The EUR/USD pair is consolidating during the European session on Tuesday ahead of the release of key US inflation data for June.
Possible technical scenarios:
As we can see on the daily chart, the EUR/USD pair is declining from the resistance level of 1.1738, it still has a large room to move to the next medium-term target of 1.1494
Fundamental drivers of volatility:
The EUR/USD pair is trading subdued ahead of the release of the US inflation report for June. Annual inflation is forecast to accelerate from 2.4% to 2.7% and core inflation from 2.8% to 3.0%, which indicates persistent price pressure in the US economy. Acceleration of inflation will increase the likelihood of maintaining or tightening the monetary policy of the Federal Reserve, reducing the chances of a rate cut.
Trade tensions between the EU and the US also remain a significant factor of volatility. Despite the negotiations, the US has already imposed tariffs of up to 30% on a number of European goods, which provokes the EU to prepare retaliatory measures worth $84 billion, affecting aviation, cars, agricultural products, and other key industries. This creates uncertainty and pressure on the euro.
Taken together, the fundamental factors point to a balance between the strengthening of the dollar due to inflationary pressure and the risks of a trade conflict affecting the euro. The results of the upcoming publication of CPI data will be the main trigger for further movements of the pair.
Intraday technical picture:
As evidenced by the 4H chart of EUR/USD, we see that the price found support at the local level of 1.1653, while remaining within the downtrend. Technically, the direction of the price will depend on whether it can pass and consolidate under the zone between 1.1631 and 1.1653 marked with dotted lines. If successful, the weakening will continue to the level of 1.1494.
The pound sterling is trading near a three-week low of around 1.3430 against the US dollar amid expectations of accelerating inflation in the US and ongoing uncertainty in global trade.
Possible technical scenarios:
On the daily chart, the GBP/USD pair is testing the support of the range between 1.3436 and 1.3630. If the 1.3436 level holds, the pair may recover in the specified corridor. Otherwise, the price will continue to fall to the levels of 1.3338 marked with a dotted line and 1.3147.
Fundamental drivers of volatility:
The main driver of volatility in the pair may be the upcoming data on the US consumer price index for June, which may show the impact of Trump's tariff policy on inflation. Annual US inflation is expected to rise to 2.7% from 2.4%, and core inflation to 3.0%. Accelerating inflation will increase the chances of the Fed maintaining or tightening monetary policy, which will support the dollar and put pressure on the pound.
ВThe UK is showing a steady increase in inflation, with the CPI forecast to remain at 3.4% in June, above the Bank of England’s 2% target. However, given rising risks to the labour market and trade tensions, the Bank of England may maintain or even cut interest rates in the near term.
Adding additional pressure on the pound is trade tensions between the US and the EU. Despite ongoing negotiations, Washington has imposed 30% tariffs on European goods, and the EU is preparing retaliatory measures. Escalating trade tensions increase uncertainty and reduce risk appetite, which negatively affects the UK currency.
Overall, the GBP/USD pair remains under the influence of a strong dollar amid US inflation expectations and trade risks, while the pound is held in a limited range, awaiting local economic data from the UK.
Intraday technical picture:
On the 4H chart of GBP/USD, it is not yet clear whether the breakout of support at 1.3436 will be true or false. Probably, the price will be able to determine the position around this level after the reaction of the dollar to the US inflation report.
The Japanese yen continues to weaken, trading near a three-week low against the US dollar, under pressure from growing trade tensions and the Bank of Japan's continued policy of not raising interest rates.
Possible technical scenarios:
Given the unfolding situation on the daily chart, the USD/JPY pair has consolidated above 145.91 and is approaching the resistance at 148.63. From there, the price will either turn down in the 145.91-148.63 corridor, or, if it breaks out and consolidates above 148.63, continue to rise to 149.94.
Fundamental drivers of volatility:
The market's confidence that the Bank of Japan will maintain an extremely loose monetary policy longer than expected is holding back investors' interest in the yen as a safe-haven asset.
