EUR/USD maintains its upward momentum, trading near 1.1600 amid rising demand for risk assets after the announcement of a ceasefire between Israel and Iran, which reduced the geopolitical premium in the dollar.
Possible technical scenarios:
As we can see on the daily chart, the EUR/USD pair is attempting to consolidate above the 1.1494 level. If successful, the next target for growth will be the horizontal 1.1738.
Fundamental drivers of volatility:
The EUR/USD pair received support amid improved risk appetite after the announcement of a ceasefire between Israel and Iran. The reduction in geopolitical tensions weakens the demand for the dollar as a safe-haven asset.
The euro is additionally supported by a sharp drop in oil prices: WTI has fallen by almost 18% in two days, easing inflationary pressure in the eurozone.
The fundamental picture in the US continues to shift towards easing monetary policy. Investors are awaiting Jerome Powell's speech to Congress: the market is pricing in about an 80% probability of a Fed rate cut in September. Recent statements by Fed officials have increased expectations of a "dovish" turn. Against this background, the dollar index is losing more than 1% from recent highs.
Data from the eurozone remains neutral: PMI remains near the stagnation line, and the IFO index showed only moderate growth.
Intraday technical picture:
As evidenced by the 4H chart of EUR/USD, there is a local trading range between 1.1454 and 1.1617. If the price breaks out of it upwards, growth to the level of 1.1738 is possible. Otherwise, trading in the sideways direction will continue.
The pound sterling is benefiting from easing geopolitical tensions, while the safe-haven dollar is falling, supporting GBP/USD.
Possible technical scenarios:
The daily chart demonstrates that the GBP/USD pair has reached the resistance of the sideways range between 1.3436 and 1.3630, where it will either turn down and roll back to support, or break upwards. If it consolidates above the level of 1.3630, the next target for growth will be the horizontal 1.3752.
Fundamental drivers of volatility:
The pound received support from the growth of interest in risk assets after the announcement of a ceasefire between Israel and Iran. Demand for safe-haven assets, particularly the US dollar, has weakened, contributing to the growth of riskier currencies, including the British pound.
Possible preliminary data on the Purchasing Managers’ Index (PMI) in the UK strengthens investor confidence in the country's economy. An improving overall business climate and a recovery in new business volumes point to resilience in economic activity, which is positive for sterling.
Meanwhile, US monetary policy is putting pressure on the dollar. Several Fed officials have spoken in favor of cutting interest rates as early as July amid signs of a slowing labor market and easing inflationary pressures. Expectations of policy easing are pushing down yields and weakening the dollar's appeal against the pound.
Intraday technical picture:
Given the unfolding situation on the 4H chart of GBP/USD, it is not yet clear whether the pair will test the resistance of the 1.3436 - 1.3630 corridor; from the current position, either a breakout of the strong 1.3630 level is possible with a strong driver, or a reversal is possible downside.
USD/JPY is trading under pressure around 145.00 as the gap in central bank monetary policy is currently working in favor of the yen.
Possible technical scenarios:
Based on the daily chart, we see that during the decline, USD/JPY moved into the trading range between 143.45 and 145.91, where it still has enough momentum to support it.
Fundamental drivers of volatility:
The Japanese yen is strengthening amid growing expectations that the Bank of Japan will raise interest rates due to accelerating inflation, while the US Federal Reserve is preparing for a possible rate cut as early as July. This puts pressure on the US dollar and contributes to the decline of the USD/JPY pair.
Hopes for a trade agreement between the US and Japan, which could be signed before July 9, add support to the yen, reducing uncertainty in relations between the two countries. Despite the announced ceasefire between Israel and Iran, the USD/JPY pair continues to decline, reflecting investors' preference for a lower-yielding but more stable currency amid global uncertainty.
The US dollar continues to weaken under pressure from disappointing business activity data and dovish statements from Fed officials, which are increasing expectations for rate cuts in the coming months.
Intraday technical picture:
As evidenced by the 4H chart of the pair, we see potential for a price decline in the sideways range between 143.45 and 145.91.
The USD/CAD pair is trading near 1.3700, with the American currency under pressure amid improved risk appetite following the announcement of a ceasefire between Israel and Iran.
Possible technical scenarios:
On the daily chart of USD/CAD, we see that the pair has risen above the level of 1.3687, and if it holds, it may recover to the next target of 1.3861. An alternative scenario in case of a breakout of the horizontal 1.3687 is a fall to the lows of June 16.
Fundamental drivers of volatility:
The dollar index has fallen by more than 1% from Monday's highs, putting pressure on the American currency in the pair. However, the growth of the Canadian dollar is limited by a significant drop in oil prices, the raw material base of the Canadian economy.
Over the past two days, WTI oil prices have fallen by almost 15%, dropping by more than $10 per barrel. This is explained by the weakening of geopolitical risks in the Middle East region and reduced fears of supply disruptions through the Strait of Hormuz.
Investors are also cautious ahead of the publication of the Canadian Consumer Price Index (CPI) for June, which may show an acceleration in inflation. Higher inflation will create difficulties for the monetary policy of the Bank of Canada.
On the US side, investors are closely watching the speech of Fed Chairman Jerome Powell in Congress. Dovish comments from some Fed members increase expectations of rate cuts in the coming months, further weakening the American currency in the pair.
Intraday technical picture:
On the 4H chart of USD/CAD, we see a local range between 1.3634 and 1.3798 (two dotted lines), within which the price may remain until new volatility drivers appear, particularly those affecting oil prices and the Canadian dollar.
Brent crude prices fell sharply to a two-week low after the ceasefire between Israel and Iran was announced.
Possible technical scenarios:
Considering the recent developments on the daily chart, we see that after the price of Brent crude oil collapsed on Monday, there is an attempt to roll back. The nearest support level is now 66.51, and the resistance is 68.52. Depending on which side of this range the price goes in, we will see either a fall to the target of 65.02 or a recovery to the $70 per barrel area.
Fundamental drivers of volatility:
Brent crude prices fell more than 3.5% to $69 per barrel after US President Trump announced a ceasefire between Israel and Iran. This reduced the geopolitical risks associated with disruptions in oil supplies from the Middle East, which had previously caused strong volatility in the market.
However, doubts remain about the stability of the ceasefire, as Israel continues to retaliate and Iran denies violations. This maintains a level of uncertainty and could lead to sharp price swings if the conflict escalates.
A key factor is the Strait of Hormuz, through which about 20% of global oil consumption passes. Any threat of its closure could quickly push up prices, so market participants are closely monitoring the situation in the region.
Intraday technical picture:
On the 4H chart, Brent’s attempt to rise above the 68.52 level looks like a false breakout, so if there are no new developments, the price may roll back to the support at 66.51.
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