The EUR/USD pair is down for the third trading session in a row amid mixed signals from global markets. Investors are focused on fundamental news that can change the power balance between the euro and the dollar in the coming days.
Possible technical scenarios:
On the daily chart of the EUR/USD pair, we can see that the pair has confirmed the reversal of the inclined neckline of the previously broken head and shoulders pattern. From this area, the pair has room to move down to the 1.1494 support.
Fundamental drivers of volatility:
Support for the euro in the pair is provided by hopes for diplomatic progress in Ukraine as a result of negotiations taking place this week. The extension of the trade truce between the US and China also reduced the demand for the dollar as a safe-haven currency, indirectly strengthening the position of the euro. However, the deterioration of the economic mood in the eurozone and the expectation of weak GDP data limit the growth potential of the European currency.
The decisive factor for the dollar will be the publication of the July inflation data in the USA. A forecasted acceleration of CPI to 2.8% and the core indicator to 3.0% could strengthen the "hawkish" rhetoric of the Fed, reducing the chances of a September rate cut. Conversely, weaker statistics will increase the likelihood of policy easing and put pressure on the US currency.
As a result, the dynamics of the pair in the next session will be determined by a combination of geopolitical expectations and the market's reaction to US inflation data.
Intraday technical picture:
As evidenced by the 4H EUR/USD chart, the pair reached the dotted support level of 1.1589. In the event of a breakout, there will be technical prerequisites for a drop to the level of 1.1494 and below, to the lows of August 1 (1.1391). If the horizontal 1.1589 holds, a recovery to the highs of August 7 (1.1698) is possible.
The pound sterling began the week with a strengthening, supported by strong employment data in Great Britain. Investors are cautious in anticipation of reports on GDP in Britain and inflation in the US, which can set the direction of the pair's movement in the coming days.
Possible technical scenarios:
Judging by the unfolding situation on the daily chart of GBP/USD, the pair is trying to gain a foothold above the level of 1.3436. If successful, the next target for growth will be the horizontal 1.3630. An alternative scenario would be a reversal from the level of 1.3436 down and a weakening towards the target of 1.3147.
Fundamental drivers of volatility:
The pound sterling strengthened against the background of strong employment data in Great Britain, which supported investors' interest in the British currency. The labor market showed a steady increase in the number of jobs, and unemployment remained at the same level, which contrasts with previous concerns about a slowdown in hiring.
According to the ONS, in the three months ending in June, 239,000 jobs were created in Great Britain, a significantly higher number than expected. Despite signs of a slowdown in wage growth (5% without bonuses and 4.6% with bonuses), these indicators remain high and allow the Bank of England to adhere to a moderate approach to policy easing after the recent rate cut to 4%.
For further dynamics of the pound, the key factors will be the data on the UK GDP and industrial production, as well as the publication of the July US inflation report. Higher inflation in the US can support the dollar and lead to a correction of the pair, while weak numbers will strengthen expectations of an easing of the Fed's policy and support the GBP.
Intraday technical picture:
The 4H chart shows that it is not yet clear from which side the price will consolidate from the level of 1.3436. Consolidation above highs on August 11 may be a signal of continued growth to the target of 1.3630.
The Japanese yen remains under pressure due to the uncertainty surrounding the Bank of Japan's next steps and the generally positive attitude of investors towards risky assets. Market participants are cautious ahead of the publication of inflation data in the US, which may set a short-term vector for the movement of the USD/JPY pair.
Possible technical scenarios:
The USD/JPY pair on the daily chart is approaching the upper limit of the range between 145.91 and 148.63. If the level of 148.63 is broken out and the price consolidates higher, the way to the level of 149.94 will be opened for quotes. An alternative scenario would be a pullback to the 145.91 support.
Fundamental drivers of volatility:
The yen is supported by the Bank of Japan's upward revision of its inflation forecast and signals about the possibility of a rate hike by the end of the year. This contrasts with expectations of a softer Fed policy, where the market is betting on two rate cuts before the end of the year amid signs of a cooling US economy.
On the other hand, weak statistics on real wages and concerns about domestic demand in Japan limit the yen's ability to strengthen.
The most important driver for the dollar in the pair will be the July US inflation report on Tuesday. Higher inflation is capable of temporarily supporting the American currency, lowering expectations of an imminent softening of the Fed's policy, while weak data will increase pressure on the dollar and may return demand for the yen as a safe-haven currency. Additional benchmarks in the coming days will be given by Fed representatives, the US producer price index, and data on Japan's GDP for the second quarter
Intraday technical picture:
Locally, on the 4H chart, we can see that there is a little margin left to the level of 148.63. Further dynamics of the pair will depend on which side of this level the price consolidates on.
At the beginning of the week, the Canadian dollar received moderate support against the backdrop of rising oil prices and improved market sentiment. That being said, weak domestic statistics and trade risks continue to hold back the potential for its strengthening against the US dollar.
Possible technical scenarios:
On the daily USD/CAD chart, the pair continues to recover in the range between 1.3744 and 1.3861, maintaining room to move to its resistance.
Fundamental drivers of volatility:
The Canadian dollar is supported by the rise in oil prices, which increased after the US and China announced the extension of the tariff truce for 90 days. Optimism in the raw materials market is favorable for the currency closely linked to oil exports, especially given that Canada is the largest supplier of oil to the United States.
That being said, the fundamental background for CAD remains mixed. Weak employment data strengthened expectations of a rate cut by the Bank of Canada, which could limit the potential for the currency to strengthen. Additional pressure is created by trade risks, including the US-imposed 35% tariffs on Canadian aluminum and the threat of tariffs on auto parts that could hit key sectors of the economy.
For the pair USD/CAD, the decisive short-term driver will be the publication of the July inflation report in the USA. Higher inflation is capable of supporting the dollar and compensating for the impact of rising oil prices, while weak figures will strengthen expectations of an imminent softening of the Fed's policy, which will put pressure on the US dollar and strengthen the position of the Canadian currency.
Intraday technical picture:
There is no additional data for analysis on the 4H of the USD/CAD chart, from the middle of the 1.3744-1.3861 corridor, the price has enough room to move to the 1.3861 level.
Gold fell at the beginning of the week, now the market is waiting for the upcoming data on inflation in the USA, which may affect the expectations on the Fed rates.
Possible technical scenarios:
As we can see on the daily chart, the price of gold has reached the support level of 3347.47 and is testing it for strength. If it is broken out, the path below will be opened for quotes, to the level of 3246.72. Otherwise, a recovery to the target of 3431.08 is possible.
Fundamental drivers of volatility:
Gold prices began the week with a decline after Donald Trump announced his refusal to impose duties on imported gold bars. Meanwhile, the market's attention shifted to the macro statistics from the USA, which may affect the expectations of the Fed's rates.
The decrease in prices is associated with a decrease in uncertainty about possible duties, which temporarily weakened the demand for gold as a protective asset. Now traders are waiting for the publication of data on inflation in the USA — CPI on Tuesday and PPI on Thursday. Higher indicators may reduce the probability of a September rate cut by the Fed, which will put pressure on gold, while weak data will increase its attractiveness.
The geopolitical agenda remains a supporting factor: the expected meeting to discuss a peace agreement on Ukraine, as well as the ongoing uncertainty in trade negotiations with China. In the conditions of low rates and geopolitical risks, gold still retains its potential as a hedging instrument, even despite the current price correction.
Intraday technical picture:
Given the unfolding scenario on the 4H chart, the price of gold has not yet determined its position relative to the horizontal at 3347.47. If it persists, the nearest target for recovery will be the highs of August 11.
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