EUR / USD
Source: Massive (polygon.io)
EUR/USD remains under significant technical and fundamental pressure, trading around 1.1620 and remaining firmly below the key moving average cluster near 1.1700, while subdued RSI momentum continues to reinforce the softer outlook. Although the pair staged a sharp intraday rebound from 1.1583 to 1.1641 during the New York session, suggesting buyers are defending near term support, the inability to reclaim overhead resistance leaves the broader trend tilted to the downside.
The macro backdrop continues to favour the dollar. The US ten year Treasury yield near 4.65%, combined with persistent inflation readings, has effectively removed expectations for near term Federal Reserve easing and reinforced the dollar’s yield advantage. In contrast, the eurozone continues to face stagflationary pressures as elevated energy costs linked to Strait of Hormuz disruptions weigh on activity and inflation expectations. However, markets continue to price a meaningful probability of ECB tightening, with an 83% chance of a June increase now expected, while optimism surrounding a potential Iran agreement and a sharp decline in Brent crude prices offer some support for the euro.
Attention now turns to whether EUR/USD can hold the 1.1580 to 1.1590 support zone and challenge resistance around the 1.1700 moving average cluster. Thursday’s flash eurozone PMI data may prove pivotal in determining whether deteriorating activity or more hawkish ECB repricing becomes the dominant theme. A sustained move below support could expose downside towards 1.1450, while any easing in geopolitical tensions could materially improve the eurozone outlook through lower energy costs.
USD / JPY
Source: Massive (polygon.io)
USD/JPY is approaching an important inflection point as evolving central bank expectations and broader geopolitical developments continue to pull the pair in opposing directions. Markets increasingly expect the Bank of Japan to tighten policy at its June meeting, with overnight index swaps implying around a 78% probability of a rate increase, while the Federal Reserve continues to maintain a relatively hawkish tone amid persistent inflation concerns and elevated energy prices.
From a technical perspective, USD/JPY is trading around 159.00 and retains a constructive bias above the 50 day moving average at 158.78, the 20 day moving average at 158.01 and the 200 day moving average at 156.15. Daily RSI near 56.5 suggests momentum remains positive without becoming overstretched. The key battleground remains between the recent high near 159.13 and the psychologically important 160 level, where intervention risks become increasingly relevant.
Looking ahead, the outlook hinges on whether Bank of Japan tightening expectations and intervention threats can begin to offset the structural support provided by yield differentials and carry demand. Developments surrounding Iran negotiations may also influence sentiment, as progress could reduce safe haven demand for the dollar and encourage renewed yen strength. Until then, the pair may remain rangebound unless a decisive break develops above 160 or below the 50 day moving average.
GBP / USD
Source: Massive (polygon.io)
GBP/USD remains caught between conflicting macro forces, with softer UK inflation data providing some evidence that previous Bank of England tightening measures are beginning to gain traction, while underlying inflation pressures continue to prevent a more dovish policy shift. Headline CPI slowed to 2.8% against expectations of 3.0%, yet wage growth remains elevated at 4.1% and PPI input costs continue to rise sharply, leaving policymakers facing a difficult balancing act.
At the same time, the Federal Reserve has undergone a more hawkish repricing, with markets removing expectations for 2026 rate reductions and US ten year Treasury yields rising towards 4.91%, continuing to support the dollar. Elevated energy prices and disruption surrounding the Strait of Hormuz remain an additional challenge for the UK economy given its sensitivity to imported energy costs, while sterling’s muted response to higher gilt yields suggests markets continue to price fiscal and political risk into UK assets.
From a technical perspective, GBP/USD is trading near 1.3430 below both the 20 day moving average and 30 day VWAP near 1.3500, although it continues to hold above the important 50 day and 200 day moving average support zone around 1.3400. RSI near 47 points to fragile momentum conditions. A sustained move below 1.3400 could expose support at 1.3308 and reinforce the broader bearish outlook. While periodic optimism surrounding a US Iran agreement may provide temporary support, rallies towards the 1.3500 to 1.3550 region may struggle unless the broader macro narrative shifts materially.
