The EUR/USD pair remains under pressure as traders await key US macroeconomic data, which will likely shape market sentiment by week’s end.
Possible technical scenarios:
As we can see on the daily EUR/USD chart, the pair is maintaining levels above 1.0478. There is a potential formation of an inverse head and shoulders pattern, with the neckline at 1.0614 marked with dotted lines. A breakout and consolidation above this level could open the path for price growth toward the 1.0749 target.
Fundamental drivers of volatility:
The EUR/USD pair faces downward pressure, staying above the critical support level of 1.0500 amid rising political instability in France. A no-confidence vote regarding Prime Minister Michel Barnier raises uncertainty, as a potential government collapse in the eurozone’s second-largest economy could heighten risks for the euro. At the same time, the ECB's signals of potential rate cuts are weighing further on the single currency.
Attention is firmly on US economic data releases this week. November's employment growth is projected to slow, which could influence expectations for Federal Reserve actions. Friday's Nonfarm Payrolls report, coupled with signs of declining business activity in the services sector, may amplify speculation regarding monetary easing.
In the medium term, the key events shaping EUR/USD’s direction will be the Federal Reserve’s rate decision on December 18 and the ECB meeting on December 12. These outcomes will likely determine the pair’s trajectory moving forward.
Intraday technical picture:
Judging by the unfolding situation on the 4H EUR/USD chart, the pair remains in a consolidation phase above the support range between 1.0478 and 1.0614. A rebound toward the upper resistance levels is possible. That being said, Friday's US labor market data could trigger a breakout, leading the price to exit this sideways trading range.
The pound sterling is declining against the backdrop of rising uncertainty surrounding the Bank of England's future actions and anticipation of the upcoming US employment report.
Possible technical scenarios:
According to the daily GBP/USD chart, the pair has risen above 1.2600. The quotes have limited room to move toward the dotted resistance at 1.2723. Should they consolidate above this level, further growth toward the target of 1.2846 could occur.
Fundamental drivers of volatility:
The GBP/USD pair is facing challenges following Bank of England Governor Andrew Bailey’s remarks about the possibility of four interest rate cuts in 2025. While Bailey reiterated the need to continue combating inflation, which remains persistent in the services sector, market participants expect the current rate of 4.75% to be maintained at the next meeting on December 19.
Meanwhile, the US dollar is gaining strength ahead of critical US Nonfarm Payrolls data and Federal Reserve Chair Jerome Powell’s speech. A potential decline in employment figures and slowing business activity in the services sector may bolster arguments for further Fed policy easing. However, with a high likelihood of a 25-basis point rate cut, the dollar remains supported.
The release of the Nonfarm Payrolls report later in the week could heavily influence the USD’s trajectory, either reinforcing or undermining the GBP/USD pair’s movements.
Intraday technical picture:
From what we observe on the 4H GBP/USD chart, an inverse head and shoulders reversal pattern is nearing completion, with the neckline at 1.2723 marked with dotted lines. A breakout above this level, followed by consolidation, could pave the way for the pair to climb toward the 1.2846 resistance.
USD/JPY has resumed its upward trajectory, driven by a strong US dollar, while the yen continues to struggle with persistent weakness.
Possible technical scenarios:
On the daily USD/JPY chart, the pair found support at 148.80 before climbing above the 150 yen per dollar mark. The nearest growth target for the pair is 151.71; if it is overcome, this could propel the quotes further toward the next target of 153.09.
Fundamental drivers of volatility:
USD/JPY remains on an upward trend, bolstered by rising US Treasury yields as markets anticipate limited monetary easing by the Federal Reserve. Conversely, the Japanese yen continues to face pressure due to persistently low yields and uncertainty regarding potential actions by the Bank of Japan (BOJ).
While speculation about a BOJ rate hike in December and caution ahead of Federal Reserve Chair Jerome Powell’s speech cap gains, strong inflation data from Tokyo supports the possibility of Japanese monetary policy tightening. This factor introduces an additional challenge to the pair's upward movement.
Traders are keeping a close eye on key US labor market data and services PMI releases. Both the ADP and Nonfarm Payrolls reports could significantly impact the dollar, shaping USD/JPY’s short-term direction as markets gear up for upcoming decisions by the Fed and BOJ in two weeks.
Intraday technical picture:
Based on what is going on on the 4H USD/JPY chart, consolidation above the 150.17–151.71 support corridor provides the pair with potential to climb toward its resistance. Further moves depend on upcoming fundamental catalysts.
The USD/CAD pair has shown gains since the start of the week, though its upward momentum has slowed due to mixed influencing factors.
Possible technical scenarios:
On the daily chart, USD/CAD rebounded upward from the support level of 1.3977 and is approaching the resistance at 1.4116. However, the pair continues to consolidate below the broader uptrend resistance. In the absence of strong fundamental drivers, it is likely that the price will face difficulty overcoming this level and instead reverse downward from 1.4116.
Fundamental drivers of volatility:
Rising oil prices are providing support for the Canadian dollar as markets anticipate extended OPEC+ production cuts and grapple with geopolitical tensions in the Middle East. On top of that, diminished expectations of substantial policy easing by the Bank of Canada are bolstering the CAD.
On the other hand, the US dollar faces headwinds from cautious investor sentiment ahead of Federal Reserve Chair Jerome Powell's speech. While expectations of a less aggressive rate cut by the Fed amid potential inflationary pressures offer some backing to the USD, it remains insufficient to counteract the strength of oil prices and the relative stability of the Canadian economy.
Key events for USD/CAD this week will be labor market data releases from both the US and Canada on Friday. Forecasts suggest rising unemployment and slowing wage growth in the US, potentially weighing on the dollar. Canadian labor market statistics will also play a crucial role in shaping the short-term trajectory of the pair.
Intraday technical picture:
The 4H chart of USD/CAD shows that the pair is navigating within the trading range between 1.3977 and 1.4116. While there is room to reach the resistance, a downward reversal is anticipated upon testing the upper level.
Oil prices advanced midweek on expectations of potential supply reductions if OPEC+ extends its production cuts.
Possible technical scenarios:
On the daily chart of Brent, the price is positioned near the top of the sideways range between 70.85 and 75.18. There is still some room for the price to approach the resistance at the upper boundary.
Fundamental drivers of volatility:
Oil prices are experiencing moderate gains on Wednesday, fueled by market anticipation that OPEC+ will confirm the extension of its production cuts during Thursday's meeting.
Geopolitical tensions are playing a pivotal role in supporting oil markets. Israel has issued warnings that a collapse in the ceasefire with Hezbollah could lead to large-scale military action against Lebanon. Meanwhile, political instability in South Korea following the lifting of martial law is contributing to regional uncertainty. Additionally, escalating tensions in Syria and their potential ripple effects on oil-producing countries are providing further support for prices.регионе.
Despite these drivers, the upward momentum is capped as the market awaits official confirmation of the extension of production cuts, reportedly amounting to 2.2 million barrels.
Intraday technical picture:
A symmetrical triangle pattern has formed on the 4H Brent chart, with the price having reached the upper boundary. From this position, a downward retracement is possible, with the price continuing to trade within the narrowing range until a breakout occurs. If the triangle resistance is broken out and the price breaks upward, the next recovery target would be 77.25.
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