EUR / USD
The EUR/USD pair faces mounting pressure as recent Federal Reserve hawkishness has significantly reduced expectations for a December rate cut, with market probability dropping from 60% to 40%. While the eurozone showed unexpected economic resilience with Q3 growth of 0.2%, internal divisions within the ECB regarding inflation risks and energy price concerns are creating uncertainty around future monetary policy direction.
Technical analysis reveals the pair trading in a constrained range, finding strong resistance near 1.165 and maintaining position above the crucial 200-day SMA at 1.15, though struggling below the 50-day SMA at 1.16. The mixed signals are further complicated by the ECB's internal debate between officials noting balanced inflation risks and those warning about potential below-target inflation due to energy price declines. A decisive break above 1.174 could trigger a bullish run toward 1.19, while a breach below 1.150 support might initiate a bearish move toward 1.14, with current market conditions suggesting increased likelihood of downside risk given the strengthening dollar narrative.
USD / JPY
The USD/JPY pair maintains strong bullish momentum, trading decisively above key technical indicators including the 20-day, 50-day, and 200-day SMAs, suggesting a robust upward trend. Japan's recent economic contraction of 1.8% in Q3 2025, ending six quarters of growth, has prompted the government to announce a substantial 17 trillion yen stimulus package, creating an unusual policy divergence as the BOJ contemplates rate adjustments.
The likelihood of a BOJ rate hike in December has decreased to 32% from 50% a week ago, while expectations for Federal Reserve rate cuts have also diminished to a 40% probability, maintaining the interest rate differential that supports dollar strength. The contrasting monetary policy stances between Japan and the U.S., combined with Japan's economic challenges, suggest continued pressure on the yen, though intervention risks remain if the currency weakens too rapidly.
Technical analysis indicates potential for the pair to test recent highs near 155.00, with possibility of extending toward the yearly peak of 158.55 if yield differentials continue favoring the dollar. However, a break below the 20-day SMA at 153.70 could trigger a deeper correction toward the psychological 150.00 level, where significant buying interest may emerge.
GBP / USD
The GBP/USD pair is experiencing pressure due to mounting fiscal challenges in the UK, with particular focus on the upcoming Autumn Budget presentation by Finance Minister Rachel Reeves on November 26. The abandonment of planned income tax hikes has sparked concerns among bond investors about the UK's fiscal consolidation trajectory, while gilt yields remain highly responsive to policy uncertainty.
Technical analysis reveals a bearish bias, with the pair trading below all major moving averages, including the 200-day at 1.34 and the 50-day at 1.33, while maintaining a relatively narrow trading range near 1.316. The combination of UK fiscal concerns and reduced expectations for Federal Reserve rate cuts, now at only 40% probability for December, suggests continued downward pressure on sterling in the near term.
Recent weak economic data and persistent inflation above the Bank of England's 3% target point to growing stagflation risks, potentially creating a challenging environment for any significant sterling recovery against the dollar.
Economic Calendar
