The EUR/USD pair found support toward the end of the week following a significant decline in the US dollar.
Possible technical scenarios:
EUR/USD is currently putting the resistance level at 1.0888 to the test. A sustained consolidation above this level could propel the price toward the target of 1.0943. Alternatively, a retracement to the support level of 1.0842 is also plausible.
Fundamental drivers of volatility:
By the week's close, the euro regained ground despite political uncertainties in France.
The pair also benefited from weakness in the US dollar, which faltered on Thursday following a report showing an unexpected drop in Core Consumer Prices for June. The annual Consumer Price Index in the US decreased from 3.3% to 3.0%, below the anticipated 3.1%.
According to CME Group FedWatch, interest rate futures indicate a greater than 90% probability of a Fed rate cut at the September meeting, up from 74% on Wednesday.
Friday's release of US Producer Price Index (PPI) data will serve as another inflation gauge that could influence dollar volatility in the pair.
Intraday technical picture:
As evidenced by the 4H chart of the EUR/USD pair, its ability to consolidate above 1.0888 remains uncertain. The dollar's reaction to the PPI report is expected to clarify the near-term price dynamics around this level.
The GBP/USD pair remains near a one-year high amidst the US dollar's weakness.
Potential technical scenarios:
Examining the daily chart, we can see that GBP/USD surpassed the 1.2846 level. The next upward target is the resistance at 1.2989.
Fundamental drivers of volatility:
This week, the pound received support from hawkish statements by Bank of England officials and better-than-expected GDP data, which reduced expectations of an August interest rate cut in the UK.
Additionally, GBP/USD was bolstered by the US dollar's decline, as unexpectedly low inflation figures in June heightened expectations of a Federal Reserve rate cut in September.
Friday's release of US Producer Price Index (PPI) data will provide another inflation gauge that could impact dollar volatility in the pair.
Intraday technical analysis:
Judging by the unfolding situation on the GBP/USD 4H chart, a local support level has formed around 1.2898 within the range between 1.2846 and 1.2989. If this level holds, a recovery towards the 1.2989 resistance is plausible.
The USD/JPY pair plummeted towards the end of the week due to the weakening US dollar and speculations about Japan's potential currency interventions.
Possible technical scenarios:
Analyzing the daily chart of USD/JPY, we observe the pair dropping to the support level of 157.10, but later rebounding above and reaching over 159 yen per dollar. The upward target remains at the resistance level of 160.21.
Fundamental drivers of volatility:
The pair's decline on Thursday was primarily attributed to the US dollar's weakening following an unexpected drop in US consumer prices. Aside from that, rumors suggested the Japanese yen strengthened amid speculations of Tokyo's intervention in the currency market.
The Japanese currency rebounded from 38-year lows, surging nearly 3% to 157.40 right after the release of the US consumer inflation report, heightening expectations of an early rate cut by the Federal Reserve as soon as September.
Intraday technical picture:
As evidenced by the USD/JPY 4H chart, we witness a steady recovery of the pair after yesterday's decline. Locally, within the 157.10-160.21 range, the price movement can potentially approach either boundary.
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