EUR / USD
Source: Massive (polygon.io)
EUR USD is trading at approximately 1.1779, holding above all key moving averages, including the 200 day SMA at 1.17, the 50 day SMA at 1.16, and the 30 day rolling VWAP at 1.16, with the daily RSI near 60, indicating moderate bullish momentum without overbought conditions. The pair has advanced steadily from a mid March low near 1.1415, and a decisive break above resistance at 1.1835 could open a move towards the 1.19 level. This technical strength is supported by growing institutional conviction in dollar weakness, with euro dollar options volume rising sharply and demand for euro calls exceeding puts, while hedge funds continue to build bearish dollar positions.
However, the fundamental factors bring headwinds for the euro. The 160 basis point interest rate differential in favour of the United States continues to underpin the dollar’s structural advantage, while the Eurozone’s position as a net energy importer, with Brent crude trading in the mid 90s, weighs on growth and complicates the European Central Bank’s ability to ease policy. Speculative accounts remain net short the euro, although this positioning creates scope for a short squeeze should geopolitical tensions ease, particularly around the approaching Middle Eastern ceasefire deadline.
In the near term, direction is likely to be driven by the diplomatic outcome in Islamabad and upcoming United States retail sales data. A de escalation could trigger a rapid unwind of bearish euro positioning and support a move through resistance, while a breakdown in talks would reinforce dollar safe haven demand and increase pressure on the euro through the energy channel, potentially leading to a pullback towards the 20 day SMA near 1.17.
USD / JPY
USD JPY remains supported near the 159 level, driven by ongoing monetary policy divergence between the Federal Reserve and the Bank of Japan. The Bank of Japan is widely expected to hold rates at 0.75% at its 28 April meeting, marking a third consecutive pause, while the Federal Reserve is also expected to remain on hold, preserving a wide rate differential that continues to support carry flows and yen weakness.
Japan’s sensitivity to energy supply disruption is adding to this pressure, with heavy reliance on Middle Eastern oil imports weighing on terms of trade amid ongoing regional tensions and risks around the Strait of Hormuz. This dynamic is limiting the yen’s traditional safe haven role, with markets instead focusing on inflationary pressure and external balance concerns.
Technically, the pair is consolidating just below resistance at the 20 day SMA at 159.13 and the 30 day VWAP at 159.07, while the 50 day SMA at 158.56 has provided support in recent sessions. A move back above the 159.07 to 159.13 area could open a path towards 160.34, a level seen as a potential trigger for intervention. Near term direction will depend on developments into midweek and any shift in Bank of Japan guidance, with a continued hold in policy likely to keep upward pressure on the pair.
GBP / USD
Source: Massive (polygon.io)
GBP USD is trading near 1.3518, holding above key support around 1.3400, supported by a softer dollar and shifting rate expectations. A clearer policy divergence is emerging between the Federal Reserve and the Bank of England, with markets scaling back expectations for US tightening while the Bank of England maintains a relatively firm stance amid persistent services inflation and elevated wage growth. This repricing has supported sterling’s recovery from the late March low near 1.3172 and shifted positioning towards net long, though this leaves the market exposed to a reversal if expectations are not met.
The key near term catalyst remains geopolitical developments into Wednesday, with energy prices and broader risk sentiment still sensitive to outcomes. Any escalation could drive safe haven demand for the dollar and weigh on sterling. Domestically, a busy UK data calendar, including CPI, retail sales and flash PMIs, will be important in shaping expectations for Bank of England policy, particularly given the balance between inflation pressure and softer growth signals.
From a technical perspective, the bullish case relies on holding above the 1.3500 level and extending towards the monthly high near 1.3587, supported by constructive momentum and a rising moving average structure. A failure near 1.3540, combined with weaker data or renewed geopolitical tension, could see a move back towards the 50 day SMA near 1.3400, leaving sterling vulnerable to a deeper pullback in what remains a highly event driven week.
