The EUR/USD pair has exhibited sideways movement throughout the week, with minimal fluctuations in the first half and key volatility catalysts anticipated on Friday.
Possible technical scenarios:
The EUR/USD pair remains within the sideways range between 1.0801 and 1.0888. On Friday, it retreated from its support level and reached the midpoint. Given the expected increase in volatility from upcoming news, both a rise towards resistance with a weakening dollar and a pullback to support are possible outcomes.
Fundamental drivers of volatility:
The US dollar's slight decline towards the end of the week has supported the EUR/USD, and its performance will be crucial for the pair's dynamics by the week's end.
The downward revision of U.S. first-quarter GDP data has heightened expectations that the Fed might cut interest rates this year.
According to the CME Group's FedWatch tool, the probability of a rate cut in September has risen to 55%, up from 51% on Thursday.
The key event today will be the release of the Fed's preferred inflation indicator, the Personal Consumption Expenditures (PCE) price index at 12:30 p.m. GMT, which may provide insights into the Fed's future actions.
Intraday technical picture:
As evidenced by the 4H chart, the EUR/USD pair is constrained by local resistance at 1.0843 marked the dotted line. If it is impossible to overcome it, the pair may revert to support at 1.0801. Alternatively, a rise to 1.0888 is also possible.
The GBP/USD pair declined towards the end of the week due to the strengthening of the US dollar. However, with significant US macroeconomic statistics expected today, volatility may increase during the American session.
Potential technical scenarios:
We can see on the daily chart that the GBP/USD pair is approaching the support range between 1.2656 and 1.2792. The anticipated rise in volatility could lead to price movement towards either boundary of this range.
Fundamental drivers of volatility:
Today, the primary catalyst for volatility in the GBP/USD pair will be the release of US personal consumption expenditures data for April, scheduled for 12:30 p.m. GMT.
This key inflation indicator is closely monitored by the Fed when determining the timing of rate cuts. The core personal consumption expenditures price index is expected to remain steady at 2.8% annually and 0.3% monthly.
The overall personal consumption expenditures price index is anticipated to stay at 2.7% year-over-year in April, with individual expenditures projected to rise by 0.3%, compared to a 0.8% increase the previous month.
Intraday technical analysis:
Judging by the unfolding situation on the 4H chart of the GBP/USD, after retreating from the ascending channel resistance, the pair formed a head and shoulders reversal pattern with a neckline at 1.2685. A breakout of this neckline could lead to a further decline in GBP/USD to the 1.2608 level.
The USD/JPY pair is consolidating this week, with low volatility attributed to a relatively calm news environment and concerns about potential currency interventions.
Possible technical scenarios:
On the daily chart, the USD/JPY price is putting the strength of resistance of the sideways range between 154.83 and 157.10 to the test. If the price breaks out and consolidates above 157.10, a rise to the psychological level of 160 yen per dollar is possible. Alternatively, a pullback to support at 154.83 could occur.
Fundamental drivers of volatility:
The USD/JPY pair is consolidating within a narrow range, influenced by the rising US dollar and concerns over possible intervention from Japanese authorities.
Frequent calls for the Bank of Japan to raise rates have not significantly weakened the yen, as the high Fed rates make the yen attractive for carry trade strategies, adding pressure to the Japanese currency.
Intraday technical picture:
As evidenced by the 4H chart of the USD/JPY pair, the pair shows potential for further growth after exiting a symmetrical triangle in an upward direction. At the moment, a support level at 156.47 has formed, suggesting possible growth towards the highs of May 29, and potentially to the psychological level of 160 yen per dollar if these highs are surpassed.
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