After the European Central Bank hiked interest rates and declared its readiness for future tightening of monetary policy, the EUR/USD pair gained ground the previous week.
Possible technical scenarios:
The EUR/USD pair's upward momentum was halted by 1.0958, and the price began to consolidate. The pair might drop from this boundary toward support at 1.0808. If the price is able to overcome the resistance at 1.0958, the next upward target will be 1.1075 marked with dotted lines.
Fundamental drivers of volatility:
There is little to no chance of substantial volatility catalysts coming from the euro area in the first half of the week. At the same time, comments made by the Chair of the Federal Reserve Jerome Powell could affect the dynamics of the US dollar in the pair. He'll be speaking to Congress on both Wednesday and Thursday at the same time (2:00 PM GMT).
In the meantime, the United States will release its Initial Jobless Claims data at 12:30 PM GMT on Thursday. The previous forecast was for 262k, so a drop to 260k is to be expected.
At 2:00 PM GMT, the report on existing home sales in the United States for the month of May will be released. The current estimate is 4.25 million against 4.28 previously.
Intraday technical picture:
As we can see on the 4H chart of the EUR/USD pair, the price is still slowly falling, with pullbacks from the resistance at 1.0958. It may return to the existing resistance and put its strength to the test until the lows of the Monday trading session are updated.
In anticipation of the UK inflation report release and the rate hike by the Bank of England on Thursday, the GBP/USD has been trading under pressure so far this week.
Possible technical scenarios:
The daily chart shows the GBP/USD pair is trading the resistance at 1.2785, where it is currently testing the waters and figuring out its position in terms of this level. If the price is able to consolidate below it, it will be able to return back to support at 1.2601 level, while a successful consolidation above it will pave the way toward the 1.2957 target.
Fundamental drivers of volatility:
This week, the two events that are most likely to cause significant fluctuations in the value of the pound sterlig are the release of the inflation data on Wednesday at 6:00 AM GMT and the results of the Bank of England meeting on Thursday at 11:00 AM GMT.
The UK Consumer Price Index year-over-year is anticipated to come in at 8.5% for the month of May, compared to 8.7% for the preceding period.
Fed Chairman Jerome Powell is scheduled to speak before Congress on both Wednesday and Thursday at the same time (at 2:00 PM GMT). The content of his remarks has the potential to affect the movement of the dollar in the pair.
Intraday technical picture:
A new candlestick opened below 1.2785 on the 4H chart of the GBP/USD, suggesting more decline. However, the technical benchmarks could shift if we see a significant increase in the volatility of the British pound as a result of the news.
The Australian currency surged as a result of an unexpected increase in interest rates by the Reserve Bank of Australia, which contributed to the rise in the AUD/USD last week.
Possible technical scenarios:
In this context, AUD/USD quotes broke out the resistance of the five-month trading range between 0.6567 and 0.6798. However, the increase was halted by 0.6869. At the time of this review's writing, the price has retraced to 0.6798, and is currently testing it. If the top-down breakout turns out to be true, we may witness the price going back to the said corridor and continue falling.
Fundamental drivers of volatility:
The minutes of the Reserve Bank of Australia's meeting, released on Tuesday, showed that, contrary to market predictions, the decision to hike the interest rate was balanced and necessary to continue the fight against inflation. Australia is no longer likely to be a source of volatility on this economic catalyst this week.
It's possible that Fed Chair Jerome Powell's comments this week will affect the dollar's performance against the pair. His is scheduled to speak before the US Congress at 2:00 PM GMT on both Wednesday and Thursday.
Intraday technical picture:
As we can see on the 4H chart of the AUD/USD pair, the pair may grow weaker toward the nearest support at 0.6669 if the price is able to consolidate below 0.6798.
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