EUR / USD
EUR/USD demonstrated remarkable strength yesterday, surging over 2% and breaking through critical technical barriers amid broad dollar weakness triggered by continued trade tensions and tariff uncertainties. Recent US inflation data showing CPI cooling to 2.4% year-over-year in March, combined with the US administration's decision to pause reciprocal tariffs, has significantly undermined confidence in the dollar.
The European Central Bank's hawkish stance and improving Eurozone economic sentiment have provided substantial support for the euro, with the currency pair reaching a session high of 1.124 after breaching the psychologically important 1.10 level. Market participants are increasingly viewing European assets as an attractive safe-haven alternative to US Treasuries, particularly German bunds, which has further bolstered the euro's position.
The pair's upward momentum could extend toward 1.13 if current conditions persist and US economic data continues to support dovish Fed expectations. However, a retreat below the critical 1.10 threshold could trigger a correction toward the 20-day SMA at 1.09, particularly if trade negotiations deteriorate or policy divergence between the Fed and ECB narrows.
Given the scale of yesterday's gains, we expect the euro to retrace some of the gains today; however, the longer-term position for the euro remains favourable.
USD / JPY
USD/JPY has experienced significant downward pressure, driven by stronger-than-expected Japanese producer price data showing a 4.2% year-over-year increase in March, coupled with heightened US-China trade tensions that have undermined dollar confidence. Technical analysis reveals a substantial 2% decline from 147.5 to 144.5, with the pair breaking through multiple support levels including 145.00.
The divergence in monetary policy stances between the Bank of Japan's hawkish position and the Federal Reserve's expected dovish pivot has emerged as a key driver, particularly as markets anticipate potential monetary tightening from Japanese policymakers. The softer US inflation data, coming in at 2.4% year-over-year in March, has reinforced expectations of Fed rate cuts while simultaneously supporting yen strength.
The combination of increased safe-haven demand amid global trade tensions and the technical breach of key support levels suggests continued bearish pressure on USD/JPY, with potential further downside toward 142.0 if current support zones fail to hold.
GBP / USD
GBP/USD strengthened strongly yesterday, achieving a significant 1.15% gain and breaking through key technical levels, including the 200-day moving average. While the pound has managed to capitalize on broad dollar weakness, its gains remain constrained by domestic economic concerns and uncertainty surrounding the Bank of England's policy trajectory.
The US dollar faces mounting pressure due to global trade tensions, particularly with China, and diminishing safe-haven appeal amid concerns about policy unpredictability. The Bank of England's warnings about trade war risks and expectations for potentially four rate cuts in 2025, revised up from two, have introduced additional complexity to sterling's outlook.
Looking forward, while the pair maintains bullish momentum above the 1.29 support level with potential to test 1.31 resistance, gains are likely to remain capped at the 1.32 level in the meantime.
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