The EUR/USD pair found local support at the beginning of the week, affected by political developments in the euro area and the weakening of the US dollar.
Possible technical scenarios:
The EUR/USD pair is attempting to consolidate above the 1.0749 level. If successful, it could rise to the next target of 1.0801. However, if the breakout at 1.0749 proves false, the price may revert to the support range between 1.0672 and 1.0749.
Fundamental drivers of volatility:
The euro has strengthened this week, buoyed by political factors, notably the unexpected victory of the far-right in the first round of the French parliamentary elections.
Aside from that, the euro benefited from the US dollar's weakness. Remarks from Jerome Powell, Chair of the Federal Reserve of the United States, on Tuesday, which suggested potential interest rate cuts this year, were interpreted as dovish due to his comments about the US being on a “disinflationary path.”
On Wednesday, the US currency's direction could be influenced by a busy news schedule ahead of Thursday’s holiday.
Key releases include the ADP report on US non-agricultural employment changes at 12:15 PM GMT, expected to show an increase to 159,000 in June from 152,000 in May, and the FOMC minutes at 6:00 PM GMT.
Intraday technical picture:
As evidenced by the 4H chart of the EUR/USD pair, further growth requires the price to pass and consolidate above the 1.0766 resistance level. If this doesn’t happen, the price may drop below the 1.0749 horizontal level to the lows seen during Tuesday’s trading session.
The GBP/USD pair found support this week due to the weakening US dollar, driven by renewed expectations of a Fed rate cut.
Potential technical scenarios:
On the daily chart, the GBP/USD pair has risen above the 1.2656 level, with growth currently halted by local resistance at 1.2700. Consolidation above this level could pave the way for an increase to 1.2792.
Fundamental drivers of volatility:
This week, UK news has been limited, so the US dollar's dynamics primarily influence the pair's direction.
The US dollar weakened following the speech of the Chair of the Federal Reserve Jerome Powell, heightening expectations for interest rate cuts this year. His remarks about the US returning to a "disinflationary path" were interpreted as moderately dovish. On Wednesday, a busy news schedule ahead of the US holiday on Thursday could impact the US currency's direction.
Key events include the ADP report on US non-farm employment changes at 12:15 PM GMT, expected to show an increase to 159,000 from 152,000 in May, and the release of the FOMC meeting minutes at 6:00 PM GMT, which could offer more insight into the interest rate outlook for this year.
Intraday technical analysis:
According to the 4H chart of the GBP/USD pair, a breakout and consolidation above the resistance at 1.2700 marked with dotted lines would open the path for the pair to reach the next target of 1.2760.
The Japanese yen continues to decline due to divergent monetary policies between the Bank of Japan and the Federal Reserve, falling to 161.83 per dollar on Wednesday.
Possible technical scenarios:
As we can see based on the unfolding situation on the daily chart, the USD/JPY pair is rising from the support level of 160.21, with the next technical target being resistance at 163.65.
Fundamental drivers of volatility:
The Japanese yen remains under pressure despite the US dollar's weakness this week. Japanese authorities have warned they are prepared to intervene to support the national currency, but so far, this remains rhetorical, slightly restraining speculators while the yen continues to hit 38-year lows.
A busy news day on Wednesday, ahead of the US holiday on Thursday, could influence the direction of the USDJPY pair.
Key events include the ADP report on US non-farm employment changes at 12:15 PM GMT, expected to show an increase to 159,000 from 152,000 in May, and the release of the FOMC meeting minutes at 6:00 PM GMT.
Intraday technical picture:
According to the 4H chart of the USD/JPY pair, the price is consolidating above the local support level of 161.28. From this point, the price could rise towards the target of 163.65 or fall back to support at 160.21.
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