The EUR/USD pair ended a five-day winning streak on Tuesday, pulling back from the 1.1735 high and trading just below 1.1700.
Possible technical scenarios:
As evidenced by the daily EUR/USD chart, the pair has turned down from the resistance of the 1.1494–1.1738 range, leaving room to move toward the lower boundary.
Fundamental drivers of volatility:
Investors are cautious ahead of today’s preliminary eurozone inflation data. This release may serve as a trigger for short-term moves in the pair and shape expectations for ECB policy.
The fundamental backdrop remains generally favorable for the euro. Inflation is expected to stay near the ECB’s target of around 2%, supporting the scenario of unchanged rates. The single currency also benefits from an improved manufacturing PMI, which climbed above 50 for the first time in three years, and hawkish comments from policymakers.ECB President Christine Lagarde and Governing Council member Isabelle Schnabel stressed there is no need for further easing, boosting investor confidence in the eurozone’s stability.
The dollar, meanwhile, stays under pressure from Donald Trump’s political attacks on the Fed and growing expectations of an imminent restart of the rate-cut cycle. Weakness in the US manufacturing sector and doubts about Fed independence are weighing on the greenback, pushing traders to seek alternatives.
As a result, despite the pullback, the euro retains much of its recent gains, and the short-term balance remains tilted in its favor — provided eurozone inflation doesn’t deliver negative surprises.
Intraday technical picture:
The 4H EUR/USD chart shows that after the downward reversal from resistance at 1.1738, the nearest target for decline is dotted support at 1.1589.
The GBP/USD pair fell sharply on Tuesday amid a partial rebound in the US dollar.
Possible technical scenarios:
Judging from the unfolding scenario on the daily chart, GBP/USD dropped to dotted support at 1.3380. If this level holds, the price may recover toward resistance at 1.3630. Alternatively, a drop lower could open the way to 1.3147.
Fundamental drivers of volatility:
The dollar gained strength in the pair due to persistent inflation risks in the US economy, which fueled uncertainty about the upcoming Fed decision. Traders are keeping their eyes open for fresh signals from the ISM Manufacturing PMI release and labor market data, including Nonfarm Payrolls, which will be key for the Fed meeting in September.
That being said, downside potential for the pound looks limited. Despite the dollar’s local rebound, markets remain confident the Fed will soon cut rates. The probability of a 0.25% cut in September is estimated at over 89% according to CME FedWatch. This undermines the sustainability of the dollar’s recovery and could return support to GBP/USD if expectations weaken further.
In the meantime, pound dynamics also depend on internal factors. Investors are currently watching the return of the British Parliament from recess and Treasury Committee hearings with Bank of England representatives, which may provide clues on future policy. Last week, MPC member Catherine Mann stressed the need to keep rates high to fight inflation, reducing the chances of an early cut in the UK. Combined with the dollar’s vulnerability, these signals could help GBP/USD regain lost ground.
Intraday technical picture:
Given the developments on the 4H chart, the pair has rebounded upward from support of the range between 1.3380 and 1.3588, leaving room to move toward resistance.
USD/JPY has climbed to multi-day highs near 148.00, extending gains for the third session in a row amid yen selling and a moderate dollar rebound.
Possible technical scenarios:
On the daily chart, USD/JPY has reached the upper boundary of the 145.91–148.63 range. A breakout and consolidation above this level would open the way toward the next target at 149.94. Otherwise, the price may reverse downward within the current sideways range.
Fundamental drivers of volatility:
Pressure on the yen is linked to uncertainty about the timing of the next Bank of Japan rate hike and reduced demand for safe-haven assets as Asian markets rise. At the same time, fresh data on capital expenditures in Japan support expectations of gradual policy normalization, which may bolster the currency in the future.
The dollar is getting short-term support from a rebound and risk aversion, but its upside remains limited. Markets are pricing in nearly a 90% chance of a September Fed rate cut and another before year-end, while Donald Trump’s political pressure on the Fed raises concerns over the stability of US monetary policy.
Further dynamics will depend on upcoming US macro releases, including ISM, JOLTS, and especially the NFP jobs report, which could set a new tone for USD/JPY.
Intraday technical picture:
Based on the look of things on the 4H chart, USD/JPY’s breakout of the 148.63 level has so far proved false, but another attempt and firm consolidation above it could pave the way toward 149.94.
The USD/CAD pair has been rising for the second straight day, supported by a stronger US dollar and weakness in the Canadian economy.
Possible technical scenarios:
On the daily chart, USD/CAD held within the 1.3744–1.3861 corridor after a false breakout of support. Now the pair has enough room to move toward 1.3861.
Fundamental drivers of volatility:
Currently, USD/CAD is trading in anticipation of US macroeconomic data, which may determine the next direction.
The dollar is supported by ongoing inflation risks: fresh PCE figures signaled price pressure, fueling uncertainty about the Fed’s easing path. At the same time, the probability of a September rate cut already exceeds 89%, limiting the upside potential for the greenback.
The Canadian dollar came under pressure after an unexpected 0.4% q/q contraction in Q2 GDP. Weak exports, sluggish investment, and trade tensions with the US are prompting markets to expect imminent Bank of Canada easing, adding further weight on the CAD.
Overall, fundamentals currently favor the US dollar. However, the durability of USD/CAD gains will depend on Friday’s labor market reports from both the US and Canada, along with the Fed’s reaction to persistent inflation risks.
Intraday technical picture:
The 4H chart demonstrates that USD/CAD has bounced upward from support at 1.3744, leaving room to move toward the nearest dotted resistance at 1.3813.
Oil prices extended their rise on Tuesday, consolidating at weekly highs on the back of growing concerns over supply disruptions amid geopolitical tensions.
Possible technical scenarios:
On the daily Brent chart, prices are recovering within the wide corridor between 66.51 and 70.62, keeping enough room to move toward the upper boundary.
Fundamental drivers of volatility:
The main factor behind the growth is the escalation of the Russia–Ukraine conflict: strikes on energy infrastructure shut down part of refining capacity, equal to more than 1 million barrels per day. This fueled concerns about reduced exports from the world’s second-largest supplier and supported demand for crude.
Investors are also focused on the upcoming OPEC+ meeting on September 7. Any signals regarding production could either reinforce the current rally or partly offset deficit risks. Until then, trading will stay sensitive to comments from alliance representatives.
Another source of uncertainty is the release of key US macroeconomic data. Industry and labor market figures will provide insight into energy demand in the world’s largest economy and may adjust short-term price expectations.
Intraday technical picture:
As we can see on the 4H Brent chart, updating last week’s highs within the range between 66.51 and 70.62 opens the way for growth toward resistance at 70.62.
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