EUR / USD
EUR/USD pair demonstrates resilience, holding at 1.1640, as markets fully price in the probability of a Fed rate cut, while the ECB maintains a notably hawkish stance. Recent German economic data has shown unexpected strength, with industrial production posting its best two-month performance since 2021, providing fundamental support for the euro. Although some ECB officials are considering a potential rate hike, markets remain sceptical, thereby capping the pair’s upward momentum.
Likewise, the technical picture reveals a consolidation phase around the 1.1600 level, where key moving averages converge, providing technical resistance. Combined with expectations of a gradual Fed rate-cutting cycle in the first half of the year, this is limiting the dollar’s downside and reinforcing both technical and fundamental resistance for the pair at 1.1710 in the medium term.
Meanwhile, the psychological support at 1.1500 remains strong and would only be breached by a significant shift in sentiment, either in favour of prolonged Fed dovishness or heightened concerns about Europe’s economic weakness. We do not expect such a reversal in the near term.
USD / JPY
The USDJPY bounced back as markets initiated an aggressive dip-buying rally at the 155.00 support level. With markets having fully priced in a Fed rate cut this week and a BOJ rate hike next week, the near-term monetary policy outlook seems settled, shifting the focus to technical factors for the pair.
One key risk to watch out for today is the delayed JOLTS job-openings report for October. As this week’s Fed meeting is already fully priced for a 25bps cut, we expect JOLTS to be more important when it comes to expectations for the path beyond December. Given that investors currently do not expect a full additional cut until mid-2026, a clear decline in job openings or a rise in layoffs would be needed for a significant repricing.
As a result, we expect the pair to remain elevated in the near term, confined within the 155.00-156.50 range.
GBP / USD
GBP/USD has remained stable, consolidating near 1.3320, where technical resistance is reinforced by the convergence of key moving averages. Market sentiment is influenced by the Federal Reserve's imminent interest rate decision, while traders anticipate no cuts until the middle of next year.
The BOE's monetary policy outlook is similarly dovish, with markets assigning an 84% probability of a rate cut at the December 18th meeting. Recent UK economic indicators present a mixed picture, with accelerating wage growth offset by cooling labour market conditions, suggesting underlying vulnerabilities in the British economy and more opportunities for potential BOE dovishness in 2026, which could weigh on the pound’s fundamentals.
The currency pair's immediate technical outlook indicates potential for consolidation, with resistance at 1.3350 appearing robust.
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