Following its recovery last week, the EUR/USD pair is demonstrating cautious trading behavior as it approaches pivotal events coming from both the euro area and the United States.
Possible technical scenarios:
The upward momentum of EUR/USD halted near the resistance of the sideways range between 1.0801 and 1.0888, and failure to break out this level could prompt a shift toward its support. Conversely, consolidation above 1.0888 could pave the way for further price advancement towards the next target around 1.1000.
Fundamental drivers of volatility:
The pair's trajectory will likely be influenced by US inflation data on Wednesday and Thursday.
The anticipated US CPI inflation report for March, expected at 12:30 p.m. (GMT) today, forecasts a month-over-month Core Consumer Price Index of 0.3%, a slight decrease from the previous 0.4%, and a year-over-year decline from 3.8% to 3.7%. Concurrently, the annual inflation rate is projected to rise from 3.2% to 3.4%, while the monthly rate is predicted to dip from 0.4% to 0.3%. Additionally, the release of FOMC minutes at 6:00 p.m. (GMT) today will add to market dynamics. On Thursday, attention will shift to the US Producer Price Indices (PPI), serving as an indicator of wholesale inflation.
For the euro, the ECB meeting results announcement on Thursday at 3:15 p.m. (GMT) will be pivotal, with expectations of an unchanged key interest rate at 4.50%, while the accompanying rhetoric may have a significant impact.
This week, the dollar dipped to a two-week low on Thursday, fueled by economic indicators reinforcing speculations of imminent US interest rate cuts. Yet, the US currency rebounded from previous losses, particularly after remarks by the president and CEO of the Federal Reserve Bank of Minneapolis suggesting rate cuts may not be necessary if inflation decelerates.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart of the EUR/USD pair, a pattern is apparent within the sideways range between 1.0801 and 1.0888. However, this trend might undergo correction in the coming days, spurred by heightened news-induced volatility.
The GBP/USD pair has experienced an uptick, yet the sustainability of this upward trajectory hinges on the US dollar's response to inflation data and the evolving sentiment surrounding Fed interest rates.
Potential technical scenarios:
According to the daily chart, the GBP/USD pair has broken out the 1.2656 level, though its ascent is currently constrained by the interim dotted resistance at 1.2708. A definitive consolidation above this level could propel the pair towards the next growth target at 1.2792.
Fundamental drivers of volatility:
This week, the pair's dynamics are primarily tethered to the US dollar. Wednesday's 12:30 p.m. (GMT) release of the US inflation report for March is poised to wield significant influence. Forecasts suggest the core CPI for March to register a 0.3% month-over-month decrease from the previous 0.4%, with a corresponding year-over-year decline to 3.7% from 3.8%.
Concurrently, the annual inflation rate is anticipated to ascend from 3.2% to 3.4%, while the monthly rate is expected to dip from 0.4% to 0.3%. Additionally, the publication of the Federal Open Market Committee (FOMC) meeting minutes at 6:00 p.m. (GMT) will be closely monitored. Thursday may see the dollar react to the US Producer Price Index (PPI) report, serving as a barometer of wholesale inflation.
Intraday technical picture:
Reviewing the 4H chart, we can see that the GBP/USD pair finds itself at a pivotal juncture beneath the dotted resistance at 1.2708. The subsequent move, either a retreat to the support at 1.2656 or an attempt to consolidate above the current resistance, hinges upon the US dollar's response to today's news developments.
The USD/JPY pair has been in a consolidation phase within a narrow range since the conclusion of March. A robust dollar is preventing a decline in the pair, while concerns over potential Japanese intervention are curbing any significant gains.
Possible technical scenarios:
As evidenced by the daily chart of the USD/JPY, the price is currently putting the strength of the resistance level at 151.71 to the test, with the psychological barrier of 152 yen per dollar serving as a strong level. Support for the pair persists at 150 yen per dollar.
Fundamental drivers of volatility:
The dynamics of the US dollar hold paramount significance for the trajectory of the USD/JPY pair. The strengthening dollar exerts pressure on the yen, with speculators actively engaged in profit generation through carry trade strategies. That being said, persistent reminders from Japanese authorities regarding their readiness to intervene at any moment serve to prevent the yen from weakening beyond the 152 yen per dollar mark.
Today's scheduled release of the US inflation report for March at 12:30 p.m. (GMT) may influence pair volatility, while the publication of FOMC meeting minutes at 6:00 p.m. (GMT) is anticipated to provide clarity on the Fed rate outlook.
Aside from that, Thursday's 3:30 p.m. (GMT) report on Producer Price Indices (PPI) in the United States could impact the dollar's dynamics.
Intraday technical picture:
Examining the four-hour chart of USD/JPY, the lateral movement between the dotted support at 151.00 and the resistance at 152 yen per dollar remains pertinent. Should news developments exert downward pressure on the US currency, the price may descend within this corridor.
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