As an increase in core inflation in the euro area and a cautious strengthening of the U.S. dollar slowed down the upward momentum, the EUR/USD recovery has been brief this week.
Possible technical scenarios:
On the daily chart, the increase in EUR/USD was stopped by the local resistance at 1.0640 marked with dotted lines. If the nearest support level at 1.0592 fails to stop the price from weakening, the pair may return to this week’s lows. Their update will enable quotes to continue dropping to 1.0492.
Fundamental drivers of volatility:
The release of the Euro Area Services PMI for the month of February at 9:00 am GMT may have a local impact on the dynamics of the EU’s single currency until the end of the week. It is expected to match the previous estimate of 53.0. In addition, a composite PMI is projected at 52.3.
Meanwhile, there may be a local spike in the U.S. dollar volatility on Thursday at 1:30 in response to released figures of the Initial Jobless Claims in the United States, which are expected to increase from 192 thousand to 195 thousand.
Aside from that, the ISM Non-Manufacturing Purchasing Managers Index in the United States for the month of February will be released on Friday at 3:00 pm GMT, with the anticipated drop from 55.2 to 54.5.
Intraday technical picture:
On the 4H chart of EUR/USD, we see that the 1.0592 - 1.0612 area serves as support. The price may either reverse upward and recover to the nearest resistance at 1.0640 marked with dotted lines, or break it out and consolidate below, opening the way for the pair to the Monday’s lows.
The GBP/USD pair keeps trading in a sideways range. While the growth of the U.S. dollar has come to a standstill, the sideways dynamics may continue provided that there are no new drivers for its strengthening.
Possible technical scenarios:
GBP/USD quotes are approaching the support level of the 1.1934 - 1.2146 corridor. In this case, two technical scenarios may occur: there could either be a reversal upward and recovery in the sideways range, or a breakout of 1.1934 and consolidation below this level. This will enable the quotes to move to the next support at 1.1744.
Fundamental drivers of volatility:
There may be a local spike in the pound sterling’s volatility following the release of the United Kingdom PMI on Friday at 9:30 am GMT. Services PMI is projected at 53.3, with Composite PMI at 53.0.
The U.S. dollar may be sensitive to the Initial Jobless Claims in the United States on Thursday and the ISM Non-Manufacturing on Friday until the end of the week.
Intraday technical picture:
On the 4H chart of the GBP/USD pair, we can see a small movement range towards the resistance of the 1.1934 - 1.2146 corridor. The further price behavior will depend on which side of 1.2146 the price will consolidate on.
The USD/JPY pair keeps getting stronger primarily amid the increase of the U.S. currency. That being said, the growth of the dollar has slowed down this week as risk appetite improved following the release of data from China, resulting in price consolidation.
Possible technical scenarios:
On the daily chart, the USD/JPY has a small movement range to the wide range resistance at 133.59 - 137.89. Once the price reaches 137.89, quotes can either reverse downward or break it out and continue going up to the next target at 137.89.
Fundamental drivers of volatility:
The dynamics of the pair will chiefly depend on the volatility of the U.S. currency until the end of the week. The dollar may also be sensitive to upcoming news releases.
The U.S. Initial Jobless Claims will be released on Thursday at 1:30 pm GMT. The forecast suggests that the figures may demonstrate an increase from 192,000 to 195,000.
The U.S. ISM Non-Manufacturing Purchasing Managers Index for the month of February will be released on Friday at 3:00 pm GMT, with an anticipated decline from 55.2 to 54.5.
Intraday technical picture:
On the 4H of the chart, the USD/JPY pair formed a local consolidation range of 135.22 - 136.90. If its upper boundary is not broken out, the sideways dynamic of the pair may continue, with the price dropping to 135.22.
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