EUR / USD
The EUR/USD currency pair is currently experiencing stagnation, with the euro trading around $1.04, primarily due to the eurozone's sluggish economic growth and lack of supportive monetary policies. The European Central Bank's plans for further interest rate cuts in early 2025 are expected to maintain downward pressure on the euro. In contrast, the U.S. economy shows resilience, supported by strong labour market data and a more conservative approach to rate cuts by the Federal Reserve, which bolsters the dollar.
Technical analysis indicates a bearish trend for EUR/USD, with the pair struggling to break above key resistance levels and remaining below key moving averages. The disparity in economic performance, with the eurozone's GDP growth at 0.4% compared to the U.S.'s 2.8%, continues to weigh on the euro. The dollar's strength is further supported by geopolitical tensions and trade uncertainties, enhancing its safe-haven appeal.
Overall, the EUR/USD pair is likely to remain under pressure in the near term, with limited catalysts for a significant upward shift.
USD / JPY
The USD/JPY currency pair is experiencing upward momentum, primarily driven by rising U.S. Treasury yields and a strong U.S. dollar, supported by the Federal Reserve's hawkish policy outlook. Technical resistance is noted in the 158.50 to 159.00 range, with potential movement above 159.00 pushing towards 161.50 to 162.00.
The yen's weakness is largely due to the Bank of Japan's cautious monetary policy, contrasting with the Fed's approach. Despite concerns about yen depreciation, the BoJ's accommodative stance could keep the USD/JPY pair elevated. However, any potential shifts in BoJ policy, such as a rate hike, could strengthen the yen and alter the pair's trajectory. Traders should closely monitor U.S. economic indicators and BoJ communications, as these could influence future movements.
Overall, the current environment favours a strong dollar, likely maintaining the USD/JPY pair's elevated status in the near term.
GBP / USD
The GBP/USD currency pair is currently experiencing bearish momentum, trading near the 1.2500 level due to the UK's economic challenges and a strong US dollar. Recent UK economic data has underperformed, weakening the pound, while the US dollar benefits from a robust labour market and resilient economic indicators.
The pair faces resistance at 1.25312, with technical indicators like the 50-day and 200-day EMAs suggesting ongoing bearish pressure. Immediate support is at 1.24757, and a breach could lead to further declines. The Bank of England's high interest rates have been criticized for exacerbating the UK's economic slowdown, adding pressure on the pound. The RSI at 38.02 indicates the pair is nearing oversold territory, potentially leading to a corrective bounce.
Overall, the outlook for GBP/USD remains cautious amid concerns about the UK economy and the strong US dollar.
EUR / CHF
The EUR/CHF currency pair has been experiencing relative stability with limited volatility in recent trading sessions. The euro's performance against the Swiss franc is influenced by sluggish growth in the Eurozone and anticipated interest rate cuts in early 2025, which may exert downward pressure on the euro. The Swiss franc, perceived as a safe-haven currency, benefits from global economic uncertainties, further challenging the euro's momentum.
The pair's recent slight upward movement from 0.936 to 0.938 reflects modest price changes within a narrow trading range. The current price is near the 50-day and 20-day moving averages, indicating a potential consolidation phase, while the 200-day moving average at 0.95 serves as a significant resistance level. Investors should watch for a bullish scenario if the pair breaks above the 0.944 resistance or a bearish scenario if it falls below the 0.932 support level.
Overall, the outlook for the EUR/CHF pair remains cautious, with a bias towards stability rather than significant appreciation or depreciation.
