EUR / USD
EUR/USD remained elevated, holding above the 1.08 mark, primarily driven by the European Central Bank's less dovish stance and Germany's impressive industrial production data, which rose 2.0% month-over-month in January. Technical analysis reveals the pair is trading above key moving averages, which could act as robust support levels in the near term.
The dollar's weakness is being exacerbated by growing recession fears in the US, with agencies revising their GDP forecast below 2.0%, while uncertainty surrounding trade policies and potential new tariffs continues to weigh on the greenback. The pair's immediate technical outlook appears somewhat stretched, with an RSI reading of 72 indicating overbought conditions, though fundamental factors continue to favour the euro.
A decisive break above the resistance level at 1.087 could pave the way for a move toward the September high of 1.120, while downside risks would materialise if prices breach the critical 200-day moving average at 1.07. Current macroeconomic fundamentals suggest continued volatility in EUR/USD, with a bias toward moderate euro strength in the near term.
USD / JPY
USD/JPY continues to cautiously test new lows, with technical indicators showing the currency pair trading below all major moving averages, suggesting sustained downward pressure. The Bank of Japan's increasingly hawkish stance, coupled with impressive wage growth data showing a 3.1% increase in January, has provided fundamental support for the Yen's appreciation. Technical resistance levels are clearly defined, with the 150.00 mark and 200-day SMA at 152.00 creating a formidable barrier for any potential upward movement.
The narrowing interest rate differential between Japan and the US, driven by growing anticipation for an increased number of rate cuts in 2025, has emerged as a key factor supporting the Yen's strength against the dollar. Growing concerns over US trade policies and global market uncertainties have also enhanced the Yen's safe-haven appeal. Should the current support at 146.65 fail to hold, the pair could experience an accelerated decline toward the September 2024 lows near 134.00.
The combination of Japanese wage pressures and rising government bond yields, reflecting expectations of BOJ policy normalisation, suggests the potential for further Yen appreciation in the medium term.
GBP / USD
GBP/USD remained elevated yesterday but struggled above the 1.2900 level once again, suggesting waning buying pressures. The UK's economic landscape appears particularly fragile, with January GDP data expected to show minimal growth of 0.1% month-over-month, contributing to sterling's vulnerability.
Technical indicators suggest approaching overbought conditions, with an RSI reading of 67.89, while the 200 DMA at 1.2789 provides significant support below current prices. Looking ahead, Wednesday's US CPI data and the Bank of England's response to ongoing trade tensions will be crucial in determining the pair's direction, with the potential for a correction to the 200 DMA level.
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