EUR / USD
The outlook for EUR/USD is being shaped by several key macroeconomic factors. Recent weak US consumer sentiment data, which has fallen to its lowest level in almost three and a half years, alongside signs of labour market softening, has strengthened expectations for Federal Reserve rate cuts. Markets are now pricing in a 67% probability of a December cut.
The prolonged US government shutdown, now the longest on record, has weighed heavily on economic activity and curtailed access to key data, though progress towards a resolution appears imminent. Meanwhile, Europe continues to show signs of persistent weakness, with disappointing German and French trade figures highlighting fragile demand. While dovish remarks from Fed officials Jefferson and Williams have reinforced expectations of early-2026 policy easing, the central bank remains cautious given that inflation is still hovering near 3%.
Attention now turns to the upcoming Eurozone Sentix Investor Confidence survey, forecast at -3.9 versus -5.4 previously, which will offer a timely gauge of sentiment. Despite multiple headwinds, the US dollar has remained resilient, underscoring the relative strength of the American economy compared with other developed markets.
EUR/USD traded in a tight range through early November, holding above the 200-day moving average near 1.15. The pair briefly tested resistance around 1.159 during mid-Friday sessions amid heavier volumes, though momentum failed to sustain, prompting a modest pullback. The pair remains trapped between technical levels, with the 50-day moving average at 1.17 acting as overhead resistance and the 30-day VWAP near 1.16 providing intermediate resistance. A sustained break above 1.173 could open the way towards September’s high near 1.187, while a loss of support at 1.150 would risk a retreat towards the 200-day moving average.
USD / JPY
The Japanese yen continues to face downward pressure amid mixed signals from the Bank of Japan and shifting fiscal priorities under Prime Minister Takaichi’s administration. The BoJ’s latest Summary of Opinions revealed a divided policy board, with only a minority favouring rate hikes, suggesting that meaningful policy normalisation may be delayed.
Prime Minister Takaichi’s comments on adopting more flexible, multi-year fiscal spending targets mark a departure from Japan’s previous commitment to fiscal discipline, adding further pressure on the yen. The US dollar, meanwhile, is showing early signs of softening as Congress moves closer to resolving the federal government shutdown, though broader concerns over global growth persist.
Markets are closely tracking the widening policy divergence between the BoJ’s caution and the Federal Reserve’s potential pivot towards easing, with Fed funds futures pricing in a 63% chance of a December rate cut. Japanese authorities remain alert to excessive yen weakness, though direct intervention seems unlikely unless volatility increases sharply or the yen approaches the 158–160 range against the dollar.
USD/JPY maintained a relatively firm tone, rising from 153.12 to 153.96 within a narrow trading band. The pair remains well above key moving averages, reflecting sustained bullish momentum. Peak trading activity occurred near 153.13, suggesting strong buying interest at lower levels. Looking ahead, a break above resistance at 154.00 could target the recent high around 154.33, while a move below 153.00 may trigger a corrective pullback towards the 30-day VWAP near 152.32.
GBP / USD
The outlook for GBP/USD is being shaped by diverging monetary policy expectations between the Federal Reserve and the Bank of England. Weak US consumer sentiment, now at a three-and-a-half-year low, together with labour market concerns, has increased expectations for Fed rate cuts in 2026. Dovish commentary from Fed officials Jefferson and Williams has reinforced market confidence in early-2026 policy easing, with traders now assigning a 67% probability to a December rate cut.
Although the prolonged US government shutdown has created significant economic uncertainty and restricted access to data, hopes of an imminent resolution have lifted risk sentiment slightly. In contrast, the Bank of England’s comparatively hawkish tone on inflation continues to provide underlying support for sterling. White House advisers, however, have warned that an extended shutdown could tip the US into negative GDP growth, adding a layer of caution to market positioning.
Sterling has shown limited volatility against the US dollar, consolidating within a narrow band while finding support near 1.31 and facing resistance at 1.32. Technical indicators suggest a mildly bearish bias, with the pair trading below all major moving averages. A sustained move above 1.32 could open the way towards clustered resistance near 1.34, while a break below 1.30 may accelerate downside momentum towards the December 2024 lows around 1.14.
