The EUR/USD pair continues to strengthen amid the ongoing decline of the US dollar.
Possible technical scenarios:
The EUR/USD pair has reached the resistance level of 1.0943. Consequently, the price may turn downward and retreat to the support level of 1.0888. Consolidating above 1.0943 would enable further growth towards the target of 1.1001.
Fundamental drivers of volatility:
The US dollar is weakening as Federal Reserve Chair Jerome Powell's comments and incoming US data increase the likelihood of a rate cut in September. This supports the euro's recovery in the pair.
This week, US retail sales data exceeded expectations but were still weak enough to maintain predictions of interest rate cuts this year. US retail sales in June remained unchanged from the previous month, whereas economists had anticipated a 0.3% decline.
Intraday technical picture:
Judging from the unfolding situation on the 4H chart of the EUR/USD pair, it remains uncertain whether the pair can consolidate above 1.0943. So, both a downward reversal and a rise to 1.1001 are possible from this level.
The pair GBP/USD is holding close to a yearly high this week amid the weakness of the US dollar and the strengthening of the pound.
Potential technical scenarios:
As evidenced by the daily chart, the GBP/USD pair rose above the level of 1.2989. Consolidation above it will open the way for the price to the level of 1.3141. If the breakout turns out to be false, a pullback to the support of 1.2846 is possible.
Fundamental drivers of volatility:
The pound was supported on Wednesday by inflation data, which showed that price pressure remained at the level of 2.0%. Against this backdrop, expectations that the Bank of England will lower interest rates next month for the first time since 2020 have weakened. Futures on interest rates showed that the probability of a rate cut in August dropped to 30%, while it was almost 50-50 before the data was released.
The dollar, in turn, is falling, as the rhetoric of the chair of the Federal Reserve Jerome Powell and incoming data from the US increase the probability of a rate cut in September.
Intraday technical analysis:
According to the 4H chart of the GBP/USD pair, we can see that the growth after the breakout of the level of 1.2989 continues, which creates prerequisites for the continued strengthening of the pair to the level of 1.3141.
The USD/JPY pair remains under pressure as the Japanese authorities seem to have intervened to support their national currency.
Possible technical scenarios:
According to the daily chart, the USD/JPY pair broke out the support level of 157.10. If it stays below this level, quotes could fall to 154.83. However, if the breakout is false, a recovery to the resistance at 160.21 is possible.
Fundamental drivers of volatility:
The decline of the US dollar and concerns about Japanese intervention are impacting the USD/JPY pair.
Market participants expect possible market intervention, especially after the Bank of Japan's data indicated Tokyo could have spent 2.14 trillion yen ($13.5 billion) on intervention last Friday. Speculations suggest that intervention might have occurred on Thursday last week, potentially bringing Japan's total intervention to nearly 6 trillion yen.
Intraday technical picture:
As we can see on the 4H chart of the USD/JPY chart, there is demand for maintaining below the level of 157.10, suggesting a potential decrease to the target of 154.83.
181