The EUR/USD pair is experiencing a downturn due to the robust dollar, having technical room to move towards the downside.
Possible technical scenarios:
Having consolidated below the 1.0888 level, the EUR/USD pair retains ample room for movement towards the subsequent southern target at 1.0801.
Fundamental drivers of volatility:
This week, the primary influencer for the pair will be the Federal Reserve meeting, scheduled for Wednesday at 6:00 p.m. GMT. The Federal Open Market Committee will unveil its statement and economic projections. Although no policy changes are anticipated, attention will be focused on economic forecasts and remarks from Chair of the Federal Reserve Jerome Powell.
Last week's unexpectedly strong inflation figures prompted traders to revise expectations for rate cuts this year. Market sentiment now anticipates a 73 basis point cut, compared to the earlier prediction of 150 basis points at the beginning of the year.
The Fed's basic interest rate is forecasted to remain at 5.50%. A press conference by the Federal Open Market Committee is scheduled for 6:30 p.m. GMT on Wednesday.
Intraday technical picture:
The 4H chart of the EUR/USD pair shows the pair positioned within the sideways range between 1.0801 and 1.0888, indicating potential localized movements towards either boundary.
The strengthening US dollar is exerting pressure on GBP/USD. However, the rhetoric of the Fed and the Bank of England this week might recalibrate the pair's trajectory.
Possible technical scenarios:
Judging by the unfolding situation on the daily chart of GBP/USD reveals the pair's arrival at the support level at 1.2656. Should this level be broken out, the downtrend could extend towards targets at 1.2608 and 1.2500. An alternate scenario could involve a rebound toward the resistance level at 1.2792.
Fundamental drivers of volatility:
Recent data for February showed a slighter decline in UK inflation than anticipated by economists and the Bank of England. Although the pound responded with modest movement, it hinted at potential interest rate cuts in forthcoming months.
On Thursday at noon GMT, the Bank of England meeting outcomes will be disclosed, with the interest rate expected to hold steady at 5.25%. Meanwhile, the release of the Monetary Policy Committee meeting minutes is anticipated, with the tone of the statements crucial for sterling's dynamics.
Similarly, the trajectory of the US dollar within the pair hinges on the outcomes of the Fed meeting, slated for announcement on Wednesday at 6:00 p.m. GMT. While no policy changes are foreseen, attention will be directed towards Chairman Jerome Powell's economic forecasts and remarks at 6:30 p.m. GMT.
Intraday technical picture:
Within the 4H chart of GBP/USD, the pair retains some room for movement towards the support level at 1.2656. Its strength will depend on the response of both currencies to the central banks' rhetoric.
AUD/USD is experiencing a decline amid a strengthening US dollar and waning risk appetite, placing pressure on commodity-linked currencies.
Possible technical scenarios:
Examining the daily chart of AUD/USD reveals the price nearing the support at 0.6498. Should this level be broken out, subsequent targets to the south include 0.6458 and 0.6401. An alternative scenario entails a rebound towards the resistance at 0.6582.
Fundamental drivers of volatility:
The Reserve Bank of Australia (RBA) opted to maintain interest rates unchanged at 4.35% for the third consecutive time on Tuesday, signaling the potential completion of its monetary policy tightening trajectory. This decision reflects heightened confidence in inflation returning to target levels amidst a decelerating economic growth pace.
Moreover, the RBA indicated no concrete steps towards altering monetary policy.
Analysts speculate that the RBA may shed its tightening bias entirely at its June meeting, potentially paving the way for a 25 basis point rate reduction in August, followed by another cut in November, culminating in year-end rates at 3.85%.
The direction of the US dollar within the pair will be influenced on Wednesday by the Federal Reserve meeting results at 6:00 p.m. GMT. While no immediate policy adjustments are anticipated, attention will be directed toward the central bank's economic forecasts and comments from Chair Jerome Powell at 6:30 p.m. GMT.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart, the AUD/USD pair still has room to reach the support at 0.6498. The subsequent price direction will hinge on which side of this level the price consolidates.
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