1. FX Outlook
  2. Daily FX Report

EUR / USD

The EUR/USD pair continues to demonstrate resilience, supported by softening US inflation data and improving economic sentiment in Europe, while maintaining its position above the critical 200-day moving average at 1.15. Recent trading patterns show consolidation near 1.165, with the pair establishing a solid support base at 1.163, suggesting a stable foundation for potential upward movement.

The European Central Bank's measured approach, combined with the absence of new energy-price shocks in Europe, has created a favourable environment for the euro, while the dollar faces headwinds from declining safe-haven demand and stable Treasury yields. Technical analysis indicates that a breakthrough above the 1.177 resistance level could catalyse momentum toward September's peak of 1.187, though the immediate challenge lies in overcoming the 30-day VWAP and 50-day moving average around 1.17.

The overall market sentiment appears to favour moderate euro appreciation, driven by expectations of a dovish Federal Reserve stance and improved global risk appetite, unless the Fed signals a less dovish policy path in upcoming meetings.

USD / JPY

The USD/JPY pair continues to demonstrate significant upward momentum, supported by the widening policy divergence between the Federal Reserve and Bank of Japan. Technical analysis reveals the currency pair is trading substantially above key moving averages, with the 20-day SMA at 151.63 and the 200-day at 146.92, confirming a robust long-term uptrend.

Prime Minister Takaichi's pro-stimulus stance and dovish monetary policy outlook have dampened expectations for near-term BOJ rate hikes, contributing to sustained pressure on the yen. The upcoming BOJ meeting is expected to maintain current rates despite inflation persisting above the 2% target, while market participants remain cautious ahead of the Federal Reserve's anticipated rate decision.

Recent price action shows a bearish reversal after testing resistance at 153.18, though the pair could target the 154.00 level if buyers successfully defend the 151.80 support level. The combination of Japan's expansionary fiscal policies and the BOJ's cautious approach to tightening suggests continued upward pressure on USD/JPY in the near term.

GBP / USD

Recent GBP/USD price action shows consolidation near the 200-day moving average at 1.34, with the pair maintaining a relatively tight trading range despite mixed fundamental drivers. The currency pair faces upward resistance at 1.35, with a breakthrough potentially opening the path to test recent highs at 1.37, while downside support remains firm at 1.33.

The pound is finding some fundamental support from the Bank of England's comparatively hawkish stance among major central banks, though this is partially offset by cooling UK inflation data and weakening retail metrics. Market participants are particularly focused on the Federal Reserve's upcoming rate decision, which could significantly impact dollar strength and consequently, the GBP/USD pair's trajectory.

The broader economic picture shows resilient but modest UK growth, while improving market sentiment regarding US-China trade relations provides an additional layer of complexity to the currency pair's outlook.

Economic Calendar

28102025

Contents

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