The EUR/USD pair continues to find support from the weakening US dollar.
Possible technical scenarios:
The EUR/USD pair is working to consolidate above the 1.1138 level. If the level holds, the next growth target could be the 1.1247 horizontal resistance. Conversely, a pullback to the 1.1064 support level is also a possibility.
Fundamental drivers of volatility:
The dollar held steady on Wednesday, remaining near its yearly low, which supports the EUR/USD pair. This week, the focus is on economic data that might influence the US Federal Reserve's September monetary policy decision. The Fed is expected to start lowering interest rates next month, following recent dovish comments of the Fed Chair Jerome Powell. The key debate now is whether the rate cut will be 25 or 50 basis points.
According to CME Group’s FedWatch tool, the probability of a more substantial cut has increased to 37%, up from 29% last week. Market expectations are for a rate cut of more than 100 basis points by the end of the year.
Also upcoming are preliminary US GDP figures for Q2 and the core personal consumption expenditure (PCE) index, which is the Fed’s primary inflation gauge. Eurozone inflation data for August is also anticipated, which could provide clues about the ECB’s future monetary policy and impact euro volatility in the pair.
Intraday technical picture:
Judging by the unfolding situation on the 4H EUR/USD chart, it is unclear whether the price will hold above or below the 1.1138 level. The pair is at a crossroads, with potential movements either up to 1.1247 or down to the 1.1064 support level.
GBP/USD remains close to multi-month highs due to the weakness in the US dollar.
Potential technical scenarios:
The daily chart shows that the GBP/USD pair has climbed above 1.3141, with the next growth target being the resistance at 1.3359.
Fundamental drivers of volatility:
The weakening US dollar is the primary driver behind the GBP/USD pair's gains. Additionally, the pound has received support from the divergence between Jerome Powell's statements on Friday, which heightened expectations for a significant US interest rate cut next month, and the more cautious remarks from the Governor of the Bank of England Andrew Bailey.
This week, the pair's movements will also be influenced by key US GDP data for the second quarter and the Core Personal Consumption Expenditure (PCE) index, which serves as the Fed’s main inflation gauge.
Intraday technical analysis:
On the 4H chart, the GBP/USD pair is attempting to hold above the local support level of 1.3220, which could pave the way to 1.3359. Should the 1.3220 level fail to hold, the price might retreat to the support level at 1.3141.
The Japanese yen by Wednesday fell from a three-week high recorded on Monday, while the US dollar is trading in anticipation of data on GDP and personal consumption expenditure in the US.
Possible technical scenarios:
On the daily chart, the USD/JPY price has moved into a sideways range between 143.39 and 145.21, to the upper limit of which there is still some movement. In case of an exit from this sideways range downwards, the next target for the decline will be support at 140.69.
Fundamental drivers of volatility:
In early August, the AUD/USD pair faced significant fluctuations due to concerns about a possible recession in the US and hawkish signals from the Bank of Japan, which put pressure on the dollar. The American currency is also declining due to expectations of a sharp start to easing the Fed's monetary policy.
According to the FedWatch tool from CME Group, the probability of a more significant reduction is now 37%, compared to 29% a week earlier. Markets expect rates to be cut by more than 100 basis points by the end of the year.
In turn, this week, Deputy Governor of the Bank of Japan Ryozo Himino confirmed the central bank's readiness to continue raising interest rates if inflation remains at current levels.
Intraday technical picture:
As we can see on the 4H chart of USD/JPY, a series of successively lower highs in the range between 143.39 and 145.21 suggests that the pair may continue to fall and break out the level of 143.39.
The AUD/USD pair is holding near monthly highs amid a drop in the US dollar and more aggressive rhetoric from the RBA.
Possible technical scenarios:
On the daily chart of AUD/USD, the price is attempting to consolidate above the 0.6777 level. If successful, the next target could be the resistance at 0.6893. However, if the breakout above 0.6777 turns out to be false, the pair might retreat to the support level of 0.6708.
Fundamental drivers of volatility:
The Australian dollar reached an eight-month high on Wednesday following data that revealed domestic inflation had eased to a four-month low in July. Despite this, progress in controlling price growth was still below expectations.
The pair also benefited from a weaker US dollar. The American currency is expected to react to upcoming preliminary data on US GDP for the second quarter and the Core Personal Consumption Expenditures (PCE) index, which is the Fed’s main inflation gauge. Market expectations are leaning towards a rate cut by the Fed in September, with uncertainty remaining over whether it will be by 25 or 50 basis points.
Intraday technical picture:
On the four-hour chart of AUD/USD, the pair needs to overcome the dotted resistance at 0.6798 and stay above it to pave the way for further growth toward the target at 0.6893.
The price of black gold remains under pressure on Wednesday as market participants worry about potential demand issues.
Possible technical scenarios:
On the daily chart for Brent, the price is nearing the support level of the sideways range between 77.25 and 79.70. A breakout of the 77.25 level could lead prices down to the next support at 75.18.
Fundamental drivers of volatility:
Oil prices declined on Wednesday due to ongoing concerns about demand in China and fears of a more significant economic slowdown. Despite this, the drop was moderated by potential disruptions in oil supplies from the Middle East and Libya.
While last week’s decrease in U.S. oil and fuel inventories offered some support, the main risks to the oil market include possible production losses in Libya and escalating conflicts involving Israeli and Gaza tensions, potentially drawing in Iranian-backed militants in Lebanon.
Intraday technical picture:
On the 4H chart of Brent, the price still has some room to travel to the support of the range between 77.25 and 79.70. If the 77.25 level holds, a rebound within this corridor is possible.
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