The EUR/USD pair is furthering a sideways dynamic despite the U.S. dollar’s appreciation after the U.S. inflation report strengthened the Fed's hawkish rhetoric.
Possible technical scenarios:
On the daily chart, the EUR/USD pair remains in the sideways range between the local support at 1.0661 marked with a green dotted line and the resistance at 1.0808. It seems that a bearish flag has formed since February 2. Should this pattern work out, the pair may drop to the area of 1.03.
Fundamental drivers of volatility:
On Wednesday, the U.S. dollar in the pair may be sensitive to the United States Retail Sales released at 1:30 pm GMT, while the euro is likely to react to the rhetoric of the president of the European Central Bank Christine Lagarde who is to speak at 2:00 pm GMT.
On Thursday at 1:30 pm GMT, we are expecting critical news from the United States. One of the leading indicators of inflation, the Producer Price Index (PPI) MoM is expected to increase from -0.5% to 0.4% in January.
Aside from that, the pair may also react to the release of the United States Building Permits, Initial Jobless Claims, and the Philly Fed Manufacturing Activity Index.
Intraday technical picture:
On the 4H chart, the EUR/USD pair still has some movement range toward support of the 1.0661 - 1.0808 sideways trend. Once it is reached, there may either be a reversal upwards or the price may attempt to break out the level with a subsequent drop to 1.0592.
Against the backdrop of the U.S. dollar’s cautious strengthening and the drop in the pound sterling following the United Kingdom inflation figures which ended up being slightly lower than expected and demonstrated a price growth decline, the GBP/USD pair remains under pressure.
Possible technical scenarios:
GBP/USD quotes bounced down from the local resistance level at 1.2269 marked with a green dotted line and moved to the 1.1934 - 1.2146 sideways range, where the pair has a large movement range to the south.
Fundamental drivers of volatility:
The release of the United States Retail Sales on Wednesday and the Producer Price Index (PPI) on Thursday at 1:30 pm GMT will act as the key catalysts for U.S. dollar volatility in the pair until the end of the week.
The United States Core Retail Sales are expected to increase from -1.1% to 0.8% with Retail Sales going up from -1.1% to 1.8%. The forecast suggests that the United States Producer Price Index MoM, which is one of the key indicators of inflation, may grow from -0.5% to 0.4%.
On Thursday, it also makes sense to pay close attention to the United States Building Permits, Initial Jobless Claims, and the Philly Fed Manufacturing Activity Index.
On Friday at 7:00 am GMT, the pound sterling may be sensitive to the January Retail Sales in the United Kingdom. The Core Retail Sales YoY are projected at -5.3% as compared to -6.1% earlier. The Core Retail Sales MoM totaled -1.1% earlier.
Retail Sales YoY are expected to increase from -5.8% to -5.5% while the MoM figures will be -0.5% against -1.0% in the previous period.
Intraday technical picture:
On the 4H chart of the GBP/USD pair, the weakening may be locally stopped near the lows of February 13. If they are updated, the pair may continue moving toward the target at 1.1934.
The AUD/USD pair is trading in the sideways range, repeating the dynamics of the dollar in inverse correlation. It seems like a bearish flag is forming here as well, which can make the price drop even further.
Possible technical scenarios:
On the daily chart of AUD/USD, the upper boundary of the sideways range is formed by 0.6994, a level marked with a green dotted line. Support is at 0.6869.
A breakout of this level and consolidation below it could send the pair south toward the target at 0.6669.
Fundamental drivers of volatility:
The United States Retail Sales for the month of January released at 1:30 pm GMT shall be the key volatility catalyst on Wednesday. The Core Retail Sales are expected to increase from -1.1% to 0.8% while Retail Sales may go up from -1.1% to 1.8%.
The dynamics of the Australian dollar in the pair may be amplified in response to the release of the Australian labor market report at 00:30 am GMT on Thursday. The employment figures are projected at 20.0 thousand against -14.6 thousand in the previous period. The unemployment rate will remain at 3.5%.
On Thursday at 1:30 pm GMT, the U.S. currency may be sensitive to the U.S. stats, which shall include the United States Building Permits, Initial Jobless Claims, and the Philly Fed Manufacturing Activity Index.
The Producer Price Index (PPI), one of the leading indicators of inflation, will be among the critical figures these days. PPI MoM is expected to increase from -0.5% to 0.4% in January.
Intraday technical picture:
On the 4H chart of the AUD/USD pair, we can see a small movement range towards the lower boundary of the 0.6869 - 0.6994 sideways trend. From that area, either a reversal upwards or a breakout with a subsequent drop may occur.
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