The EUR/USD pair has entered a consolidation phase after failing to sustain a position above 1.1800. Market participants are adopting a wait-and-see approach ahead of key data releases and news regarding U.S.-Iran negotiations.
Possible technical scenarios:
The daily chart demonstrates that EUR/USD continues to test the 1.1788 resistance level; however, its breakout remains false for now. If the price consolidates above this level, the next upside target is 1.1898. If this scenario doesn’t play out, it could trigger a pullback toward the dotted support at 1.1682.
Fundamental drivers of volatility:
The overall sentiment for the pair remains moderately positive, yet momentum is beginning to fade. Primary pressure stems from cautious demand for the U.S. dollar amid ongoing uncertainty surrounding U.S.-Iran talks. While there are signals of potential progress, the lack of concrete agreements is sustaining safe-haven demand for the greenback, limiting EUR/USD gains and prompting local corrections.
Expectations for the Eurozone economy are also weighing on the Euro. Energy prices remain a negative factor, as high oil costs worsen trade conditions and dampen business activity. Germany’s ZEW Economic Sentiment index came in at -17.2, significantly lower than the -6.7 forecast, indicating a marked deterioration in business and investor sentiment within the region's largest economy region.
In the short term, the market will remain sensitive to Iran-related headlines. Confirmation of diplomatic progress could weaken the dollar and return the pair to an upward trajectory.
Intraday technical picture:
As evidenced by the H4 chart, uncertainty persists regarding the price position around 1.1788. A local reversal following the false breakout creates the potential for a move toward the dotted support at 1.1682.
GBP/USD has entered a moderate correction following a strong recovery from April lows. Despite the lingering U.S.-Iran tensions, the pound remains resilient due to moderate dollar dynamics and expectations regarding the Bank of England (BoE).
Possible technical scenarios:
As we can see in the daily chart, GBP/USD is trading in the middle of the 1.3436–1.3630 range. Following this temporary correction, there is still sufficient room for an upward move toward the 1.3630 level. That being said, traders should keep in mind that a price move in the middle of a range can shift toward either boundary.
Fundamental drivers of volatility:
UK labor market data has emerged as the key domestic driver for the pound. Wage growth slowed only slightly to 3.6% against expectations of 3.5%, which the market interprets as persistent inflationary pressure. For traders, this is significant as the BoE uses this metric as a primary gauge for service sector inflation. Stronger-than-expected wage data support expectations that the regulator will maintain a hawkish stance.
While unemployment figures appeared positive at first glance—dropping unexpectedly to 4.9% from 5.2%—the decline was largely driven by an increase in economically inactive individuals, particularly students, rather than robust job growth.
The British currency also remains sensitive to oil price dynamics and inflation expectations. Rising energy costs increase the risk of an accelerated CPI in the UK, which is highly vulnerable to energy import costs. This keeps expectations of a tighter BoE policy alive and supports the Pound, especially as the market prices in higher-for-longer interest rates.
Key drivers for the pair this week include UK inflation data, PMI reports, and U.S. retail sales. The combination of steady wage growth, a potentially strong CPI, and a soft dollar provides fundamental support for GBP/USD, though geopolitical headlines from the U.S.-Iran talks remain the primary source of volatility.
Intraday technical picture:
Locally, the H4 chart shows the pair trading in the center of the 1.3436–1.3630 range, leaving the door open for a move toward either edge of the sideways trend.
The USD/JPY pair has stabilized near the 159.00 level. The market has temporarily lost directional momentum, forming a short-term range as fundamental factors remain balanced.
Possible technical scenarios:
After retreating from the psychological resistance at 160.00, USD/JPY still has room for a downward move toward the 157.90 support level.
Fundamental drivers of volatility:
The U.S. dollar is seeing a drop in upward momentum. Much of the geopolitical premium is already priced in, and Fed rate expectations remain stable with no signs of further tightening. This limits the pair's upside potential.
The yen remains under pressure due to the Bank of Japan’s (BoJ) dovish stance. Revised expectations for the timing of policy tightening reduce the likelihood of near-term rate hikes, keeping the yield differential in favor of the dollar. Additionally, Japan's heavy reliance on energy imports leaves the currency vulnerable to external shocks.
Currency intervention risks act as a major headwind for USD/JPY. As the pair nears 160.00, expectations of action from Japanese authorities intensify, capping buying interest at higher levels and defining the upper boundary of the current range.
Consequently, the pair is trading in a state of equilibrium: support from the interest rate differential and yen weakness is offset by dollar limitations and intervention fears.
Intraday technical picture:
The H4 chart reveals a local price correction within a descending channel. Without strong fundamental catalysts, another reversal from the 159.00 area is likely, potentially leading to a decline toward 157.90 support.
