EUR / USD
EUR/USD has demonstrated significant bullish momentum, with prices continuing to mark new highs, closing above the 1.15 level by the end of the week. The euro's strength can be attributed to growing concerns over Federal Reserve independence and US economic policy uncertainty, particularly amid Trump's intensifying criticism of Fed Chair Powell. Safe-haven flows are increasingly favouring the euro over the dollar, with the options market signalling strong expectations for further euro appreciation, while the ECB's recent rate cuts appear fully priced in.
Technical analysis reveals overbought conditions with an RSI reading of 76.00, indicating the potential for a short-term correction toward the 1.14 level. The pair's immediate resistance lies at the recent peak of 1.1573. Market sentiment indicates ongoing euro resilience unless there is a significant de-escalation of US trade tensions or unexpected dollar strength.
USD / JPY
USD/JPY continues to experience significant downward pressure as political uncertainty surrounding Fed independence and US-China trade tensions weigh heavily on market sentiment. The currency pair's technical outlook appears bearish, with prices maintaining below critical moving averages at 151.61, 150.32, and 148.17, as prices approach the September low of 139.58.
Japan's expanding trade surplus of JPY 544.1 billion in March provides fundamental support for the yen despite the Bank of Japan maintaining its accommodative stance. The implementation of aggressive US tariffs, particularly the 25% levy on car imports, has strained US-Japan economic relations and contributed to the dollar's weakness against the yen.
Market participants are closely monitoring the upcoming talks between Japanese Finance Minister Kato and US Treasury Secretary Bessent, which could address currency matters alongside tariff discussions. A potential bearish continuation could unfold if selling pressure intensifies below 140.00, potentially driving the pair below the September 2024 lows near 138.61.
GBP / USD
GBP/USD continued to strengthen, as the pair is seen approaching the September 2024 high of 1.3434. The currency pair's strength is primarily driven by growing concerns over Fed independence and criticism of Fed Chair Powell, which have contributed to broad dollar weakness.
The pound's attractiveness is enhanced by the UK economy's relative stability and the Bank of England's steady policy stance, helping push the pair toward peaks near 1.342. However, technical indicators suggest some near-term caution is warranted, with an RSI reading of 74.00 indicating overbought conditions despite the overall positive trend.
While the pair maintains support above the 20-day moving average at 1.30, potential headwinds could emerge if global risk aversion intensifies or if US-China trade tensions begin impacting broader international trade. A bullish continuation could see the pair testing yearly highs above 1.343, particularly if economic data continues to support the Bank of England's hawkish stance.
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