EUR / USD
EUR/USD remained elevated, supported by the European Central Bank's hawkish stance as they approach the end of their easing cycle, contrasting sharply with the Federal Reserve's more dovish positioning. Recent NY Fed data showing easing consumer inflation expectations across all timeframes could further influence the Federal Reserve's policy trajectory, potentially widening the monetary policy divergence between the two central banks.
The technical outlook remains constructive, with the pair trading above all major moving averages and maintaining support above the crucial 20-day SMA at 1.133. The RSI at 57 indicates healthy momentum without being overbought, while price action between 1.139 and 1.143 suggests a period of consolidation before the next directional move.
A breakthrough above 1.146 could target the recent peak at 1.156. The broader economic landscape favours the euro, with the eurozone showing economic resilience while managing inflation pressures, in contrast to mixed signals from US economic indicators.
USD / JPY
USD/JPY strengthened yesterday despite an upward revision in Japanese GDP performance. Japan's Q1 GDP data showed that the economy contracted less than initially estimated in the first quarter. Consumption figures were revised higher following the inclusion of additional data, such as spending on restaurants and leisure activities, which helped narrow the overall contraction from -0.7% to -0.2% QoQ. The upward revision helped temper concerns about domestic demand weakness amid external trade pressures.
Technical analysis reveals the pair trading below key moving averages at 144.50, suggesting the technical resistances are capping the upside. The pair's immediate technical outlook indicates resistance near 144.75, with a possible bullish breakout above 145.55 targeting 148.51, while downside risks could see testing of support at 142.50 if current levels fail to hold.
GBP / USD
GBP/USD held its nerve just below the 1.36 mark, having appreciated approximately 8% year-to-date, primarily benefiting from broad dollar weakness and a relatively stable UK economy. Technical analysis reveals a robust bullish trend, with the pair trading above all major moving averages - the 20-day SMA at 1.3465, 50-day at 1.33, and 200-day at 1.29.
The Bank of England's cautiously hawkish stance and expectations for unchanged rates at the upcoming June 19th meeting continue to provide underlying support for sterling, while the pair currently faces significant resistance at the 1.36 level. The currency pair's immediate trajectory will likely be influenced by several key events, including Wednesday's UK spending review, which will outline government department budgets through 2029, and the US CPI report.
The pair's future movement may find additional direction from upcoming April data on UK jobs, growth, and industrial output, with a potential breakthrough above 1.36 possibly triggering a rally toward 1.37 if the data comes better-than-expected.
Economic Calendar
