The EUR/USD pair is trading in a limited range, balancing under the influence of internal and external economic factors.
Possible technical scenarios:
As we can see on the daily chart of EUR/USD, the pair has managed to recover the losses from Friday’s trading session by Wednesday and consolidate above the level of 1.0478. From this point, there is potential for the quotes to climb toward the nearest resistance level of 1.0614, marked with a dotted line.
Fundamental drivers of volatility:
The EUR/USD pair stabilized midweek as markets await the release of key US economic data, including the PCE price index and quarterly GDP. Investors are focused on evaluating the outlook for monetary policy amidst contrasting factors.
The euro is weighed down by rising geopolitical uncertainty and the looming threat of new tariffs from the US, which have dampened market risk appetite. Aside from that, the anticipation of a 25 basis point cut in the ECB rate during December continues to exert pressure.
Meanwhile, the US dollar faces challenges from optimism in the bond market, and recent Trump administration appointments signal a hardline economic approach. The FOMC minutes indicate a cautious stance, with further rate cuts tied to a notable downturn in the labor market and inflation.
Global trade tensions, amplified by Trump’s new tariff announcements targeting China, Mexico, and Canada, have heightened uncertainty. This dynamic adds further risks for the European economy, exacerbating pressure on the euro.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart, EUR/USD remains in consolidation above the support of the sideways range between 1.0478 and 1.0614. Depending on the dollar's reaction to the upcoming US data, the pair could either rise toward the corridor’s resistance or fall back to Friday’s lows.
The GBP/USD pair is consolidating below 1.2600, reflecting investor caution ahead of key US economic data.
Possible technical scenarios:
According to the daily GBP/USD chart, the pair has managed to hold above 1.2500 but has yet to overcome the resistance at 1.2608. An exit from this corridor could occur with a volatile dollar reaction to US macroeconomic statistics or political news. Consolidating above 1.2608 would pave the way for further growth toward targets of 1.2656 and 1.2723.
Fundamental drivers of volatility:
This week, the primary drivers of GBP/USD volatility are expected to originate from the US. Market participants are closely monitoring the release of the Personal Consumption Expenditures (PCE) index, a crucial metric for the Fed's interest rate decisions.
Expectations for an increase in core PCE inflation to 2.8% bolster the likelihood of the Fed adopting a more easing-oriented policy, which pressures the dollar. However, the FOMC minutes released on Tuesday failed to provide definitive guidance on future rate adjustments, leaving markets uncertain.
With a relatively quiet news cycle for the UK this week, the pound remains influenced by external factors and speculation about the Bank of England’s next moves. Additional downward pressure on the pound stems from the US tariff policies, which could negatively impact the UK export sector.
Intraday technical picture:
The 4H GBP/USD chart shows that the pair remains consolidated beneath the dotted resistance level of 1.2608. This could either lead to a downward reversal toward the support at 1.2500 or a breakout that drives growth toward 1.2656. A series of consistently higher lows on the chart creates the technical potential for the second scenario to unfold.
USD/JPY remains under pressure due to dollar weakness and yen stability, but its dynamics may be adjusted after the release of US macroeconomic statistics.
Possible technical scenarios:
On the daily chart of USD/JPY, we see that the pair has broken through the support of 151.71. Consolidation below will open the way for quotes to the support level of 150.17.
Fundamental drivers of volatility:
USD/JPY fell amid a weakening US dollar, despite Donald Trump's statements about new tariffs on Canada, Mexico, and China, which previously supported the American currency.
The pressure on the dollar increased amid expectations that Trump's nominee for the post of Treasury Secretary, Scott Bessent, will maintain the stability of economic policy without provoking an increase in inflation. Investors turned their attention to the US personal consumption expenditure (PCE) inflation data, which could provide clues about the Fed's next steps.
In turn, the Japanese yen is holding on thanks to a cautious market mood, despite the decline in expectations for the Bank of Japan to hike rates in December.
Intraday technical picture:
On the 4H chart of USD/JPY, we see an attempt to consolidate the price below the 151.71 level, which confirms the likelihood of a price decline to the 150.17 level.
The NZD/USD pair rose on Wednesday following the RBNZ meeting, during which the central bank delivered an anticipated rate cut.
Possible technical scenarios:
Based on the look of things on the daily chart, the NZD/USD pair held above the support at 0.5840 and is approaching the resistance at 0.5912. This could result in either a local downward reversal or an attempt to break out and consolidate above the resistance.
Fundamental drivers of volatility:
The NZD/USD pair gained strength after the Reserve Bank of New Zealand (RBNZ) cut the official cash rate by 50 basis points to 4.25%. This movement likely reflected profit-taking after selling based on expectations. RBNZ Governor Adrian Orr signaled the possibility of additional rate cuts in February 2025, reinforcing market confidence in monetary policy easing.
However, the New Zealand dollar continues to face headwinds due to escalating trade barriers introduced by Donald Trump, particularly against China—a crucial trading partner for New Zealand. Economic instability in China poses additional risks to the New Zealand economy.
Meanwhile, the US dollar remains under pressure amid optimism in the bond market and expectations of Federal Reserve policy easing. Today’s focus on US GDP and PCE data could introduce short-term volatility to the pair.
Intraday technical picture:
On the four-hour NZD/USD chart, the range between 0.5840 and 0.5912 reveals an inverse head and shoulders reversal pattern, with the neckline located at 0.5912. Upon reaching this level, a local downward reversal could occur, forming a second shoulder. If this scenario plays out, a breakout of the 0.5912 level would signal continued recovery, potentially driving the pair toward the 0.5959 level.
Gold prices rose as the US dollar weakened, driven by expectations of further Federal Reserve policy easing.
Possible technical scenarios:
On the daily XAU/USD chart, the price rebounded upward from the dotted support at 2600.12 and approached the resistance at 2659.99. A breakout and consolidation above this level could pave the way for continued price recovery toward the target of 2708.36.
Fundamental drivers of volatility:
In the near term, gold's movement will be shaped by upcoming US economic data and Federal Reserve decisions.
On Wednesday, investors are anticipating reports on inflation (PCE), jobless claims, and US GDP, which could influence both the dollar's performance and gold prices. Given the inverse correlation between gold and the US dollar, shifts in these data points could significantly impact the market. According to CME FedWatch, there is a 63% probability of a rate cut in December. Additionally, Donald Trump’s policies, including tariff increases and rising debt levels, could encourage de-dollarization, supporting long-term growth in gold prices.
Intraday technical picture:
According to the 4H XAU/USD chart, the local trajectory depends on whether the price can break out the resistance at 2659.99 or reverse downward from it. Should the latter scenario occur, gold is likely to continue trading within the sideways range between 2600.12 and 2659.99 until a significant fundamental catalyst emerges.
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