The USD/CAD pair is trending lower as the Canadian dollar strengthens amid subdued U.S. dollar performance.
Possible technical scenarios:
Judging by the look of things on the daily chart, USD/CAD has reached the midpoint of the 1.3503–1.3744 range. A local correction may occur from the intermediate dotted level at 1.3642. That being said, if current fundamental conditions persist, the pair has enough room to move down toward the 1.3503 support.
Fundamental drivers of volatility:
USD/CAD is trading with a downward slope as fundamentals shift in favor of the loonie, largely driven by the oil market. High oil prices resulting from Middle East tensions are boosting the Canadian dollar, as expensive oil improves Canada’s trade conditions while supporting foreign currency inflows.
Meanwhile, signals of renewed U.S.-Iran negotiations are dampening demand for the dollar as a safe-haven asset. This limits support for the greenback and intensifies downward pressure on the pair, particularly in the absence of strong U.S. domestic catalysts.
Regarding monetary policy, there is no clear momentum favoring the dollar. The market is not escalating expectations for Fed tightening, which is keeping yields from rising and reducing the USD's appeal against commodity currencies like the CAD.
In the short term, the pair will remain highly sensitive to oil price movements and diplomatic updates regarding the U.S. and Iran.
Intraday technical picture:
The H4 chart demonstrates an attempt at a local upward correction from the intermediate dotted level at 1.3642. Given the prevailing downtrend, this bounce is likely to be temporary, with the decline expected to resume toward the 1.3503 target.
Gold is consolidating as the market adopts a cautious stance, weighing the likelihood of a de-escalation in the U.S.-Iran conflict.
Possible technical scenarios:
Despite local consolidation, gold prices are cautiously moving from the 4635.63 support level toward the next target at 4939.80. That said, given the ambiguous news cycle and the price's position in the middle of the 4635.63–4939.80 range, a move toward either boundary of the sideways range cannot be ruled out.
Fundamental drivers of volatility:
The primary pressure on the precious metal comes from the U.S. dollar. A stronger dollar makes gold more expensive for holders of other currencies, curbing external demand. With no new growth catalysts, interest in gold is declining, especially following the recent rally.
Geopolitics are impacting prices through oil and inflation expectations. The prospect of negotiations and a possible truce is weighing on oil prices, which in turn lowers inflation risks. In this environment, the market is revising interest rate expectations toward a less aggressive path; while this generally supports gold, the effect is currently offset by dollar strength.
Uncertainty about future Fed actions serves as an additional factor. Rate expectations remain sensitive to inflation signals, and rising yields traditionally diminish the appeal of gold as a non-yielding asset. Any signals pointing toward a more hawkish policy will increase pressure on the metal.
Ultimately, gold is balancing between two forces: falling oil prices and potential de-escalation are limiting inflation expectations, while a strong dollar and rate uncertainty are curbing demand. Short-term dynamics will be dictated by negotiation headlines and the subsequent dollar reaction.
Intraday technical picture:
The H4 chart shows gold consolidating in the middle of the 4635.63–4939.80 range, from which a move toward either boundary is possible.
Brent crude prices are correcting after a sharp rally as the market partially prices in the possibility of U.S.-Iran negotiations and a potential easing of supply disruptions. That said, this decline appears to be a correction based on expectations rather than an actual improvement in the fundamental supply-demand balance.
Possible technical scenarios:
Judging by the unfolding scenario on the daily chart, Brent is trading in the middle of the 85.70–95.18 range. Given the conflicting news background, prices could fluctuate toward either boundary of this range.
Fundamental drivers of volatility:
Supply expectations are currently the primary driver for oil. The prospect of negotiations and a possible extension of the truce suggests the return of some Middle Eastern supply, which is pressuring prices. Nevertheless, physical constraints remain. Traffic through the Strait of Hormuz is still disrupted, and infrastructure blockades continue to keep the market in a deficit.
It is critical to note the divergence between market expectations and reality. While there is optimism regarding a diplomatic solution, current physical supply disruptions remain significant. This suggests that the corrective price drop is driven by a reassessment of future supply, while the immediate balance remains tight.
The geopolitical premium also remains a factor. Even with the hope of negotiations, the risk of escalation persists, limiting the depth of any price decline. Any sign of a breakdown in dialogue or renewed conflict will quickly reintroduce the risk of supply interruptions, particularly given the critical role of the Strait of Hormuz in global markets.
Intraday technical picture:
The H4 chart also evidences consolidation in the middle of the 85.70–95.18 range, confirming that the market is at a crossroads and could move toward either boundary.
Login in Personal Account
46