As we witness the weakening of the U.S. dollar against a basket of currencies, the EUR/USD pair has experienced a recovery this week. This was explained by the expectation of milder measures and the Fed’s rhetoric during this week's meeting amid the banking crisis.
Possible technical scenarios:
On the daily chart, EUR/USD has updated its March 15 highs and is on its way to resistance at 1.0808. Once it is reached, there may either be a downward reversal followed by a correction toward the support at 1.0663 marked with green dotted lines, or a breakout with a consolidation above. If the price confirms the horizontal line at 1.0808 as support, 1.0958 will become the next growth target.
Fundamental drivers of volatility:
The dynamics of the European single currency in the pair may intensify locally following the speech of the President of the European Central Bank Christine Lagarde which is expected on Wednesday at 8:45 am GMT.
However, the market players’ eyes will be primarily on the release of the Fed meeting results at 6:00 pm GMT. The basic interest rate is expected to increase from 4.75% to 5.0%.
The rhetoric of Fed Chairman Jerome Powell will also be one of the main focuses this week as we are looking forward to the FOMC press conference which will be held at 6:30 pm GMT.
Intraday technical picture:
On the 4H chart of the EUR/USD pair, we can see a very small movement range toward the resistance at 1.0808. We must wait for the price to find its position in terms of this boundary to be able to predict further price behavior.
The GBP/USD pair rise early this week has been explained by the overall weakness of the U.S. dollar. That said, the release of the Fed meeting results on Wednesday and the Bank of England’s decision regarding the interest rate may cause higher volatility and overall change in the technical picture.
Possible technical scenarios:
The growth of GBP/USD quotes was stopped by resistance at 1.2269 marked with dotted lines. In technical terms, a corrective pullback towards the support level at 1.2146 is likely. The pair will continue going up to 1.2410 if the quotes manage to break out the 1.2269 - 1.2323 area and consolidate above it.
Fundamental drivers of volatility:
The UK inflation figures for the month of February shall be released on Wednesday at 7:00 am GMT. The Consumer Price Index is expected to drop from 10.1% to 9.8%. The actual values being higher or lower than the forecasted figures may affect the volatility of the pound sterling.
The dynamics of the U.S. dollar will depend on the U.S. Federal Reserve meeting results to be announced at 6:00 pm GMT. The forecast suggests that the basic interest rate will be hiked from 4.75% to 5.0%.
The FOMC press conference will be held at 6:30 pm GMT. The rhetoric of the European Central Bank’s president may cause increased volatility in the market.
Intraday technical picture:
On the 4H chart of the GBP/USD pair, there is a local pullback downward from the resistance at 1.2269. Amid an eventful week with many critical news releases, it is difficult to predict further price behavior in the next two days. At the same time, 1.2146 and 1.2323 remain the boundaries of the range.
The local improvement in risk appetite amid the Credit Suisse rescue and the weakening U.S. dollar supported the AUD/USD pair. Its further behavior will depend on the market’s reaction to the Fed's decision announced on Wednesday evening.
Possible technical scenarios:
The AUD/USD pair has remained below the resistance at 0.6722 marked with green dotted lines since last week. From this area, the price may either pull back toward the nearest support at 0.6631 marked with dotted lines or break out 0.6722 and consolidate above it. This will enable the quotes to move toward the resistance at 0.6798.
Fundamental drivers of volatility:
This week’s dynamics of the pair depend on changes in risk appetite and the volatility of the U.S. dollar.
The prominent event of the week will be the release of the Fed meeting results on Wednesday at 6:00 pm GMT. According to the forecast, the basic interest rate will be hiked from 4.75% to 5.0%.
In addition, the FOMC press conference will be held at 6:30 pm GMT.
Intraday technical picture:
On the 4H chart of AUD/USD, we can see that the pair bounced down off the resistance at 0.6722 marked with green dotted lines, finding local support at 0.6669. Further price decline or upward exit from this range will depend on the U.S. dollar’s volatility.
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