FX Outlook
Daily FX Report

Daily FX Report

Fri 14 February 2025 07:00

Read disclaimer

Back to reports

Authors

Daria Efanova Head of Research

Contact research

US Dollar’s Strength Fading

EUR / USD - USD Weakness Drives Euro Sentiment

EUR/USD jumped higher due to US dollar weakness, further supported by better-than-expected industrial production data from the bloc. The risk-on appetite prompted the pair to breach a significant resistance level of 50 DMA at 1.0394 and 1.04, respectively. The weakness of the US dollar, with the index testing weekly lows of 107.25, provided a necessary boost for the EUR/USD.

With the Eurozone GDP release today, which is expected to show 0.0% QoQ growth, markets will likely price in moderate stagflationary pressures. Markets are already pricing in approximately 81bps of cuts by the end of 2025, suggesting a continued widening of the yield differential between the ECB and the Fed.

If the pair holds support above 1.0340, it could indicate further upside. However, protracted gains are likely to be capped by yesterday's high of 1.0444 and 1.0521 - a January high.

We expect cautious optimism from EUR/USD in the near term. While the Eurozone's GDP figure is crucial for guiding the macroeconomic narrative, markets will closely monitor the US dollar's moves to gauge the intraday direction.

USD / JPY - Markets Eye 200-Day MA

USD/JPY weakened yesterday, erasing the previous day's gains, primarily driven by the retreat in US Treasury yields, with the 2-year yield approaching 4.30% and the 10-year yield dipping below 4.55%. This decline has been further amplified by heavy selling during Asian and European sessions, with notable institutional participation pushing the pair below the key technical level at 154.22.

The pair is currently testing critical support at the 200-day moving average of 152.74, with the next significant support range lying between 151.50 and 152.00. Dollar weakness yesterday was key, driving the pair lower despite stronger PPI data, suggesting the dollar investors might be losing momentum on the upside.

Technical analysis points to a continuation of bearish momentum, with the pair now capped at immediate resistance of 155.00. A breakdown below the 200 DMA support level could trigger further weakness.

GBP / USD - Is Stronger GDP Enough to Support Sterling?

GBP/USD jumped higher yesterday, breaking above the robust resistance level of 50 DMA at 1.2470, as stronger-than-expected UK data and a weaker dollar fuelled upside momentum. In particular, UK Q4 2024 GDP growth surprised to the upside at 0.1% QoQ, avoiding the expected contraction. The pair ended the day near the highs, just above the 1.2540 level, indicating a strong risk-on appetite. If GBP/USD maintains its position above 1.2400 today, this could set the scene for further gains to 1.2576 and 1.2600, respectively.

However, the fundamental narrative of slower UK growth compared to the US could weigh on the pair's longer-term momentum, suggesting a possible short-term reversal back to the 50 DMA. Indeed, the %K/%D stochastics for both the long- and short-term horizons suggest that the pair is overbought at current levels.

We expect muted upside performance today, especially given a lack of additional UK economic releases that could support continued upside momentum.

Economic Calendar

14022025

Disclaimer

This is a marketing communication. The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy, sell or otherwise deal in any particular investment. Please be aware that, where any views have been expressed in this report, the author of this report may have had many, varied views over the past 12 months, including contrary views.

This report was prepared with the assistance of artificial intelligence.

A large number of views are being generated at all times and these may change quickly. Any valuations or underlying assumptions made are solely based upon the author’s market knowledge and experience.

Please contact the author should you require a copy of any previous reports for comparative purposes. Furthermore, the information in this report has not been prepared in accordance with legal requirements designed to promote the independence of investment research. All information in this report is obtained from sources believed to be reliable and we make no representation as to its completeness or accuracy.

This report is not subject to any prohibition on dealing ahead of the dissemination of investment research. Accordingly, the information may have been acted upon by us for our own purposes and has not been procured for the exclusive benefit of customers. Sucden Financial believes that the information contained within this report is already in the public domain. Private customers should not invest in these products unless they are satisfied that the products are suitable for them and they have sought professional advice. Please read our full risk warnings and disclaimers.

Sign up to get the latest market insights

We will email you each time a new report has been published.

You might also be interested in...

Global markets are once again on edge as trade tensions between the U.S., Canada, and Mexico escalate. After months of uncertainty, the implementation of sweeping 25% tariffs on Canadian and Mexican imports has reignited fears of economic disruption, supply chain instability, and policy-driven volatility. With Canada and Mexico heavily dependent on US trade, how will this unfolding trade war affect the Canadian dollar and Mexican peso?

12.03.2025

FX Monthly Report - Canada & Mexico Focus

Metals

As we enter the first quarter of 2025, trade tensions heavily influence market sentiment, with Trump’s tariffs narrative shaping the overall momentum. Volatility has gripped major asset classes – including FX, bonds, and equities – as markets attempt to gauge the scale, timing, and likelihood of these tariffs being fully implemented. While Chinese New Year holidays traditionally bring a quieter tone to the first quarter of the year, tariff announcements - such as a 10% tariff on Chinese imports and a 25% tariff on aluminium and steel - are injecting moderate volatility into the metals complex. What can we expect in the metal markets in the first months of 2025?

Q1 2025

Quarterly Metals Report

Brazil remains a dominant player in the coffee market, with farmers leveraging high domestic prices to maintain strategic selling practices despite wider dollar-based discounts. Nonetheless, challenging weather conditions throughout the growing season are casting a shadow over Brazil's coffee prospects. Understanding these dynamics is essential for making informed decisions as we move forward. Read our coffee crop update, with commentary on recent price activity, and coffee market forecasts to take advantage of market movements.

Coffee Crop Update - Beat the Heat

With a new government in place and a challenging global environment, what does 2025 hold for the UK economy?

UK Economy - 2025 Outlook

This report provides a comprehensive analysis of the EV market, with a particular focus being on supply chain analysis through mining, battery cell production, and sales of EVs. Additionally, we examine the implications of EV-specific tariffs, assessing their impact on cross-border trade, manufacturing costs, and company competitiveness.

Electric Vehicle and Battery Material Report - December 2024