Possible technical scenarios:
On the daily chart, the EUR/USD pair managed to hold above the local support at 1.0661 which is marked with a green dotted line. That being said, the fact that the price is pressing to it and putting its strength to the test on Friday does not exclude the possibility of repeated attempts to break it out followed by a drop to support at 1.0592.
Fundamental drivers of volatility:
This coming Thursday, there may be a local reaction of the euro to the release of the inflation report in the euro area along with the German inflation stats on Wednesday.
The FOMC minutes that are expected on Wednesday at 7:00 pm GMT will have critical importance for the U.S. dollar. Market players will scrutinize in search of hints regarding the pace of further interest rate hikes.
On Friday, the U.S. Personal Consumption Expenditures may also affect the volatility of the U.S. currency in the pair since this is one of the key inflation indicators factored in by the Fed.
Intraday technical picture:
On the 4H chart, the breakout of the support level at 1.0661 by the EUR/USD pair will open the way for the price to Friday's lows. If they are updated, the price will be able to move toward the support at 1.0592. However, keep in mind that this technical scenario may change if there is a volatility spike following the news.
The last week’s increase in the U.S. dollar kept the GBP/USD pair under pressure. Currently, the direction of the U.S. currency is questionable, as investors are waiting for the latest figures in order to be able to make any type of conclusions about whether or not the Fed rhetoric will remain hawkish.
Possible technical scenarios:
That being said, the support level at 1.1934 held ground in terms of the GBP/USD pair. The pair may move to any of the boundaries from the middle of the 1.1934 - 1.2146 sideways range. If the support at 1.1934 is broken out, 1.1744 will serve as the next target to the south.
Fundamental drivers of volatility:
On Tuesday, we are expecting the release of the UK PMI figures. Otherwise, the dynamic of the pair will depend on the volatility of the U.S. currency.
The FOMC minutes to be released on Wednesday at 7:00 pm GMT will have critical importance for the U.S. dollar. The bullet points from the Fed’s February meeting will be released on Wednesday at 7:00 pm GMT, possibly giving more clarity on how hawkish the central bank's stance will be. Higher-than-expected personal consumption expenditures will boost the U.S. currency.
On the 4H of the GBP/USD chart, we see that the pair is cautiously declining following the consolidation in the middle of the 1.1934 - 1.2146 range. This creates prerequisites for a return to its support.
Intraday technical picture:
On the 4H chart of the GBP/USD pair, the weakening may be locally stopped near the lows of February 13. If they are updated, the pair may continue moving toward the target at 1.1934.
The AUD/USD pair is trading primarily under the influence of the U.S. currency’s behavior. After the U.S. dollar reversed the uptrend, it is extremely likely that the quotes will continue to drop.
Possible technical scenarios:
On the daily chart of AUD/USD, we see that the pair has reached the support level at 0.6869. If it is broken out and the price consolidates lower, 0.6798 will be the next target for the decline. Otherwise, recovery to the resistance at 0.6967 is likely.
Fundamental drivers of volatility:
The Reserve Bank of Australia meeting minutes released on Tuesday revealed that the central bank’s rhetoric has changed to hawkish, and there is no question about a possible pause in the matter concerning interest rate hikes. The authority is currently monitoring the wage hike dynamics to figure out its next steps regarding policy tightening.
The FOMC minutes on Wednesday and the U.S. Personal Consumption Expenditures on Friday will be the two key events affecting the behavior of the U.S. dollar this week.
Intraday technical picture:
On the 4H chart, the AUD/USD pair stopped at the support of 0.6869. From a technical perspective, two scenarios are possible. The first one is a level breakout with consolidation below it which will open the way for quotes to the next support at 0.6798. The second scenario is a reversal upwards from support, which will bring the pair back to either the highs of Monday’s trading session or the current resistance at 0.6967 provided that the highs are overcome.
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