EUR / USD
EUR/USD remains compressed within a clearly defined 1.1750–1.1830 range, with price hovering near the 50-day SMA around 1.1800 but repeatedly failing to sustain a break above the 20-day SMA and 30-day VWAP clustered near 1.1800–1.1810. We see this confluence acting as a near-term ceiling, reinforced by systematic selling interest above 1.1835. The daily RSI near 44 confirms subdued momentum, and we note the pair has now retraced roughly 2% from its late-January peak near 1.2042, consistent with a corrective phase.
Fundamentally, we see the euro facing structural headwinds from weak eurozone momentum, including soft auto registrations and broader growth fragility. The ECB’s neutral messaging provides little catalyst for renewed upside. By contrast, the dollar retains underlying support from elevated US yields, limited rate-cut expectations of around 50 basis points for 2026, and resilient US consumer confidence data at 91.2, even as growth slowed to 1.4% quarter-on-quarter.
We expect the medium-term bias to remain tilted lower unless 1.1837 is decisively reclaimed. Failure to hold above the 1.1810 resistance band would likely see a retest of 1.1722, while a break below that level could expose the 200-day SMA near 1.1658–1.1700, which we view as the key trend-defining threshold. Only a sustained recovery above 1.1837 would open scope toward 1.1936, a scenario we see as less probable given prevailing macro conditions favouring dollar resilience.
USD / JPY
USD/JPY continues to draw support from policy divergence, as political pressure on the Bank of Japan — including Prime Minister Takaichi’s caution on further rate hikes and the appointment of more dovish academics — has compressed expectations for near-term tightening. At the same time, hawkish Federal Reserve rhetoric and resilient US data have limited the scope for aggressive rate-cut pricing, sustaining carry flows into the dollar.
Technically, the pair is consolidating between the 20-day SMA near 155 and the 50-day SMA around 156, with RSI at 55 signalling moderately constructive momentum. Price remains comfortably above the 200-day SMA near 152, reinforcing the broader uptrend. We expect a sustained break above 156 to open scope toward the 157.7 resistance area and potentially the January high near 159. Conversely, a clear move below 155 would likely expose 153.5 and possibly 152.2 if downside momentum builds.
Looking further ahead, we see the structural case for yen weakness as intact but increasingly nuanced. Geopolitical developments and evolving US tariff policy may provide justification for the BoJ to delay normalisation, yet we expect eventual tightening by mid-to-late 2026. Combined with prospective Fed easing later this year, this suggests the current rate differential advantage may narrow over time. A hawkish surprise in the BoJ’s forthcoming neutral rate band communication could therefore trigger sharp carry unwinds, altering the pair’s trajectory more abruptly than markets currently anticipate.
GBP / USD
GBP/USD remains under pressure amid weakening UK fundamentals and widening monetary policy divergence. We see markets increasingly pricing in near-term Bank of England rate cuts, driven by softer labour data, easing inflationary pressures and fragile domestic demand. This stands in contrast to the Federal Reserve’s relatively restrictive stance, sustaining a carry advantage that continues to favour the dollar.
From a technical standpoint, the pair is testing the 50-day SMA near 1.3500 while trading below the 20-day SMA and 30-day VWAP near 1.3600. The daily RSI around 42 reflects persistent bearish momentum since the late-January high near 1.3848. The 200-day SMA at 1.3400 aligns with structural support near 1.3359 and represents a critical downside pivot.
We expect the 1.35 area to remain the near-term battleground. A sustained defence followed by a move above 1.3568 would improve the technical tone, though we see upside constrained by rate differentials and lingering political uncertainty in the UK. Conversely, a decisive break below 1.3480 would likely accelerate losses toward 1.3400 and potentially 1.3359, consistent with entrenched expectations for BoE easing and a cooling domestic backdrop.
