Remaining the key driver for major currency pairs’ volatility this week, the US dollar has been trading flat against a basket of currencies. The market players are keeping an eye on the likelihood of another rate hike by the US Federal Reserve and the adoption of a deal to raise the US national debt ceiling, both of which are expected to occur before June 5. In this context, the US dollar continues to hold a significant advantage over the Euro in the EUR/USD pair.
Possible technical scenarios:
Trading the intermediate level of 1.0707, the EUR/USD pair has proceeded to consolidate in the middle of the 1.0592-1.0808 range. If the price settles below it, it's likely that the decline toward support at 1.0592 will persist. If not, the pair will return back to the resistance at 1.0808.
Fundamental drivers of volatility:
The dynamics of the pair will be determined by the volatility of the US dollar until the end of the week. The US jobs report, due out on Friday at 12:30 pm GMT, tends to cause increased volatility in the value of the dollar.
Forecasts indicate that there will be 180,000 fewer people employed in the private sector and government agencies (Nonfarm Payrolls) in May than there were in April, with figures totaling 253,000. The unemployment rate is expected to rise from 3.4% to 3.5% and the growth of average hourly wages will drop from 0.5% to 0.4%.
Intraday technical picture:
As can be seen on the 4H chart of the EUR/USD pair, the price is still confused about where it stands in relation to 1.0707. However, the price's subsequent trajectory will likely become clear after seeing how the US dollar responds to Friday’s news.
The recovery of the GBP/USD pair that began earlier in the week persists. If this trend continues, the pair may return to its ten-month highs.
Possible technical scenarios:
The GBP/USD pair settled above 1.2410. The quotes have a small room to move toward resistance at 1.2525, from which the price will either reverse direction and fall to the level of 1.2610 or break it out and continue to rise to the May 10 highs.
Fundamental drivers of volatility:
The data on the US labor market for the month of May will be released this coming Friday at 12:30 pm GMT. This report tends to make the volatility of the US dollar spike since the actual values very rarely coincide with the projection.
It is anticipated that the Nonfarm Payrolls indicator, which shows the change in the number of people employed in the non-farm sector, amounted to 180 thousand in May as compared to 253 thousand in April, while the unemployment rate will climb from 3.4% to 3.5%. The rise of the average hourly pay is expected to decelerate from 0.5% to 0.4%.
Intraday technical picture:
The 4H chart of the GBP/USD suggests that the pair is getting closer to the resistance of the 1.2410-1.2525 sideways range. In a purely technical sense, the further behavior of the pair will be determined by which side of 1.2525 the price consolidates at.
In spite of the fact that the US dollar has continued to move in a sideways pattern, the value of USD/JPY has started to decrease. Furthermore, the technical picture over the next few months sets the prerequisites for a move to the downside for the pair.
Possible technical scenarios:
On the daily chart, we can see that USD/JPY quotes have retreated downward from the resistance of the wide ascending channel, which started to form back in January.
Within the context of the downward correction, the quotes have room to move toward the 134.00 area.
Fundamental drivers of volatility:
In terms of the Japanese yen, we do not anticipate any volatility catalysts until the end of the week. On the other hand, the dollar may react with an increase in dynamics to data on the US labor market that will be released on Friday at 12:30 pm GMT.
Nonfarm Payrolls, which demonstrates the change in the number of people employed in the non-farm sector, was forecasted to be 180,000 in May, down from 253,000 in April, while the unemployment rate jumped from 3.4% to 3.5%. The rise of the average hourly pay is expected to decelerate from 0.5% to 0.4%.
Intraday technical picture:
As can be seen from the 4H chart of the USD/JPY pair, it is attempting to consolidate its position below 139.38. In the event that it is successful, the next objective to the downside will be the horizontal line at 137.89. The return of the prices back into the 139.38–140.22 range is another possibility, albeit one that is far less likely.
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