EUR / USD
EUR/USD held its nerve, holding below the 20 SMA and above the 1.16 mark. Recent US retail sales and jobless claims data surpassing expectations have reinforced the Federal Reserve's current monetary stance, contributing to the euro's retreat from its 2025 highs.
Technical analysis reveals a bearish momentum, with the pair declining by 0.37% to 1.159 and holding below the crucial 20-day moving average at 1.17, while finding temporary support at the 50-day moving average of 1.15. The proposed 30% US tariffs on EU imports and Italian Deputy Premier Tajani's concerns about euro strength have introduced additional uncertainty into the market, potentially impacting eurozone growth prospects.
Market participants are closely monitoring the upcoming ECB meeting on July 24, though expectations for immediate policy action remain minimal, with only a 1% probability of a rate cut currently priced in. The technical outlook suggests further downside potential if the pair breaks below 1.158, with the next support level at 1.13. We expect the pair to remain in the recent ranges, with technical support and resistance levels tempering momentum.
USD / JPY
USD/JPY remained elevated, primarily driven by the stark contrast between Federal Reserve and Bank of Japan monetary policies, with the pair recently testing resistance at 148.62. Technical indicators support the upward trajectory, as the pair maintains positions above both the 50-day and 20-day SMAs, suggesting sustained buying pressure in the near term.
Japan's economic challenges, including contracting exports and political uncertainty surrounding the Upper House election, have contributed to yen weakness, while the BOJ's reluctance to adjust its accommodative stance despite inflation concerns further pressures the currency. The potential for fiscal deterioration in Japan, evidenced by promises of cash handouts and possible tax cuts, raises concerns about debt sustainability and adds another bearish factor for the yen.
A breakthrough above current resistance levels could target the 200-day SMA at 149.16, with potential for extension toward the January high of 158.55, though failure to breach those levels could cause the pair to retreat to shorter-term SMAs, which provide a strong technical support in the meantime.
GBP / USD
GBP/USD held its nerve despite the UK's labour market showing concerning signs of deterioration, with unemployment reaching a four-year high of 4.7% and wage growth moderating to 5%. The pound's weakness is further compounded by the UK's position as a G7 nation with the highest inflation rate, creating a challenging environment for the Bank of England's monetary policy decisions.
Strong US economic indicators, particularly the better-than-expected retail sales, have contributed to dollar strength against the pound. Technical analysis reveals the pair trading near crucial support at 1.34, with the RSI at 35 suggesting oversold conditions that could lead to a temporary bounce.
The currency pair remains caught between significant technical levels, with the 100-day moving average at 1.3280 providing support and the 50-day moving average at 1.35 serving as immediate resistance, while the contrasting economic conditions between the US and UK continue to favour dollar strength in the medium term.
Economic Calendar
