The EUR/USD pair has been under pressure due to the rising U.S. dollar the entire week. Concerns caused by the U.S. debt ceiling contribute to the growth of government bond yields and a shift to the American currency in an attempt to avoid risks.
Possible technical scenarios:
The daily chart demonstrates that the EUR/USD pair is putting the support of the sideways range between 1.0808 and 1.0958 to the test. If the price consolidates below it, support at 1.0694 marked with green dotted lines will serve as the next target to the south.
If the breakout ends up being false, the pair may proceed to recover in the flat between 1.0808 and 1.0958.
Fundamental drivers of volatility:
While the U.S. government debt issue, which has not been addressed yet, continues to be the primary focus of the market players, the U.S. dollar is rising, thus putting pressure on the pair. This factor will likely remain the key volatility catalyst until the end of the week.
Aside from that, it makes sense to keep a close eye on the speech of the central banks’ heads on Friday evening.
Chairman of the Federal Reserve of the United States Jerome Powell is expected to speak at 3:00 pm GMT.
The President of the European Central Bank Christine Lagarde will speak at 7:00 pm GMT.
Intraday technical picture:
As evidenced by the 4H chart of the EUR/USD pair, the April 3 lows are being updated as a new candlestick emerges below 1.0808 which has been broken out. This increases the probability that the breakout will end up being true and the price will continue to drop towards support at 1.0694 marked with dotted lines.
The weakness of the pound sterling and the rising U.S. dollar this week have kept the GBP/USD pair under pressure. Quotes remain near the support level of the four-week sideways range.
Possible technical scenarios:
The GBP/USD pair dropped to the support of the sideways corridor between 1.2410 and 1.2601 by the end of the week. From a technical standpoint, a recovery to the interim mirror resistance at 1.2525 from this area is likely. Otherwise, a breakout of 1.2410 and consolidation below it will pave the way to the target of 1.2323.
Fundamental drivers of volatility:
The pair is currently trading under pressure against the backdrop of the rising U.S. dollar. The growing demand for it as a safe-haven asset along with rising government bond yields act as catalysts, while the U.S. government debt remains the key focus of the market.
The spike in the U.S. dollar’s volatility is possible in response to the speech of Fed Chairman Jerome Powell which is expected on Friday at 3:00 pm GMT.
Intraday technical picture:
As can be seen in the 4H chart of the GBP/USD pair, 1.2410 has stopped the price for now. That being said, the quotes are currently at a crossroads, so it makes sense to wait until the price consolidates above or below this horizontal line to make any further assumptions about further local direction and targets.
The USD/JPY pair has been putting the strength of the six-month high to the test this week. The quotes are rising amid the strengthening of the U.S. dollar and the weakness of the Japanese yen as there are no drivers for its strengthening just yet.
Possible technical scenarios:
On Thursday USD/JPY quotes attempted to break out the resistance at 137.89. If the breakout turns out to be true and the price consolidates higher, the pair may continue to climb up towards 139.38. An alternative scenario could be a return back into the range between support at 133.92 and resistance at 137.89 provided that the breakout ends up being false.
Fundamental drivers of volatility:
Serving as both a fear factor and a reason for the growing demand for the U.S. dollar as a safe-haven asset, the U.S. government debt has remained the primary focus of the market players this week.
In addition, we are expecting a speech from Chairman of the Federal Reserve of the United States Jerome Powell on Friday at 3:00 pm GMT. If what he says provides clues regarding interest rates, this may affect the volatility of the American currency.
Intraday technical picture:
According to the 4H chart of the pair, we can see that a new candlestick emerged above 137.89 that has been broken out. If this horizontal line is confirmed as support, we can expect the price to strengthen further toward 139.38.
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