The EUR/USD pair lost half of the gains made the previous day on Tuesday as the US dollar recovered, retreating upward from a two-week low.
Possible technical scenarios:
As we can see on the daily chart of EUR/USD, despite the decline, the pair remains above the 1.0344 level. If this level holds, the pair could return to the target at 1.0448 marked by red dotted lines and attempt to test this level for strength. After a prolonged decline, an inverse head and shoulders reversal pattern may be forming, with the neckline at 1.0448.
Fundamental drivers of volatility:
The EUR/USD pair continues to face pressure from a strong US dollar, which has rebounded from a two-week low amid expectations that the Fed will maintain its current monetary policy. Investors are not expecting a rate cut in the near future, which supports the demand for the US dollar.
On the other hand, the euro is under pressure from the dovish rhetoric of the ECB. The central bank plans to gradually cut rates by 25 basis points in upcoming meetings, which limits the euro's growth potential.
An additional factor supporting temporary euro strength was Donald Trump's statement that the US would not immediately raise tariffs, leading to some buying of riskier assets, including the euro. However, ongoing uncertainty surrounding US and Eurozone trade policies continues to limit significant growth for the euro.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart of EUR/USD, the pair has reached the support of the sideways range between 1.0344 and 1.0448, from which it may either recover. However, if the inverse head and shoulders reversal pattern continues to form, the price may temporarily fall below the 1.0344 level to complete the second "shoulder."
GBP/USD remains under pressure on Tuesday as the US dollar recovers, while the pound declines following weak UK employment data.
Possible technical scenarios:
As we can see on the daily chart, GBP/USD retreated from the resistance at 1.2306, and it may now move toward the support at 1.2068. If a breakout of the 1.2306 level occurs, the next recovery target will be 1.2430.
Фундаментальные драйверы волатильности:
Weak UK labor market data is weighing on the pound. Employment growth slowed to 35 thousand, down from 173 thousand previously, and the unemployment rate rose to 4.4%. Despite higher wage growth (5.6% excluding bonuses), this has not been enough to offset the weakness in the labor market, dampening expectations of a tightening policy from the Bank of England.
Conversely, the US dollar is strengthening, fueled by Donald Trump’s statements about a possible tariff increase. Additionally, investors expect the Fed to maintain rates within the range between 4.25% and 4.50% in the coming months, which continues to support the US dollar.
An additional driver of volatility for the dollar could be the release of the US PMI index later this week. If the data confirms the stability of the US economy, it could further strengthen the dollar and put additional pressure on GBP/USD.
Intraday technical picture:
A local upward trend has developed on the four-hour GBP/USD chart. In this context, a potential reversal upward from the trend support near 1.2204 is possible.
USD/JPY is cautiously strengthening on Tuesday amid a weakening yen, supported by positive sentiment in stock markets and the recovery of the US dollar from a two-week low.
Possible technical scenarios:
On the daily chart of USD/JPY, the price is holding above the support level of 154.83, with technical potential for recovery toward the target of 157.10. If the price consolidates above this level, further gains are possible.
Fundamental drivers of volatility:
Statements by US President Donald Trump regarding a potential increase in tariffs have raised inflation expectations and bolstered demand for the dollar. However, the low yields on US Treasury bonds and recent data showing a decline in inflation are limiting the US dollar's strength.
Meanwhile, the yen is trading in anticipation of an interest rate hike by the Bank of Japan this week, with an 80% probability. Comments from Bank of Japan Governor Kazuo Ueda and rising inflationary pressures in Japan are fueling speculation about tightening monetary policy.
In the medium term, the yen may strengthen, but in the short term, the US dollar’s recovery could continue to support USD/JPY, particularly if geopolitical risks or US macroeconomic data increase demand for the US currency.
Intraday technical picture:
According to the 4H chart of USD/JPY, the pair’s growth is currently capped by the local mirror resistance at 156.46. The yen’s reaction to the Bank of Japan’s decision on Friday will likely help determine the pair’s position around this level. If the pair fails to break it out, sideways movement within the range between 154.83 and 156.46 may continue for a while.
The weakness of the Canadian dollar, combined with the overall strengthening of the US dollar and current economic uncertainty, keeps the USD/CAD pair near last year's highs.
Possible technical scenarios:
The daily chart shows that, despite increased volatility, the USD/CAD pair remains within the local range between 1.4297 and 1.4467, the two red dotted lines, with both boundaries being unsuccessfully tested. An upward exit from this range could push the price higher, with the next target at 1.4556.
Fundamental drivers of volatility:
The Canadian dollar is under pressure as US President considers imposing 25% tariffs on imports from Canada, raising concerns about the potential economic impact.
This week, investors are focused on Canadian inflation data. The consumer price index is expected to rise by 1.8%, but any deviation from this expectation could impact the Bank of Canada’s monetary policy.
The Bank of Canada’s decision to cut rates to 3.25% continues to weigh on the CAD, while the weak exchange rate and high prices for imported goods are increasing inflation risks. Market participants are cautiously assessing the central bank’s next steps, given the slowing economy and limited room for aggressive rate cuts.
Intraday technical picture:
On the 4H of USD/CAD, the price is approaching the resistance of the sideways range between 1.4297 and 1.4467, the two red dotted lines. If the resistance is not broken out and the price fails to consolidate above it, the pair may reverse and move toward the support at 1.4297.
Prices are falling for the fourth consecutive session amid expectations that US President Donald Trump's policies may lead to an expansion of supply.
Possible technical scenarios:
Judging by the unfolding situation on the daily chart of Brent, the price has fallen below the 79.70 level, with a small room to move toward the support at 77.25. If this support fails, the next target for further decline will be 75.18.
Fundamental drivers of volatility:
Oil prices are being influenced by a mix of factors tied to the new US trade and energy policies. Donald Trump’s proposal to introduce 25% tariffs on Canadian oil raises the risk of higher import costs, as Canada is the main supplier of crude oil to the US. This has strengthened expectations that oil prices could rise due to a potential reduction in supply and an increase in export costs.
At the same time, the lifting of restrictions on drilling in the Arctic and along the US coast, along with faster permitting for energy projects, sets the stage for a rise in US oil production. This could increase supply in the market, putting downward pressure on prices, despite the short-term risks tied to the tariffs.
Ongoing uncertainty regarding tariffs with China, the world’s largest oil importer, adds another layer of volatility. The threat of high tariffs could affect demand, particularly if China reduces its oil purchases.
Intraday technical picture:
On the 4H chart of Brent, we see a sharp decline within the range between 77.25 and 79.70. The further price direction will depend on which side of the 77.25 level the price consolidates.
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