EUR / USD
EUR/USD remained resilient, with prices maintaining a strong position above key moving averages and reaching six-week highs above 1.14. The European Central Bank's recent rate cut to 2.0%, coupled with ECB President Lagarde's more hawkish commentary suggesting the nearing end of the easing cycle, has provided substantial support for the euro.
Technical indicators reinforce the bullish outlook, with the currency pair trading comfortably above the 20-day SMA at 1.13 and both the 50-day and 20-day SMAs at 1.125, while the RSI at 60 indicates room for further upside. The pair's immediate trajectory appears positive, supported by expectations of European investors repatriating funds from the US and reduced market pricing for additional ECB rate cuts.
However, potential headwinds exist in the form of US trade policy uncertainty and possible tariffs, which could impact the euro zone's export performance and ultimately affect the currency pair's strength. The critical support level at 1.126 remains significant, as a break below this threshold could trigger a bearish reversal and a potential retest of the 50-day SMA at 1.125.
USD / JPY
USD/JPY held its nerve, capped by the short-term SMAs on the upside and the 142.30 support from the downside. Despite the Bank of Japan's increasingly hawkish stance under Governor Ueda, persistent domestic challenges, including declining real wages, have complicated the path toward monetary policy normalization. Technical analysis reveals a consolidation phase between 142.7 and 144.6, with the pair encountering significant resistance at the 50-day moving average.
Recent weak US economic data, particularly disappointing jobless claims and ISM services figures, have undermined dollar strength and contributed to yen appreciation. The currency pair's immediate direction appears contingent on the upcoming US nonfarm payrolls report, while a potential breakthrough above 144.6 could target the 200-day moving average at 149.50. However, a breach below the 142.7 support level could trigger a decline toward 139.9, particularly given the current RSI reading below 47, indicating weakening momentum.
GBP / USD
GBP/USD has demonstrated remarkable strength, primarily driven by the UK's robust economic performance and improved trade relations with the US, particularly notable in the exclusive steel and aluminium tariff agreement. Recent US economic weakness, evidenced by disappointing ADP employment figures and a contracting ISM services index, has contributed to dollar softness, pushing the US Dollar Index to seven-week lows.
The technical outlook appears promising, with the pair testing the crucial 1.36 resistance level and maintaining positions above all major moving averages. The Bank of England's measured approach to monetary policy, with Governor Bailey emphasizing a "gradual and careful" stance toward rate cuts, continues to provide fundamental support for sterling's valuation.
A successful breach of the 1.36 resistance level could pave the way for further gains toward 1.37, although today's path will be highly contingent on US nonfarm payroll data.
Economic Calendar
