FX Outlook
Daily FX Report

Daily FX Report

FX Guided by Diverging Central Banks Outlook

Wed 16 April 2025 07:00

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Authors

Daria Efanova Head of Research

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EUR / USD

EUR/USD remained elevated despite softening yesterday, edging to 1.1289. This comes on the back of German economic sentiment data showing a sharp decline to -14.0 in April from 51.6 in March, reflecting growing concerns about US tariffs' impact on European growth. Technical indicators remain supportive, with the pair maintaining levels above critical support levels of 1.12 and 1.11. While the European Central Bank is expected to cut rates by 25 basis points at its upcoming meeting, markets have already priced in 75 basis points of total easing for 2025.

The immediate technical outlook suggests a bullish scenario could materialise if buyers defend support at 1.126, potentially pushing prices toward recent highs near 1.143. We believe the euro strength will maintain in the long term given the erosion of the dollar's traditional safe-haven status and the euro's high liquidity characteristics attracting global capital rotation away from US assets.

USD / JPY

USD/JPY held its nerve, with Japan's insistence on removing Trump-era tariffs becoming a central point of contention. Technical analysis reveals bearish momentum as the pair trades below all major moving averages, with the 20-day SMA at 147.84, 50-day at 149.22, and 200-day at 150.76 serving as significant resistance levels.

The pair's recent price action has been relatively contained, maintaining a narrow trading range of 0.42% around the 143 level, though the technical setup suggests potential for further decline.

Bank of Japan Governor Ueda's warnings about downward pressure on both global and Japanese economies, coupled with the technical resistance cluster above 147, indicate that the path of least resistance remains to the downside, with potential acceleration of selling pressure if the support at 143.09 breaks.

GBP / USD

GBP/USD demonstrated remarkable strength, primarily driven by robust UK employment data showing 206,000 new jobs in February and sustained wage growth at 5.9% year-over-year. The US dollar's weakness, influenced by President Trump's aggressive tariff policies and the Dollar Index falling to three-year lows around 100, has further supported the pound's positive trajectory.

Technical analysis reveals strong bullish momentum, as the diverging monetary policy expectations between the Federal Reserve and Bank of England, coupled with the UK's relatively lower exposure to US trade tensions, provide fundamental support for further sterling appreciation.

Economic Calendar

16042025

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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