The US dollar is trading under pressure this week due to expectations of the end of the Fed's tightening cycle and a potential shift to rate cuts next year, leading to the recovery of the EUR/USD pair.
Possible technical scenarios:
The daily chart demonstrates EUR/USD's growth halted at 1.0958, with the pair now trading within the range between 1.0808 and 1.0958 range, indicating a possible move towards either boundary.
Fundamental drivers of volatility:
This week, market volatility has been low, especially with the Thanksgiving long weekend in the US.
Looking ahead, the news landscape remains relatively calm, but the dollar's dynamics could be influenced by the Conference Board's Consumer Confidence Index and US GDP data in the following week.
Despite this, the pair's movement might stay subdued, potentially maintaining its existing technical benchmarks.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart, EUR/USD has pulled back from the resistance of the 1.0808 - 1.0958 corridor, having enough room towards the support. That being said, if the US dollar's decline persists, the pair may revisit the 1.0958 level and put its strength to the test.
Amidst a declining US dollar, the GBP/USD pair persists in gaining strength. With market attention shifting towards the potential for a Fed rate cut in 2024, there's a likelihood that the US currency will continue to face pressure, creating room for further strengthening of the pound.
Possible technical scenarios:
According to the daily chart, the pair currently sits at the upper end of the 1.2410 - 1.2601 sideways range. The pair still has some room for movement towards its resistance. From a local perspective, the price may travel to either side of this corridor’s boundaries.
Fundamental drivers of volatility:
This week, the primary factor influencing pair volatility is the dynamics of the US dollar. With indications from FOMC minutes suggesting the end of the tightening cycle, the dollar's pressure is expected to persist until the end of the long Thanksgiving weekend.
Looking ahead, reports on consumer confidence and US GDP may impact US currency volatility next week, but unless there is a significant deviation from forecasts, market players are likely to continue anticipating a rate cut.
Intraday technical picture:
As evidenced by the 4H chart of the GBP/USD pair, a pattern of successively increasing lows within the range between 1.2410 and 1.2601 range creates technical preconditions prompting further growth towards the resistance.
The USD/JPY pair faced ongoing pressure as the US dollar declined. Despite this, the Japanese yen's weakness provided an opportunity for the quotes to regain some lost ground.
Possible technical scenarios:
The daily chart for USD/JPY indicates a drop in quotes to the support at 146.93, followed by an upward turn towards the 150 yen per dollar resistance. The pair's future dynamics hinge on whether the price can consolidate above this psychological level. A successful consolidation may lead to a continuation of the rise toward the resistance at 151.93, otherwise, the pair could reverse downward in a sideways range between 146.93 and 150.21.
Fundamental drivers of volatility:
Despite reports indicating that Japanese officials are suggesting the Bank of Japan is considering a shift away from negative interest rates next year, this has not yet translated into support for the yen.
The pair's volatility and direction are primarily affected by the US dollar, which, in turn, is weakening due to expectations of the Fed's anticipated move to ease monetary policy in the coming year.
Intraday technical picture:
As we can see on the 4H chart, USD/JPY is currently trading near the top of the 146.93-150.21 corridor, maintaining a local margin towards its resistance.
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