EUR / USD
EUR/USD faces moderate pressure as the pair fluctuated widely on the back of dollar volatility, which was driven by the US Court of International Trade ruling that President Trump exceeded his legal authority in imposing tariffs under the International Emergency Economic Powers Act (IEEPA). Later statements regarding a temporary reprieve from a ruling eased some of the concerns, which has kept the EUR/USD upside capped by 1.14.
Moreover, the European Central Bank signalled a highly probable 25 basis point rate cut at its upcoming June 5 meeting, contrasting sharply with the Federal Reserve's more measured stance on monetary policy. Recent US economic data presents a mixed outlook, with Q1 GDP revised to -0.2% while core PCE shows signs of easing inflation pressures at 3.4%, factors that continue to influence the currency pair's movements.
Technical analysis reveals the pair is maintaining a relatively strong position, trading above both its 50-day and 200-day moving averages at 1.12 and 1.08, respectively, with an RSI of 57 indicating moderate bullish momentum. The recent surge to 1.138 during mid-day trading demonstrates short-term strength, though the sustainability of this move remains uncertain given the diverging monetary policy expectations between the Fed and ECB.
The pair's immediate trajectory appears contingent on maintaining support above 1.135, with potential for further gains toward 1.16.
USD / JPY
USD/JPY faced moderate downward pressure, having fallen from its peak of 146.09 through multiple technical levels during the day, with current trading well below key moving averages, including the 50-day SMA at 145. Japan's economic landscape presents a mixed picture, with Q1 GDP contracting 0.7% and inflation running at 3.6%, though consumer confidence has shown improvement, rising to 32.8.
The Bank of Japan's gradual normalization efforts, including their rate hike to 0.5% in January, coupled with challenges in the bond market and weak demand at government debt auctions, continue to influence the currency pair's movements. The pair's immediate technical outlook suggests potential support near 143.50, coinciding with the trend support.
The currency pair's future trajectory appears increasingly dependent on both the resolution of U.S.-Japan trade disputes, particularly regarding auto sector tariffs, and the relative pace of monetary policy adjustments between the Federal Reserve and Bank of Japan under Governor Ueda's leadership.
GBP / USD
GBP/USD held its nerve, demonstrating resilience amid complex macroeconomic conditions, with strong UK economic data providing fundamental support despite global trade uncertainties. Technical indicators present a bullish outlook, with the currency pair maintaining positions above key moving averages and showing positive momentum as indicated by an RSI of 60.
The Bank of England's cautious approach to rate cuts, highlighted by Governor Bailey's emphasis on gradual policy adjustments, continues to underpin sterling's strength, while weak US economic data, including a Q1 GDP contraction of 0.2%, weighs on the dollar.
The immediate technical landscape suggests room for further appreciation, with 1.37 emerging as a key target should the pair successfully breach the 1.359 resistance level.
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