The EUR/USD pair is currently facing downward pressure, with today's outcome of the Fed meeting likely to introduce heightened volatility to the US dollar and potentially upgrade technical benchmarks.
Possible technical scenarios:
As we can see on the daily chart, the pair has reached the support of the range between 1.0801 and 1.0888. From this point, there may be either an upward reversal or a breakout of the 1.0801 level with subsequent consolidation below it. In the latter case, the pair could chart a course southward toward the next support at 1.0749.
Fundamental drivers of volatility:
For the US dollar, the primary event for the pair in the first half of the week will be the Fed meeting results. Aside from that, Wednesday will see the commencement of data releases related to the US labor market, leading up to Friday's employment report.
At 1:15 p.m. (GMT), the ADP agency will release data on changes in the number of workers in the US non-agricultural sector for January, with a forecast of 145,000, up from December's 164,000.
At 7:00 p.m. (GMT), the results of the US Federal Reserve meeting will be unveiled, with the main interest rate expected to remain at 5.50%.
The Federal Open Market Committee (FOMC) will also issue a statement, followed by a press conference at 7:30 p.m. (GMT). The market will keenly watch for clarity on the timing of potential rate cuts.
On Thursday at 10:00 a.m. (GMT), euro area inflation data for January will be released, potentially impacting euro volatility if there's a significant deviation from the forecast.
The Core Consumer Price Index is anticipated to decline year-over-year from 3.2% to 3.4%, while the Consumer Price Index for January is expected to drop from 2.9% to 2.8%.
Intraday technical picture:
As evidenced by the 4H chart of the EUR/USD pair, there are two noticeable rebounds from the support at 1.0801. It seems that a double bottom pattern, which typically points to a reversal, is forming on the chart. In this scenario, consolidation above yesterday's highs could pave the way for the pair to reach resistance at 1.0888. That being said, it's essential to keep in mind that news-induced volatility may affect technical scenarios.
The GBP/USD pair has reversed its course and is steadily decreasing in anticipation of this week's Federal Reserve and Bank of England meetings.
Possible technical scenarios:
Given the unfolding situation on the daily chart, the GBP/USD pair is under continued pressure within the range between 1.2608 and 1.2792, forming a descending triangle. Should there be an upward reversal from 1.2608, any price increase may be halted by its inclined resistance. Meanwhile, the pair has room to decline towards 1.2608.
Fundamental drivers of volatility:
This week, the pair's movement will be influenced by two central bank meetings. On Wednesday, the Fed meeting results will be disclosed at 7:00 p.m. (GMT), followed by a FOMC press conference at 7:30 p.m. (GMT). While no change in the interest rate is anticipated from the American central bank, the tone of their statements will be pivotal in shaping market expectations.
The Bank of England meeting results are scheduled for Thursday at noon (GMT), with the main interest rate expected to remain at 5.25%. The Monetary Policy Committee meeting minutes will also be published, and Bank of England Governor Andrew Bailey is set to speak at 2:15 p.m. (GMT).
Intraday technical picture:
According to the 4H chart of the GBP/USD pair, there is a decrease in both highs and lows, indicating a potential decline towards the 1.2608 level unless the market's reaction to news prompts an update of technical benchmarks.
The AUD/USD pair continues to demonstrate a sideways dynamic as traders await the outcomes of the upcoming Fed meeting, with expectations of potential increased volatility.
Possible technical scenarios:
Analyzing the daily chart, the AUD/USD pair is trading within the corridor between two dotted lines 0.6541 and 0.6619. Locally, there is room for the price to approach its resistance. A surge in US dollar volatility on Wednesday could propel the price beyond this range.
Fundamental drivers of volatility:
In Australia, the slowdown in inflation has sparked discussions among investors about a possible interest rate cut. Financial experts are reasonably confident that the Reserve Bank of Australia will refrain from hiking interest rates next week, marking its first major move this year. Over 70% of analysts anticipate a potential interest rate cut in August to stabilize the financial situation.
As far as the US dollar to which the pair is sensitive, it may experience volatility based on the rhetoric from today's Fed meeting. The meeting results will be disclosed on Wednesday at 7:00 p.m. (GMT), followed by a press conference at 7:30 p.m. (GMT). While no interest rate change is anticipated, investors will be looking for any cues regarding the potential timeline for the commencement of the American central bank's monetary policy easing.
Intraday technical picture:
Given the look of things on the 4H chart of the AUD/USD pair, a local upward reversal within the corridor between the two dotted lines (0.6541 and 0.6619) could propel the pair towards its upper boundary, to which it has enough room to move.
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