The EUR/USD pair is correcting below 1.1800 after testing 1.1820, as markets remain cautious ahead of preliminary PMIs and Jerome Powell’s speech.
Possible technical scenarios:
As we can see on the daily chart, EUR/USD is recovering after finding support at 1.1745, marked with dotted lines. A consolidation above 1.1788 would open the path toward resistance at 1.1898, and potentially further to 1.1961.
Fundamental drivers of volatility:
The US dollar remains under pressure amid expectations of additional Fed rate cuts, though mixed statements from Fed officials are limiting downside momentum.
In the eurozone, data were mixed: Germany’s manufacturing sector slipped into contraction (PMI 48.5), while services showed strong growth (52.5), lifting the composite index to a 16-month high. This signals modest economic recovery, but risks in manufacturing constrain further euro strength.
Investors are closely watching the U.S. PMI releases and Powell’s upcoming speech. If data confirms a slowdown and the Fed signals continued accommodative policy, the dollar may remain weak. Conversely, stronger U.S. data or more hawkish Fed comments could boost the dollar, keeping EUR/USD near 1.1800.
Intraday technical picture:
As evidenced by the 4H chart, a consolidation above 1.1788 would open the way for a rally toward 1.1898.
The pound sterling pared some of its losses this morning following disappointing PMI data and rising fiscal risks in the United Kingdom. That being said, pressure remains amid expectations of a looser Bank of England policy.
Possible technical scenarios:
Judging by the unfolding scenario on the daily chart, GBP/USD is declining within the 1.3380-1.3630 range, remaining roughly halfway to its dotted support line.
Fundamental drivers of volatility:
The pound weakened sharply against the dollar after weak preliminary UK PMI data for September. The composite index fell to 51.0 from 53.5, reflecting a slowdown in business activity. The manufacturing sector remains particularly weak (46.2), while services also softened (51.9), heightening concerns about the sustainability of the economic recovery.
Domestic factors add pressure: the budget deficit has risen to £18 billion, a five-year high, and government bond yields are climbing. These trends limit fiscal flexibility and increase expectations of potential new tax measures in the autumn budget. Weak growth and declining business expectations also support market pricing in further Bank of England rate cuts, despite its cautious tone.
The US dollar is subdued ahead of Jerome Powell's speech, following last week’s 25-basis-point Fed rate cut and signals of additional easing this year. If Powell confirms a loose policy stance, dollar pressure may ease. For now, weak UK data leaves the pound exposed to further downside.
Intraday technical picture:
On the 4H chart, lower highs confirm the likelihood of a continued decline toward 1.3436 and 1.3380, marked with a dotted line.
The yen remains in a narrow range against the dollar, balancing domestic political uncertainty and expectations of an imminent rate hike by the Bank of Japan. Market participants are maintaining a wait-and-see stance until Powell's speech and key inflation data are released.
Possible technical scenarios:
Given the look of things on the daily chart, USD/JPY continues to trade within a three-month range of 145.91-148.63. The pair has reversed downward within this range while maintaining a sufficient movement range to support. If it is reached, an upward reversal and continuation of sideways movement within the range are possible.
Fundamental drivers of volatility:
USD/JPY remains range-bound as conflicting factors keep the market undecided. Political uncertainty in Japan and rising global risk appetite put pressure on the yen as a safe-haven asset. Meanwhile, monetary policy expectations diverge: the market anticipates a rate hike by the Bank of Japan as early as October, while the Federal Reserve is expected to continue easing.
Geopolitical tensions in the Middle East and Eastern Europe maintain potential demand for safe-haven assets, which could support the yen if risks escalate. However, rising stock indices and positive risk sentiment are currently limiting defensive demand.
Investors are closely watching Jerome Powell's speech, Tokyo inflation data, and the US PCE index. These releases are likely to determine the near-term direction of USD/JPY, keeping the pair in a sideways range until new drivers appear.
Intraday technical picture:
According to the 4H chart, USD/JPY still has enough movement range to reach support at 145.91. If this turns out to be the case, the price could reverse upward.
USD/CAD remains near local highs, supported by softer Fed policy expectations while reacting to oil price movements.
Possible technical scenarios:
On the daily chart, USD/CAD continues to trade within the 1.3744-1.3861 range, forming a descending triangle. The price is approaching resistance at 1.3861, from where it may reverse downward and remain within the pattern for some time before a breakout occurs.
Fundamental drivers of volatility:
The Canadian dollar is under pressure due to risks of a slowdown in the Canadian economy, while the Bank of Canada maintains a cautious stance after its September rate cut.
Oil, as the key driver of the CAD, is fluctuating amid geopolitical risks and global demand expectations. Volatility in the commodity market directly affects the Canadian dollar, increasing the instability of USD/CAD.
Investors are awaiting signals from Jerome Powell and U.S. PCE inflation data, which could set the tone for the US dollar. Until these key macroeconomic releases, USD/CAD is likely to remain range-bound with a moderate dollar bias.
Intraday technical picture:
Given the recent developments on the 4H chart, USD/CAD shows some technical upside potential within the 1.3744-1.3861 range, after which a downward reversal is likely.
Gold reached a new record high of $3,790 per ounce amid expectations of further Fed rate cuts and Jerome Powell's upcoming speech.
Possible technical scenarios:
On the daily chart, the price has risen above 3662.96 and is halfway to the next target of 3873.23. If this level is overcome, gold could reach the psychological milestone of $4,000 per ounce.
Fundamental drivers of volatility:
Pressure on the US dollar and expectations of a more accommodative monetary policy are creating a favorable environment for gold, which trades inversely to the dollar. This is driving demand from institutional investors and retail buyers in India.
Investors are pricing in two possible 0.25% Fed rate cuts in October and December, supporting gold's upward momentum. Additional support comes from growing demand for ETFs, particularly the SPDR Gold Trust, whose holdings are at their highest in over three years, as well as renewed interest from China and India.
In the short term, gold's price movements will depend on the stability of buying demand, including seasonal factors in India, and market reactions to Fed statements and US PCE inflation data.
Intraday technical picture:
The 4H chart shows that XAU/USD has room to move toward the resistance of the 3662.96-3873.23 range, though the rise may be interrupted by minor pullbacks.
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