the U.S. currency is likely to increase.
The Core Personal Consumption Expenditure Price Index month-over-month is projected at 0.4% in February, up from 0.6% earlier. At the same time, the increase in expenditures of individuals is expected to slow down from 1.8% to 0.3%.
Intraday technical picture:
On the 4H chart, USD/JPY is consolidating below the current resistance at 132.90. In this context, the further price behavior remains unclear, so we have to wait for either a breakout of the level, or a clear reversal from it downward.
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