FX Outlook
Daily FX Report

Daily FX Report

FX Holds Firm Amid Mixed GDP Data

Thu 01 May 2025 07:00

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Authors

Daria Efanova Head of Research

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EUR / USD

EUR/USD weakened slightly as economic signals suggested that the Eurozone showed unexpected strength through Q1 GDP growth of 0.4% while the US economy contracted by 0.3%. Technical indicators remain supportive, with the pair maintaining positions above key moving averages, including the 50-day MA at 1.095 and the 20-day MA at 1.126.

The Federal Reserve's increasingly dovish stance, with markets pricing in four quarter-point rate cuts for 2025, coupled with moderating US core PCE inflation at 2.6%, suggests potential dollar weakness ahead. The dollar has already experienced its weakest monthly performance since November 2022, while the euro gained over 5% in April.

The pair's immediate technical outlook appears cautiously optimistic, with support at 1.126 potentially serving as a springboard toward the recent peak of 1.156. The currency pair's trajectory will likely be influenced by the upcoming US non-farm payrolls report and ongoing trade negotiations, with the recent easing of auto tariffs helping to stabilise market sentiment.

USD / JPY

USD/JPY strengthened as recent Japanese economic data revealed concerning contractions in industrial production and weakening retail sales, suggesting potential negative GDP growth in Q1. The Bank of Japan's expected maintenance of interest rates at 0.5% contrasts sharply with the Federal Reserve's anticipated rate cuts, with markets pricing in nearly 100 basis points of reductions by December.

Technical analysis shows USD/JPY trading below all major moving averages, including the 20-day SMA at 143.77 and the 50-day SMA at 147.05, while maintaining a relatively narrow trading range. The currency pair's immediate outlook appears cautious, with key resistance at 144.70 and support at 140.38, though trade-related developments could significantly impact price action.

Recent executive orders by President Trump to ease auto tariffs have provided some relief to Japan's export-dependent economy, though broader trade tensions continue to influence market sentiment and could affect the pair's trajectory.

GBP / USD

GBP/USD faced significant headwinds as the pair struggled above the 1.34 mark. Technical analysis shows the pair maintaining support above key moving averages, with the 200-day MA at 1.28, the 50-day MA at 1.30, and the 20-day MA at 1.32, despite recent selling pressure that pushed prices toward 1.33. The pound has demonstrated notable resilience, achieving its strongest monthly performance against the dollar since November 2023, supported by the UK's strategic efforts to mitigate US tariff impacts through economic agreements and technology partnerships.

However, the combination of anticipated BoE rate cuts, cooling global growth indicated by declining US job openings, and persistent trade uncertainties creates a challenging environment for sustained sterling strength. Moreover, technical indicators point to a waning bullish appetite, which could trigger a modest correction in the near term.

Economic Calendar

01052025

Disclaimer

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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.

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