The EUR/USD pair is consolidating at the start of the week as markets await US labor market data and the outcome of the Federal Reserve meeting.
Possible technical scenarios:
On the daily chart, EUR/USD has completed the formation of a bullish double-bottom reversal pattern with the neckline at 1.1655 marked with a dotted line. Since no strong breakout has followed, a decline from this level and a pullback toward support at 1.1494 remain possible, forming a third bottom (a potential triple-bottom reversal).
Fundamental drivers of volatility:
The US dollar is receiving support from rising Treasury yields, which are keeping the currency near recent highs. Although markets are nearly fully pricing in a 0.25% Fed rate cut, traders remain cautious as they await guidance on the Fed’s future policy path, updated rate projections, and comments from Jerome Powell.
Short-term sentiment is also being shaped by conditions in the US labor market. ADP employment figures and JOLTS data are viewed as important indicators ahead of next week’s official jobs report. Softer-than-expected results could increase expectations for additional Fed easing and weaken the dollar, while stronger data would reinforce dollar support.
Traders are also awaiting several delayed US data releases. The September PPI is expected to show a 0.3% monthly increase after a 0.1% decline previously, with the annual rate In the eurozone, the fundamental picture is largely neutral. A slight improvement in the Sentix index suggests a cautious recovery in investor sentiment, but ECB officials continue to deliver mixed messages regarding the timing of the next policy decision. The absence of clear guidance from the regulator and the lack of strong macro data limit short-term euro upside against the dollar.
Intraday technical picture:
Given the recent developments on the 4H chart, after a false breakout of 1.1655 marked with a dotted line, the pair is attempting to rebound lower. This creates conditions for a move toward support at 1.1494.
The GBP/USD pair is consolidating as markets weigh the likelihood of Bank of England monetary easing and await policy signals from the US Federal Reserve.
Possible technical scenarios:
Judging by the look of things on the daily chart, GBP/USD shows a reversal of the downtrend, an upward exit from the 1.3010–1.3279 sideways range (between the two dotted lines), and the formation of a bullish flag. This pattern creates technical conditions for a rise toward the target of 1.3436 and a possible test of this level.
Fundamental drivers of volatility:
The pound remains under pressure due to persistent expectations of a 25-basis-point rate cut by the Bank of England at the upcoming meeting. Weakness in the labor market and slowing inflation have strengthened confidence in imminent policy easing. According to a KPMG and REC survey, permanent job placements continue to decline, reflecting business caution ahead of fiscal changes. MPC member Alan Taylor noted that inflation could soon return to the 2% target, reducing the need for tight monetary conditions.
Signals from the Bank of England remain an additional source of uncertainty. Markets are awaiting a speech from Governor Andrew Bailey and the release of October GDP data, which could confirm cooling economic activity. At present, UK fundamentals offer no reason to revise rate expectations upward, limiting demand for the pound.
The outlook for the dollar is more balanced. Markets are already pricing in a 0.25% Fed rate cut, but the currency’s next moves will depend on the Fed’s messaging and updated forecasts. In the absence of a clear indication of a sequence of future rate cuts, the dollar remains resilient, preventing GBP/USD from establishing a stronger upward trend.
Intraday technical picture:
The 4H chart suggests that the pair is consolidating within the bullish flag pattern, signaling continuation toward resistance at 1.3436.
The USD/JPY pair retreated from its highs amid signals from the Bank of Japan indicating readiness to raise rates and expectations of policy easing from the Federal Reserve.
Possible technical scenarios:
Given the unfolding situation on the daily chart, USD/JPY is recovering from 154.35, maintaining a slight margin of safety toward the nearest resistance at 156.71. If this level does not stop the price advance, further growth toward the November highs becomes possible.
Fundamental drivers of volatility:
The primary driver behind the pair’s decline was a statement from Bank of Japan Governor Kazuo Ueda, who reaffirmed his intention to gradually normalize monetary policy. He noted that core inflation continues to move closer to the 2% target, giving the central bank room to slowly scale back monetary stimulus. These comments strengthened the yen and triggered profit-taking in long USD positions after the rate moved above 156.00.
