By the end of the week, the improvement in the value of the US dollar made it possible for the EUR/USD pair to finish consolidating and then proceed to move lower.
Possible technical scenarios:
The daily chart shows that the EUR/USD retreated from the resistance at 1.1228 and dropped to the support at 1.1121. From this area, the price may either recover if 1.1121 holds or fall below it if the US currency continues to strengthen in anticipation of the Fed meeting. In the second instance, 1.1075 marked with dotted lines, and 1.0958 will serve as southward targets for EUR/USD.
Fundamental drivers of volatility:
Market players are now awaiting next week's Wednesday and Thursday meetings of the Federal Reserve and the European Central Bank. Although rate hikes are anticipated, forecasting their peak values during this tightening cycle remains uncertain. In this context, the pair's future trajectory will depend on the statements made by central banks.
Intraday technical picture:
As evidenced by the 4H chart of the EUR/USD pair, the price is attempting to bounce upwards off of the support at 1.1121. Because it does not appear to be a bearish flag formation, there is a likelihood that the price may rebound to the resistance at 1.1228.
The GBP/USD pair stopped falling, which was caused by weaker-than-expected UK inflation data this week. Against this backdrop, market expectations regarding the level of peak rates of the Bank of England weakened.
Possible technical scenarios:
Judging by the look of things on the daily chart, the GBP/USD pair has found local support at the 1.2848 mirror level marked with dotted lines, and the pair is currently retracing upwards from that level. The closest point of focus for the turnaround is a horizontal line of 1.2957.
Fundamental drivers of volatility:
The next move of the US dollar in the pair will be determined by the announcement of Fed meeting minutes next Wednesday. The topic of whether or not the US central bank will maintain its rate-hiking policy beyond July will be closely watched by market players.
Intraday technical picture:
The 4H chart of the GBP/USD pair shows that the price bounced upwards off of the support of the sideways range between 1.2848 and 1.2957, giving the pair enough room to travel to its upper boundary.
The USD/JPY pair gained ground this week, while the Japanese yen fell as a result of the Bank of Japan's dovish comments.
Possible technical scenarios:
The USD/JPY went up within the range between 137.89 and 140.22. If the price is able to overcome its upper boundary, it may continue to rise, with the closest target being the 137.89 level.
Fundamental drivers of volatility:
The pair is now trading in anticipation of next week's meetings of the Federal Reserve and the Bank of Japan. As the rate hike is already factored in, the rhetoric will be crucial as it will set expectations for future monetary policy decisions by the Fed.
Intraday technical picture:
As we can see on the 4H chart of the USDJPY pair, the price is putting the resistance at 140.22 to the test. A breakout and consolidation above it will pave the way toward the next targets at 141.91 and 142.79. If that doesn’t happen, the price may go back to the support at 139.38.
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