EUR / USD
The euro faces persistent headwinds as recent Eurozone data highlight worsening economic conditions, with investor confidence unexpectedly slipping to -7.4 in November from -5.4 in October. The EUR/USD pair trades precariously near the 200-day moving average at 1.156, with the 20-day average at 1.16 acting as immediate resistance.
Diverging monetary policy outlooks between the ECB and the Federal Reserve remain a key driver. Markets continue to price multiple Fed rate cuts through 2026, while the ECB appears largely done with its tightening cycle. Mixed signals from the Federal Reserve have fuelled uncertainty over potential December easing, with market-implied probabilities falling from 90% to 63%. However, softer US data, including job losses and weaker consumer sentiment, have renewed expectations of policy loosening.
Technically, the pair sits at a pivotal juncture: a breakout above 1.167 would open the way to the 50-day moving average at 1.17, while a slide below 1.147 could expose 1.14. The resolution of the US government shutdown may provide greater clarity on the Fed’s policy path, though near-term direction remains clouded by the interplay of technical and fundamental forces.
USD / JPY
The USD/JPY pair remains robust, holding above key technical supports: the 20-, 50-, and 200-day simple moving averages at 153, 151, and 147 respectively. The yen’s continued weakness reflects Japan’s shift toward looser fiscal targets under Prime Minister Takaichi and the Bank of Japan’s cautious stance on normalisation.
Despite narrowing interest rate differentials, with five-year spreads contracting to around 2.5%, the yen continues to underperform relative to historical norms. Technical momentum remains supportive, with the pair trading above the 30-day VWAP at 152.45. The RSI reading of 62 suggests neutral momentum, neither overbought nor oversold.
Further upside could see a retest of 154.50 if US yields climb, though intervention risks from Tokyo are rising as the currency hovers near multi-month lows. UBS estimates the yen’s fair value at roughly 125 against the dollar, but structural factors continue to delay any meaningful convergence toward this level.
GBP / USD
Sterling remains under sustained pressure as dovish signals from the Bank of England reinforce expectations of rate cuts, with markets assigning a 60% probability of a reduction in December. The Bank’s narrow 5–4 vote to hold rates underscores growing internal division over maintaining current policy.
Technically, GBP/USD trades around 1.317, below all major moving averages, including the 200-day SMA at 1.34, suggesting a bearish medium-term bias. Upcoming UK employment and wage data will be pivotal; any signs of labour market softening could strengthen expectations of earlier rate cuts and further weigh on the pound.
Goldman Sachs maintains a bearish outlook, projecting faster-than-expected cuts and a terminal rate near 3% by 2026. Combined with ongoing domestic headwinds and renewed dollar strength, supported by progress on the US government shutdown and potential US-India trade development, the pound may struggle to sustain current levels in the near term.
