Against the backdrop of the increase in the U.S. dollar, the EUR/USD pair remained under pressure last week. That being said, the further strengthening of the U.S. currency is currently debatable, as the dollar index has reached strong resistance.
Possible technical scenarios:
On the daily chart, the EUR/USD pair is putting the strength of the support level at 1.0592 to the test. Based on the bullish engulfing candlestick pattern, a local reversal is likely if the price manages to consolidate above this boundary.
In this instance, 1.0640 marked with dotted lines, and resistance at 1.0808 will serve as the targets for recovery. If it fails to overcome 1.0592 and the price pulls back down from it, the quotes may drop to the support at 1.0492.
Fundamental drivers of volatility:
The release of the euro area inflation report on Thursday at 10:00 am GMT and the European Central Bank’s meeting minutes shedding light on further monetary policy at 12:30 pm GMT will be two critical events, possibly affecting the dynamics of the euro in the pair this week.
The European Consumer Price Index YoY is expected to drop from 8.6% to 8.2%, with a likely volatile reaction should the figures be significantly higher or lower than those in the forecast.
Meanwhile, the U.S. dollar may react to the release of the U.S. Conference Board Consumer Confidence Index on Tuesday at 1:00 pm GMT and the U.S. ISM Manufacturing PMI on Wednesday at 3:00 pm GMT.
The CB Consumer Confidence Index is expected to increase from 107.1 to 108.5, while the ISM may rise from 47.4 to 48.0.
Intraday technical picture:
On the 4H chart, the EUR/USD quotes have not overcome the 1.0592 - 1.0612 resistance area just yet. Two local scenarios are possible here: there may be either a consolidation higher with an increase to the nearest dotted resistance at 1.0640, or a drop to Monday's lows.
The GBP/USD pair has been trading in the sideways range for the fourth week. Due to the downward correction of the U.S. dollar this week, quotes are recovering; however, this increase may be short-lived.
Possible technical scenarios:
On Monday, the GBP/USD price bounced up from the support level of the 1.1934 - 1.2146 corridor, maintaining a small movement range in it. Once it hits 1.2146, both the reversal from it downwards and the breakout and consolidation above are likely. In the second instance, the GBP/USD next growth target will be 1.2269 (a resistance marked with green dotted lines).
Fundamental drivers of volatility:
The UK news background is rather scarce this week. That being said, it makes sense to pay close attention to the speech of the Bank of England governor Andrew Bailey on Wednesday at 10:00 am GMT. His rhetoric is what typically affects the behavior of the pound sterling in the pair.
In terms of the U.S. dollar, volatility in the pair may increase amid the release of the U.S. Conference Board Consumer Confidence Index on Tuesday at 1:00 pm GMT which is expected to increase from 107.1 to 108.5 and the U.S. ISM Manufacturing PMI on Wednesday at 3:00 pm GMT with an anticipated increase from 47.4 to 48.0.
Intraday technical picture:
On the 4H chart of the GBP/USD pair, we see a small movement range toward the 1.1934 - 1.2146 corridor. The further price behavior will depend on which side of the 1.2146 level the price will consolidate on.
This week, the AUD/USD pair proceed to consolidate after weakening earlier. Recovery amid a downward correction of the U.S. dollar is still held back by the Australian dollar that’s not very strong.
Possible technical scenarios:
On the daily chart, the AUD/USD pair is trading in the middle of the 0.6669 - 0.6798 sideways range. The local resistance is 0.6742 marked with dotted lines. The further price movement direction in the said range will depend on the side the price consolidates on.
Fundamental drivers of volatility:
The current dynamics of the AUD/USD pair chiefly depend on the volatility of the U.S. currency. That being said, make sure to keep your eyes open for the Australian GDP figures for the fourth quarter released on Wednesday at 00:30 am GMT. The Growth Rate YoY is projected at 2.7% against 5.9% in the previous period. Meanwhile, the forecast suggests that the GDP Growth Rate QoQ will be 0.8% against 0.6% earlier.
The U.S. dollar in the pair may be sensitive to the release of the CB and ISM Manufacturing PMI on Tuesday and Wednesday. The Conference Board Consumer Confidence Index is expected to increase from 107.1 to 108.5, while the ISM may rise from 47.4 to 48.0.
Intraday technical picture:
On the 4H chart of the AUD/USD, the pair is putting the strength of the 0.6742 resistance marked with dotted lines to the test. That being said, there is still not enough information for us to be able to predict a breakout from the bottom upwards or a bounce off of this boundary. If the resistance holds ground, 0.6669 may be the next downside target for AUD/USD.
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