The EUR/USD pair has entered a downward trend for the second consecutive session as the US dollar resumes its ascent.
Possible technical scenarios:
EUR/USD quotes have retraced to the support level at 1.0801, where the future trajectory hinges on whether this level holds. A rebound could propel the pair towards the resistance at 1.0888. Otherwise, a breakout of the 1.0801 support may lead to further downside, targeting the horizontal level at 1.0749.
Fundamental drivers of volatility:
This week's primary driver of volatility for the pair will be the release of US personal consumption expenditure data for January, scheduled for Thursday at 1:30 p.m. (GMT). This data point serves as a key indicator of inflation, offering insights into the potential timing of Federal Reserve interest rate adjustments.
Forecasts suggest that the core personal consumption price index will rebound by 0.4% monthly, reversing the previous 0.2% increase, while the annual figure is anticipated to ease to 2.8% from 2.9%. Meanwhile, the personal consumption expenditures price index is projected to rise by 0.3% compared to the previous month's 0.2% increase, with a year-over-year increase of 2.4% compared to the prior 2.6% rise.
Intraday technical picture:
The 4H chart of EUR/USD indicates a temporary halt around the support level at 1.0801. Should this level hold, a potential recovery towards the 1.0888 level is possible if the 1.0801 horizontal line is not broken out.
The GBP/USD pair experienced a decline following eight consecutive sessions of gains, spurred by a reversal in the US dollar's downtrend on Wednesday. Further movement of the pair hinges on the dynamics of the US currency.
Potential technical scenarios:
On the daily chart of GBP/USD, the pair broke out the 1.2656 level, suggesting a potential test of the subsequent support at 1.2608 if the downtrend persists. However, if the breakout of 1.2656 proves to be false, a resurgence toward the resistance level at 1.2792 may occur.
Fundamental drivers of volatility:
Market attention this week centers on the US PCE indicator, which provides insight into personal consumption expenditures. Scheduled for release on Thursday at 1:30 p.m. (GMT), the January data is anticipated to offer clarity regarding the trajectory of US interest rates.
Forecasts indicate that the core personal consumption price index is poised to rise by 0.4% month-over-month, surpassing the previous increase of 0.2%, while year-over-year figures are expected to moderate to 2.8% from 2.9%.
At the same time, the monthly personal consumption expenditures price index is projected to escalate by 0.3%, up from the previous 0.2% increase, with an annual increase of 2.4%, compared to the prior 2.6% rise.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart of GBP/USD, a partial rebound from today's decline is evident, raising uncertainty regarding sustained consolidation below the 1.2656 level. Should resistance at 1.2656 hold, the pair may remain within the range between 1.2608 and 1.2656.
The AUD/USD pair witnessed a decline on Wednesday as the US dollar gained strength following several days of weakness.
Possible technical scenarios:
Examining the daily chart of AUD/USD, the pair has approached the support level at 0.6498, with further price movement depending on the sustainability of this horizontal line. Should the level be broken out and consolidation below it occur, the pair may target the subsequent level at 0.6458. An alternate scenario entails a potential upward reversal, leading to a recovery towards the resistance at 0.6582.
Fundamental drivers of volatility:
Despite Australian consumer price inflation data indicating a two-year low in January, the Australian dollar exhibited a muted response on Wednesday, implying diminished prospects for further interest rate hikes by the Reserve Bank of Australia (RBA).
Meanwhile, the US dollar demonstrated modest strength ahead of Thursday's release of the Personal Consumption Expenditure (PCE) data, a key inflation metric, hinting at the possibility of interest rate cuts by the Federal Reserve.
According to CME's FedWatch Tool, markets have largely factored in potential interest rate cuts during the Federal Reserve's meetings in March and May, with a probability of rate reduction in June standing at approximately 51%.
Intraday technical picture:
As evident from the 4H chart of the AUD/USD pair, we can see that the support level at 0.6498 has been broken out, although it remains uncertain whether this breakout will prove to be true or false. The short-term direction of the price movement direction will determine the pair's consolidation relative to the 0.6498 level.
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