Since the beginning of the week, there has been no significant news coming out of the euro area, thus the dynamics of the EUR/USD pair have remained relatively unchanged. In the meantime, the volatility of the US currency is extremely unpredictable.
Possible technical scenarios:
The EUR/USD pair has remained in the middle of the sideways range between 1.0592 and 1.0808. The price has not yet chosen whether or not to settle at the intermediate level of 1.0707, whose strength is currently being tested. From a technical standpoint, the price may shift to any of the boundaries of the corridor between 1.0592 and 1.0808 from its current position.
Fundamental drivers of volatility:
This trading week’s news backdrop does not feature a lot of newsworthy events. Investors are currently waiting for next week's Fed meeting as no major news is expected from the United States.
The release of the GDP report for the euro area is scheduled to take place on Thursday at 9:00 am GMT. This report will be the most prominent event to come out of the region this week and may have a local impact on the dynamics of the single European currency. It is anticipated that the Q4 economic growth rates will come in at 1.2% year-over-year, which is lower than the value of 1.8% that was recorded in the previous quarter. The growth rate for the first quarter will be 0.0% quarter-over-quarter, compared to an increase of 0.1% in the prior period.
Intraday technical picture:
As can be seen from the 4H chart, the dynamics of the EUR/USD pair in the middle of the corridor between 1.0592 and 1.0808 appear to be uncertain. The pair will be able to continue its drop provided that the lows from the previous day are updated.
This week, the GBP/USD pair has been trading under pressure as the US dollar has resumed its upward trend.
Possible technical scenarios:
The dotted resistance at 1.2525 acted as a barrier for the GBP/USD quotes last week, sending them tumbling back to the 1.2410 support level. If the breakout and consolidation below the support at 1.2410 turns out to be successful, it might lead to a drop toward 1.2323 or a return to 1.2525.
Fundamental drivers of volatility:
There are no events on the economic calendar this week that are likely to have a major impact on the volatility of the GBP/USD pair. Expectations for future Fed rate hikes may affect the behavior of the US currency. In addition, we are expecting the Federal Reserve Board meeting scheduled for June 14th.
Intraday technical picture:
As evidenced by the 4H chart, the support at 1.2410 is currently being tested by the GBP/USD pair, and it is not yet clear whether or not the price will consolidate below that level. The lows of Monday’s trading session need to be updated for a further decline to occur.
The AUD/USD pair shot up dramatically on Tuesday when the Reserve Bank of Australia decided to hike interest rates against market expectations that monetary policy would continue to be tightened. The hawkish rhetoric continues to provide an additional lift to the price, while also leaving the door open to the possibility of future monetary tightening.
Possible technical scenarios:
The AUD/USD quotes have hit a resistance at 0.6669 and are currently putting its strength to the test. The consolidation above this mark will pave the way toward the next resistance level, which sits at 0.6798. If consolidation above 0.6669 fails, a drop below the support at 0.6567 may serve as an alternative scenario.
Fundamental drivers of volatility:
The RBA's rate hike on Tuesday and the hawkish comments from its chairman have already caused the Australian dollar to rise.
Philip Lowe, the Governor of the Reserve Bank of Australia, is scheduled to speak again on Tuesday at 11:20 pm GMT.
The figures for the first quarter of the Australian economy's gross domestic product will be released on Wednesday at 1:30 am GMT. According to the forecast, the economic growth rate is projected at 2.7% year-over-year, which will be the same as the previous value, while the GDP growth QoQ is anticipated to be 0.8%, which is higher than the previous value of 0.5%.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart of the AUD/USD pair, the price is now being held back by the resistance located around 0.6669. It is possible for the quotes to pull back to the nearest support at 0.6631 from there, which may then be followed by resumed growth.
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