EUR/USD is making a recovery despite the ongoing strength of the US dollar. However, this week's US labor market report could influence these trends.
Possible technical scenarios:
The EUR/USD pair has found support around the 1.0723 level and has subsequently risen above the 1.0749 support level. This suggests that there is room for further movement towards the resistance at 1.0801.
Fundamental drivers of volatility:
Strong economic indicators from the US this week have driven the dollar to nearly a five-month high against a basket of currencies. Positive PMI reports for March, indicating the first manufacturing growth in a year and a half, along with robust new orders for US goods, signal continued market strength. Additionally, the labor market remains stable.
Market players anticipate the Fed to cut rates by approximately 70 basis points this year, which is less than what the central bank had forecasted. The initial policy easing is not expected until July.
Today at 12:15 p.m. (GMT), the ADP agency will release a report on changes in US non-farm employment, which serves as a precursor to Friday's official labor market report. A rise from 140 thousand to 148 thousand jobs is anticipated for March.
Intraday technical picture:
According to the 4H chart, the EUR/USD pair is positioned in the middle of the range between 1.0749 and 1.0801, suggesting the potential for both upward movement towards resistance and downward movement towards support. Given the latest news from the United States, there may be testing of either boundary within this range.
The GBP/USD pair is recovering cautiously for the second day after falling on Monday. Data from the US this week will clarify further price direction.
Possible technical scenarios:
As we can see on the daily chart, the GBP/USD pair found support at the local dotted level of 1.2525. From here, the quotes have some room to recover to the resistance at 1.2608.
Fundamental drivers of volatility:
The GBP/USD pair is trading mainly under the influence of the US dollar. The American currency has already been supported by strong data on the US manufacturing sector. This week, the main catalysts for volatility will be reports on the labor market, which will begin to arrive today.
At 12:15 p.m. (GMT), a report on changes in the number of people employed in the US non-farm sector from the ADP agency will be released—a precursor to Friday's official report on the US labor market. In March, an increase is expected from 140 thousand to 148 thousand.
Investors now expect the Fed to cut rates by about 70 basis points this year, less than the central bank's forecast to begin easing monetary policy in July.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart, the GBP/USD pair still has some room to move towards the 1.2608 resistance, from where the price will either reverse down towards the 1.2525 level or try to continue rising if US labor market data turns out to be weak.
The USD/JPY pair persists in consolidation for the second consecutive week, teetering between concerns about Japanese intervention due to a weakened yen and a robust US dollar.
Possible technical scenarios:
Observing the daily USD/JPY chart, prices continue to consolidate below the resistance at 151.71. A consolidation above 152 yen per dollar could pave the way for the pair to ascend to the next psychological and technical level of 153.00. However, this outcome appears unlikely given the heightened intervention risk. Meanwhile, psychological support remains steadfast at 150 yen per dollar.
Fundamental drivers of volatility:
Wednesday saw a resilient dollar, maintaining the yen near its multi-decade lows. That being said, the mounting specter of currency intervention from Tokyo curbed further yen depreciation.
Despite the Bank of Japan's recent rate hike — the first in 17 years — the yen persists under pressure, particularly amidst the significant yield gap between Japanese and US yields.
Japanese authorities have been relentless in their efforts to shield the currency, with intervention threats effectively limiting the dollar's advance towards 152 yen, deemed by many as a crucial resistance line.
Intraday technical picture:
As evidenced by the 4H chart of the USD/JPY pair, local support holds at 151.00, while psychological resistance persists at 152 yen per dollar. A downward move from this range appears more likely, albeit contingent on fundamental catalysts.
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