After this week's inflation figures confirmed market expectations regarding the Fed’s interest rate hike in May, the U.S. dollar has remained under pressure. It stands to mention that the recovery of the EUR/USD pair continues amid these developments.
Possible technical scenarios:
The daily chart shows that the EUR/USD pair hit new highs since February 2, continuing to strengthen within the range between 1.0958 and 1.1121. The price still has a movement range toward its resistance. The breakout and consolidation above 1.1121 will pave the way to the next target at 1.1221.
Fundamental drivers of volatility:
The end of the trading week is marked by the March U.S. Retail Sales figures released at 12:30 pm GMT. This report will complement this week’s stats which form the market player’s expectations regarding the future steps of the Fed as far as the monetary policy goes.
Retail sales month-over-month are expected to drop from -0.1% to -0.3%. At the same time, we are expecting a 0.4% decline in retail sales volumes as compared to the previous period.
Intraday technical picture:
As we can see in the 4H chart of the EUR/USD pair, the price has consolidated above 1.1032, confirming the technical scenario of the price increase toward the nearest resistance at 1.1121. That being said, a possible change in U.S. dollar volatility in response to the news may affect the technical benchmarks.
The weakening of the U.S. dollar is good for the dynamics of the pound sterling. On Friday, the GBP/USD pair hit new highs since last week and is now headed toward the area of 1.26 values.
Possible technical scenarios:
The price of GBP/USD in the daily chart hit new highs since April. Consolidation above this level creates prerequisites for reaching the technical and psychological resistance at 1.2600. The price may overcome this boundary provided that the U.S. dollar continues to decline.
Fundamental drivers of volatility:
Friday’s major event will be the release of the U.S. Retail Sales figures for the month of March at 12:30 pm GMT. This may have an impact on the behavior of the U.S. currency in the pair if the values turn out to be higher or lower than expected.
The forecast suggests that the Core Retail Sales Index month-over-month will drop from -0.1% to -0.3%. We are also expecting a 0.4% decline in retail sales volumes as compared to the previous period.
Intraday technical picture:
The 4H chart of the GBP/USD pair shows that the price confirmed the dotted line at 1.2505 as support. If the way the U.S. dollar reacts to the retail sales report does not affect the technical picture, the price may continue to climb to the resistance at 1.2601.
The USD/JPY pair remains under pressure owing to the general decline in the U.S. currency. If the dollar index hits the new lows since February 2, the price may continue to weaken.
Possible technical scenarios:
USD/JPY quotes in the daily chart remain in the middle of the sideways range between 131.25 and 133.59, where the pair still has sufficient movement range toward the lower boundary.
Fundamental drivers of volatility:
The way the U.S. dollar reacts to today's release of the March U.S. retail sales figures at 12:30 GMT may change the technical benchmarks or increase the volatility of the pair.
The Core Retail Sales Index is expected to show a 0.3% month-over-month decline as compared to a 0.1% drop previously. At the same time, the retail sales volumes are projected to decline by 0.4%, as in the previous period.
Intraday technical picture:
Judging by the 4H chart of the USD/JPY pair, we can see that the pair is currently in a downtrend. Having pulled back from its resistance, the price has a movement range to the channel’s support at the intersection with a horizontal level of 131.25. That being said, the local support level at 132.21 may prevent the price from growing weaker locally.
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