That being said, the broader fundamental picture for the yen remains mixed. Revised Japanese Q3 GDP data showed a deeper contraction (-0.6% quarter-over-quarter versus the initial estimate of -0.4%), reinforcing the case for extensive fiscal stimulus and partially limiting the scope for aggressive BoJ tightening. Additional pressure on the yen came from news of a strong 7.6-magnitude earthquake in northeastern Japan and the issuance of tsunami warnings.
On the US side, markets are in a holding pattern ahead of the Federal Reserve meeting. Investors have nearly fully priced in a 25 bps cut to the 3.50–3.75% range, but future USD/JPY direction will depend on updated economic projections and the tone of Powell’s comments. For now, diverging outlooks for Fed and BoJ policy are preventing a more pronounced strengthening of the yen.
Intraday technical picture:
USD/JPY on the 4H chart shows a break in the local downtrend, with the possibility that a new ascending channel could form, including pullbacks on the way toward 156.71 and the November highs.
The USD/CAD pair is cautiously correcting after last week’s sharp drop, but it still maintains downside potential.
Possible technical scenarios:
According to the daily chart, USD/CAD broke its uptrend following a bearish head-and-shoulders pattern and is now consolidating below 1.3861. From this area, the path remains open toward the next downside target at 1.3744.
Fundamental drivers of volatility:
The Canadian dollar received support from strong employment figures released on Friday, strengthening expectations that the Bank of Canada may lean toward a firmer stance. The data confirmed labor market resilience and reinforced arguments against an imminent rate cut, which continues to exert downward pressure on USD/CAD.
That said, the CAD’s potential for further appreciation is still limited. Statements from Donald Trump regarding possible new tariffs on agricultural products, including Canadian fertilizer, increase geopolitical and trade-related risks for Canada. Weak oil prices add another layer of pressure: the stabilization of crude prices after a steep drop makes the commodity currency less attractive.
For the US dollar, upward momentum also appears constrained. Markets continue to price in further Fed rate cuts, limiting USD recovery despite occasional safe-haven demand. With diverging policy expectations between the Fed and the Bank of Canada — and ahead of key decisions from both regulators — traders are opting for a cautious approach, avoiding strong directional positions in USD/CAD.
Intraday technical picture:
As we can observe on the 4H chart, USD/CAD continues to consolidate below 1.3861, creating the conditions for a further decline toward the next target at 1.3744.
Brent crude oil prices remain under pressure, balancing geopolitical risks, expectations of a supply surplus, and uncertainty surrounding Federal Reserve policy.
Possible technical scenarios:
As evidenced by the daily chart, Brent continues to move within a downtrend, having fallen below 63.23. From this point, the price still has room to decline toward the lower boundary of the channel near 61.10.
Fundamental drivers of volatility:
Oil prices saw a slight correction after yesterday’s sharp drop, which was triggered by the restoration of production at Iraq’s West Qurna-2 field. The return of output from one of the region’s largest fields has intensified concerns about oversupply and has been a major factor behind recent price weakening.
Markets are also closely monitoring negotiations related to Ukraine. The outcome of diplomatic efforts is viewed as a key driver: progress in talks could increase the likelihood of Russian oil returning more fully to global markets, putting additional downward pressure on prices, while a breakdown in negotiations could instead support prices. Discussions within the G7 and EU about potential tightening of restrictions on Russian oil exports add another layer of uncertainty.
The broader backdrop is further complicated by long-term projections of excess supply. Expectations surrounding the IEA’s December report — which previously highlighted the possibility of a record oil surplus in 2026 — are limiting any sustained upward movement. Although the Fed’s upcoming rate decision could offer short-term support through monetary conditions, monetary policy remains secondary to structural concerns over a medium-term oil glut.
Intraday technical picture:
The 4H chart shows that Brent is trading in the middle of the descending channel and simultaneously within the midpoint of the 61.10–63.23 sideways range. While there is potential for continued downward movement, it may be accompanied by localized pullbacks.
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