The EUR/USD pair is currently consolidating near weekly highs on Friday, awaiting new fundamental catalysts that could shed light on market expectations regarding Fed interest rates.
Possible technical scenarios:
As we can see on the daily chart, the EUR/USD pair is in a consolidation phase within the 1.0749-1.0801 range. Locally, the pair may gravitate travel to either boundary. To determine its future trajectory, we need fundamental drivers.
Fundamental drivers of volatility:
The US dollar rebounded from its initial losses by the week's end, supported by Thursday's release of data on US unemployment benefits, which affirmed the stability of the labor market. These statistics reinforced the Fed's decision to maintain interest rates at their current levels in the foreseeable future.
The upcoming focus for market players will be on US inflation data, scheduled for release on Tuesday, which is likely to provide further insights into the timing of potential Fed rate adjustments.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart, the EUR/USD pair is currently trading within a downtrend, where it has room to move toward resistance at 1.0830. Whether the upward correction can continue into the following week hinges on the prevailing fundamental landscape.
The GBP/USD pair demonstrates subdued dynamics towards the week's end, with market players awaiting fresh economic data to revise expectations regarding the timing of the first Fed rate cut.
Possible technical scenarios:
According to the daily chart of GBP/USD, the pair maintains its position above 1.2608. Should this level hold as support, a potential rebound towards the nearest resistance at 1.2656 is possible. If this scenario doesn’t play out, there may be a decline in the pair, with support at 1.2500 serving as a southern target.
Fundamental drivers of volatility:
The USD's recovery towards the week's end exerts pressure on the GBP/USD pair. Amidst the absence of significant volatility catalysts from both currencies this week, the pair is consolidating ahead of the US inflation report scheduled for next week. The potential for further Fed monetary policy easing hinges on the dynamics of price pressure.
Data from CME Group's FedWatch Tool indicates a 16.5% probability of a rate cut at the Fed's forthcoming March meeting, a decrease from 65.9% recorded a month earlier.
Intraday technical picture:
As evidenced by the 4H chart of the GBP/USD pair, we observe that the strength of the 1.2608 level is being put to the test. The highs and lows from Thursday's trading session serve as local price reference points.
The USD/JPY pair has experienced an uptick this week, driven by a weakening Japanese yen and a strengthening US dollar, buoyed by expectations of a postponed Fed rate cut.
Possible technical scenarios:
Analyzing the daily chart, the USD/JPY pair has surpassed the resistance at 148.80 and consolidated above it. Consequently, the price now has an upward path towards the nearest psychological level of 150 yen per dollar.
Fundamental drivers of volatility:
Towards the end of the week, the Japanese yen depreciated to a 10-week low as investors began to relinquish hopes for an imminent interest rate hike by the Bank of Japan.
Concurrently, the US dollar continued its ascent, supported by encouraging data on US unemployment benefits, indicating a stable labor market.
Currently, investors are eagerly anticipating the release of the US inflation report for January, scheduled for Tuesday, which is expected to offer further insight into the timing of the Fed's monetary policy adjustment.
According to CME Group's FedWatch Tool, traders now perceive a mere 16.5% likelihood of an interest rate cut at the Fed's upcoming March meeting, a decline from 65.9% recorded a month earlier.
Intraday technical picture:
Based on the 4H chart of the USD/JPY pair, there is a price consolidation within the range between 148.80 and 150.17, suggesting potential movement towards either boundary.
181
