EUR / USD
EUR/USD held its nerve as markets awaited announcements from Trump's tariff announcements. After his executive order, the pair saw major volatility, fluctuating between 1.0820 and 1.0900. Still, with the 1.0800 support holding firm, market reaction suggests that investors expected more stringent tariffs on the bloc. Trump said he would apply a minimum 10% tariff on all exports to the US and additional duties on other nations with the largest trade imbalances, with the European Union facing a 20% levy.
Technical indicators paint a resilient picture, with the pair trading above crucial moving averages, including the 20-day, 50-day, and 200-day SMAs, while the 1.08 provides immediate support. A breakthrough above 1.095 could trigger further upside momentum toward the September 2024 high of 1.120, though a decline below the critical support at 1.073 would invalidate the bullish outlook and potentially initiate a move toward the January lows near 1.012.
USD / JPY
USD/JPY weakened yesterday, dropping to 148.40, with the downside pressure intensifying by the end of the day following Trump's reciprocal tariff announcements. Trade tensions have created substantial downward pressure on the pair as markets process the implications of the proposed 24% tariff on Japanese imports, scheduled to take effect in a week's time.
The technical picture shows the pair breaking below critical support levels, including the 20-day SMA at 149.12 and the psychologically important 149.00 mark, suggesting increasing bearish momentum. Meanwhile, Japanese business sentiment has reached a one-year low, reflecting growing concerns about the impact of trade tensions on Japan's export-dependent economy, while the yen's traditional safe-haven status has strengthened amid the current uncertainty.
The pair's immediate trajectory appears bearish, with potential downside targets at 146.75, though a successful defence of this support level could trigger a bullish reversal toward the 50-day SMA at 150.80.
GBP / USD
GBP/USD accelerated its upward momentum by the end of the day following the announcement from the Trump administration that proposed a broad 10% tariff on many economies. As the UK received a smaller levy in comparison to its European counterparts, the pair's sentiment was bullish, breaching the psychological resistance level of 1.30, sending a strong buy signal.
Technical indicators remain favourable, with the pair trading above major moving averages and showing an RSI reading of 63, suggesting room for further upside without entering overbought territory. The UK government's diplomatic approach to Trump's new tariff regime, particularly their measured response to the relatively moderate 10% tariff on UK goods, has provided underlying support for sterling.
If a pair holds above the 1.30 level, this could pave the way for further gains toward 1.31, though failure to overcome this resistance might trigger a retreat to the support cluster around 1.28. The technical setup appears constructive, and we expect the pair to be 1.28.
