EUR/USD rose amid expectations of a pause in ECB policy easing. The euro is additionally supported by the weakness of the US dollar due to the Fed maintaining interest rates and inflation risks from Trump's tariff policy.
Possible technical scenarios:
As we can see on the daily chart, EUR/USD continues to test the upper boundary of the wide range between 1.0777 and 1.0938. If the price manages to break out upwards, the next target for growth will be 1.1191. Otherwise, a downward correction from 1.0938 is possible.
Fundamental drivers of volatility:
The EUR/USD pair reached a five-month high of 1.0955 following the approval of the debt restructuring deal by the German parliament. The increase in the borrowing limit and the establishment of a 500 billion euro infrastructure fund are stimulating the economy and supporting the euro.
Investor optimism is boosted by expectations that the European Central Bank will pause its easing cycle, as confirmed by comments from Robert Holzmann. The euro is also supported by strong German economic indicators, with the ZEW index rising to 51.6 from 26.0 previously.
An additional factor in the pair's growth is the weakness of the US dollar. The DXY index dropped to a minimum of 103.20, and the Fed is likely to keep interest rates unchanged. Market concerns over inflation risks from President Trump's tariff policy limit the growth prospects of the dollar.
Investors are also focused on the US-Russia ceasefire talks in Ukraine, which could influence global risk sentiment.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart of EUR/USD, the pair has returned to test the resistance at 1.0938. A breakout is possible given the weakness of the US dollar. However, if this level is not broken, a decline toward the support at 1.0777 is likely.
GBP/USD is rising amid expectations of the Bank of England's rate decision, which is likely to remain at 4.5%. The pound is additionally supported by the weakness of the US dollar due to a possible easing of the Fed's policy amid falling inflation and deteriorating consumer confidence.
Possible technical scenarios:
The daily chart demonstrates that the GBP/USD pair continues to consolidate above the support at 1.2862, leaving room for further movement toward the resistance at 1.3147.
Fundamental drivers of volatility:
The pound sterling is showing moderate growth against the US dollar ahead of the Bank of England's meeting, where the interest rate is expected to remain at 4.5%.
Investors are also focusing on potential divergence in the votes of the Monetary Policy Committee (MPC) members, as some favor a more aggressive rate cut. The Bank of England is expected to make two more rate cuts this year as the UK economy slows, adding uncertainty to the pound’s prospects.
Pressure on the US dollar is increasing due to a slowdown in US inflation and weakening consumer confidence, which raises the possibility of a dovish Fed stance. Recent data showed core inflation fell to 3.1%, the lowest since 2021, while the University of Michigan Consumer Sentiment Index dropped to 57.9, signaling worsening economic expectations.
In these circumstances, the Fed is likely to keep rates in the range between 4.25% and 4.50% but may signal further monetary easing, putting pressure on the dollar. Despite the pound's short-term strength, its future direction will depend on the Bank of England's stance, as well as investor reactions to potential Fed moves. If expectations for a rate cut in the UK intensify, this could limit the upside potential of GBP/USD, even with the dollar's weakness.
Intraday technical picture:
Based on the look of things on the 4H chart of GBP/USD, the price has moved up from the narrow range between 1.2862 and 1.2944, and now the path to the next target at 1.3147 is open.
USD/JPY hits a two-week high amid US dollar recovery and increased risk appetite.
Possible technical scenarios:
As evidenced by the daily chart, USD/JPY rose above 148.63, opening the way to the nearest resistance at 151.96.
Fundamental drivers of volatility:
USD/JPY has reached a two-week high due to steady US dollar gains and increased risk appetite. Investors are responding positively to China’s stimulus measures and potential progress in Ukraine talks, which are reducing demand for safe-haven assets, including the yen.
Additional support for the pair comes from the dollar’s recovery from recent lows, although expectations of imminent Fed easing are limiting its growth.
Markets are pricing in the possibility of further rate hikes by the Bank of Japan (BoJ) following strong results from spring wage talks. Increasing household incomes may contribute to inflation, pressuring the BoJ to tighten monetary policy. Meanwhile, investors expect signals of easing from the Fed amid a slowing US economy, creating uncertainty in the USD/JPY pair’s prospects.
The key events of the week will be the rate decisions from the BoJ and the Fed. If the BoJ signals a continuation of policy normalization, the yen could receive support. However, if the Fed confirms its readiness to cut rates, pressure on the dollar will increase, leading to heightened volatility in the pair.
Intraday technical picture:
On the 4H chart of USD/JPY, after settling above the level of 148.63, there is sufficient room for the price to move toward the resistance at 151.96.
The USD/CAD pair is demonstrating a moderate gain after two days of decline, but the potential for further strengthening of the US dollar remains limited.
Possible technical scenarios:
According to the daily chart, USD/CAD continues to move sideways, returning to the support of the range between 1.4271 and 1.4468. From here, the price may recover. However, if the 1.4271 level fails and the price consolidates below it, the next target for the decline will be the support at 1.4149.
Fundamental drivers of volatility:
A modest recovery of the US dollar is supported by expectations ahead of the Fed meeting, but the market is pricing in a possible rate cut this year, which limits bullish momentum.
An additional factor putting pressure on USD/CAD is the rise in oil prices, which reached a two-week high amid geopolitical tensions in the Middle East. This supports the Canadian dollar (CAD), as Canada's economy is heavily dependent on energy exports. Positive news from US-Canada trade talks is also contributing to the strengthening of the CAD.
Investors remain cautious ahead of the Fed meeting and the release of the Canadian consumer price index. These data could set the direction for USD/CAD, having an impact on the outlook for the monetary policies of both countries.
Intraday technical picture:
Given what we observe on the 4H chart of USD/CAD, there is an attempt to reverse upwards from the support at 1.4271. If this level holds, the pair will have enough room to move toward the resistance at 1.4468.
Oil prices continue to rise amid increasing geopolitical tensions in the Middle East and positive economic data from China.
Possible technical scenarios:
The daily chart shows that Brent is approaching the upper boundary of the sideways range between 70.62 and 72.05. If it breaks out upwards, the next target for growth will be 83.28. Otherwise, quotes may continue sideways dynamics, returning to the support at 70.62.
Fundamental drivers of volatility:
Brent futures have consolidated above $71 per barrel, receiving support following US strikes against the Houthis and retaliatory attacks on the American aircraft carrier. Iran's involvement in the conflict raises the risks of further escalation, which strengthens oil prices.
An additional driver of growth was data from China, where domestic demand for oil at the start of the year increased by 2.4% year-over-year, and both retail sales and investments exceeded forecasts.
The focus of the markets is on the negotiations between Trump and Putin on a ceasefire in Ukraine. A potential agreement could impact energy markets, with investors keeping a close watch on the situation and assessing the prospects for changes in raw material flows.
Intraday technical picture:
There is no additional information for analysis on the 4h Brent chart. Locally, the quotes still have technical growth potential within the corridor between 70.62 and 72.05.
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