FX Outlook
Daily FX Report

Daily FX Report

FX Markets Guided by Central Bank Policy Moves

Tue 08 April 2025 07:00

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Authors

Daria Efanova Head of Research

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EUR / USD

EUR/USD demonstrated resilience despite challenging global trade conditions, with the European Union's robust current account surplus of 3% providing fundamental support to the euro. Recent price action shows modest losses, with the pair maintaining positions above key technical levels, including the 1.09 mark.

Market expectations for approximately 110 basis points of Fed rate cuts in 2025 are creating a supportive environment for the euro, although this is partially offset by disappointing eurozone economic data, including lower-than-expected retail sales growth of 0.3%. Technical analysis suggests the potential for further upside if the pair can break above the 1.10 resistance level, with 1.11 serving as the next significant target.

The European Union's measured approach to trade tensions, compared to more aggressive responses from other global players, may provide additional stability for the euro in the medium term. In the meantime, we expect the support at 1.08 to serve as a critical pivot point for the pair.

USD / JPY

USD/JPY has shown significant volatility recently, with a notable surge from 145.5 to 147.9 yesterday, representing a 2% increase despite broader market uncertainties. Still, with the resistance at 150.00 remaining intact, markets continue to benefit from the yen as a safe haven.

Technical indicators suggest that near-term gains might be capped, with the pair trading below the 20-day moving average of 148.90 and other moving averages. The pair's future trajectory appears heavily dependent on the April 9th tariff implementation deadline, and we maintain a bearish stance on the dollar while favouring the yen as a defensive option amid expectations of falling US real yields and stagflation risks.

GBP / USD

The GBP/USD pair has experienced significant downward pressure, dropping to critical levels as global trade tensions intensify and market sentiment deteriorates. The technical analysis reveals a decisive breach of key moving averages, with the pair breaking below both the 200-day and 50-day SMAs at 1.2812 and 1.2732, respectively, suggesting a strengthening bearish momentum.

The currency pair's weakness is particularly pronounced against the backdrop of mounting concerns about the UK economy's vulnerability to trade disruptions, with approximately £60 billion of annual exports to the US now subject to a 10% tariff. Market expectations have shifted dramatically toward a more dovish Bank of England stance, with traders fully pricing in a rate cut by May 2025, further undermining sterling's appeal against the dollar.

The immediate technical outlook appears challenging, with the pair finding strong resistance at 1.291 and showing limited recovery potential as selling pressure persists around the 1.276 level, while a breach of support at 1.234 could potentially trigger a more substantial decline toward February's lows near 1.24.

Economic Calendar

08042025

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.

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