Domestic political uncertainty in Japan also contributes to the defensive stance of yen holders. Against the backdrop of the overall strength of the dollar, which is supported by expectations of accelerating inflation in the US and a likely tightening of the Federal Reserve policy, demand for the yen remains low.
Positive expectations for trade talks between the US and the EU reduce the risk of investors fleeing to traditional "safe havens", which include the yen, which further weakens its rate.
The main short-term factor for the USD/JPY pair will be the US inflation data - their strong figures can strengthen the dollar and continue to put pressure on the yen.
Intraday technical picture:
Locally, on the 4H chart, the pair is approaching the highs of June 23 (148.02), and if they are updated, it will continue to grow towards the target of 148.63.
The USD/CAD pair maintains its upward momentum amid ongoing uncertainty caused by the threat of new US tariffs on Canadian imports.
Possible technical scenarios:
On the daily USD/CAD chart, we see that the pair has almost reached the resistance of the sideways range of 1.3503 - 1.3744, forming a “double bottom” reversal pattern with a neckline of 1.3744. Upon reaching this level, a downward reversal and drawing of the third bottom of the reversal pattern is possible. But if the 1.3744 level is broken from bottom to top, there is a high probability of growth to the targets of 1.3861 and 1.4013.
Fundamental drivers of volatility:
Starting from August 1, 35% US tariffs on a number of Canadian goods will come into effect, supplementing the existing tariffs on steel and aluminum. A 50% duty on copper imports has also been introduced. These measures put pressure on the Canadian dollar, given the importance of the United States as a trading partner and a major consumer of Canadian resources.
On the other hand, positive Canadian labor market data for June supports the Canadian dollar. The unemployment rate fell to 6.9%, and job growth significantly exceeded expectations (83.1 thousand vs. 8.8 thousand), indicating an improving economic situation.
Financial markets are pricing in an almost 84% chance that the Bank of Canada will keep its interest rate unchanged at its July meeting, with a possible rate cut expected in the second half of the year due to ongoing economic uncertainty.
The main event on Tuesday will be inflation data in the United States and Canada, which could provide additional impetus for the USD/CAD pair. Increased inflation pressure in the United States will support the dollar, while strong domestic economic data could strengthen the Canadian dollar and limit its weakening.
Intraday technical picture:
On the 4H chart, the USD/CAD pair has almost reached the resistance of the range between 1.3556 and 1.3744 and may test it for strength. In case of a breakout of the 1.3744 horizontal and consolidation above, the next target for growth will be the dotted level of 1.3799. Otherwise, the pair will head towards the support between 1.3556 and 1.3744.
Gold prices rose amid escalating global trade tensions and expectations of the publication of US inflation data, which could clarify the future policy of the Federal Reserve.
Possible technical scenarios:
According to the daily chart, the price of gold continues to strengthen within a wide range between 3246.72 and 3431.08. If quotes can consolidate above the intermediate level of 3347.47, the next target for growth will be the level of 3431.08.
Fundamental drivers of volatility:
The growth in demand for gold is explained by its status as a safe haven asset in the context of trade conflicts: threats of 30% tariffs by the US against Mexico and the EU increase uncertainty in the markets. However, the strengthening of the dollar and the rise in US Treasury yields limit the potential for further gold growth. A breakthrough to $3400 will require a weakening of the dollar or yields in the absence of new geopolitical shocks.
Investors are awaiting US inflation data for June, where annual price growth is expected to accelerate from 2.4% to 2.7%, and core inflation from 2.8% to 3.0%. These figures are important for understanding the Fed's future interest rate decisions.
The low rates that President Trump has been talking about lately support the appeal of gold, which retains value in the face of economic uncertainty and low yields on other assets.
Intraday technical picture:
On the 4H chart, gold confirmed support at 3347.47, which opens the way for the price to rise to resistance at 3431.08.
Login in Personal Account
11