– Written by


David Woodsmith

STORY LINK GBP/USD Forecast: Pound Sterling Choppy as Iran Talk Uncertainty Persists

The Pound US Dollar (GBP/USD) exchange rate moved without a clear trajectory on Thursday, amid uncertainty around US-Iran peace negotiations.

At the time of writing, GBP/USD was trading at $1.3364, having wavered throughout the session.

The US Dollar experienced uneven movement, rising early in the session before giving back those gains, as uncertainty surrounding potential US-Iran peace talks clouded market sentiment.

Earlier in the week, US President Donald Trump suggested that discussions were underway to bring an end to the conflict, a claim swiftly dismissed by Tehran.

Since then, reports have remained mixed, with speculation ranging from informal contact to the possibility of structured negotiations taking place in the coming days.

Washington has also tabled a peace proposal that Iran has publicly rejected, though there are suggestions it is still being weighed behind closed doors. At the same time, the deployment of an additional 2,000 US troops to the region has raised questions about the credibility of de-escalation efforts.

Amid these conflicting signals, the safe-haven US Dollar found it difficult to establish a clear trend.

The Pound struggled to find momentum, with the absence of notable UK economic releases leaving Sterling without a clear catalyst.

With little fresh data to guide markets, GBP traded cautiously as investors continued to assess how the ongoing Middle East crisis could influence the UK’s economic outlook.

While rising energy prices may encourage the Bank of England to maintain a more restrictive policy stance, they also risk placing additional pressure on already weak growth prospects.

Short-Term GBP/USD Forecast: UK Retail Sales in Focus

Friday’s UK retail sales figures could act as a headwind for the Pound. Forecasts suggest sales volumes contracted by 0.8% in February, with a drop of this scale likely to raise fresh concerns about the resilience of the UK economy.

Across the Atlantic, the final reading of the US consumer sentiment index is also due. If confidence is confirmed to have weakened or revised lower, this could place some downward pressure on the US Dollar.

Developments in the US-Iran conflict are expected to remain a key driver of movement. Any indication that both sides are willing to engage in meaningful peace discussions may lift market sentiment and support GBP/USD. On the other hand, further escalation could reinforce demand for the safe-haven US Dollar and potentially push the exchange rate lower.

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2026.03.26 2026.03.26
Yen Slides Amid Rising Oil Pressures. Forecast as of 26.03.2026

Dmitri Demidenkohttps://www.litefinance.org/blog/authors/dmitri-demidenko/

The Japanese government doubts that intervening in the Forex market will drive the USD/JPY pair down. The US dollar is strong amid surging Brent crude prices. Let’s discuss this and develop a trading plan.

Major Takeaways

• The Japanese government is stepping up its verbal interventions.
• Japan is planning to intervene in the oil market.
• The BoJ may raise rates as early as April.
• Long positions on the USD/JPY pair can be opened on a breakout of 159.7.

Weekly Fundamental Forecast for Yen

While the Japanese government says it is ready to intervene in the currency market at any moment, it is also considering a large-scale plan to deploy its $1.4 trillion in reserves across other markets. The crude oil futures market, in particular, is in the spotlight. The recent rally in Brent crude—triggered by the closure of the Strait of Hormuz—has become a major concern for Prime Minister Sanae Takaichi.

Japan has considerable experience with currency interventions, but its effectiveness has often depended on periods of US dollar weakness. With the Fed signaling the end of its monetary tightening cycle and a potential shift toward rate cuts, pressure on USD/JPY has increased. It seems that Tokyo has been waiting for the right moment to act.

USD/JPY Rate and Currency Interventions

Source: Bloomberg.

This time, however, the Fed is largely sidelined. The futures market gives a 63% probability that the US regulator will keep rates unchanged through the end of 2026. At the same time, the trajectory of the US dollar is increasingly tied to oil prices. In other words, any decline in USD/JPY quotes is likely to be temporary as long as Brent crude prices remain elevated. Addressing the root cause of the problem would, in turn, ease pressure on the Japanese currency.

At the same time, Japanese officials continue to fuel concerns in the domestic currency market. Finance Minister Satsuki Katayama has described the USD/JPY rally as disconnected from fundamentals and warned that intervention in the foreign exchange market could occur at any moment. She has been echoed by Deputy Minister for International Affairs Atsushi Mimura. Alongside this, Bank of Japan Governor Kazuo Ueda has indicated that the Middle East conflict will have only a temporary impact on the economy and reiterated that the central bank is still considering further rate hikes. These factors would support the yen.

However, the currency remains weak. This weakness, combined with rising import costs driven by higher oil prices, is increasing the risk of renewed inflationary pressure, even as inflation has recently fallen below the 2% target for the first time since March 2022.

Japan CPI

Source: Bloomberg.

In this context, the Bank of Japan’s potential moves are truly mind-boggling. The central bank refrained from raising the overnight rate even though consumer prices remained above target for four years. Now, it is considering rate hikes while the CPI slides below 2%. It is nothing short of a paradox.

In reality, central bank actions are typically preventive. If rising inflation expectations are not contained early, they can spiral out of control. This is precisely why Nomura expects the BoJ to increase the overnight rate in April.

Weekly USDJPY Trading Plan

Interventions in the oil market are unlikely to achieve lasting results. Brent is reacting primarily to news of ongoing negotiations, and any funds Japan injects will likely only suppress prices temporarily. The same logic applies to the USD/JPY pair. As a result, a sustained break above the resistance level at 159.7 could serve as a strong signal to add to previously established long positions.

This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.

Price chart of USDJPY in real time mode

Singapore, March 2025 – The EUR/USD currency pair, the world’s most traded forex instrument, currently exhibits a pronounced downside bias according to technical analysis from United Overseas Bank (UOB). However, this bearish pressure operates firmly within a well-defined and persistent broader trading range, creating a complex landscape for traders and investors navigating the 2025 financial markets. This analysis examines the technical structure, fundamental underpinnings, and potential market implications of this configuration.

EUR/USD Technical Structure: Defining the Range

United Overseas Bank’s Global Economics & Markets Research team identifies specific technical levels that confine the current price action. The pair has consistently found support near the 1.0650 level throughout the first quarter of 2025. Conversely, multiple rally attempts have faltered around the 1.0950 resistance zone. This 300-pip corridor has contained most trading activity since late 2024. Consequently, the market demonstrates clear memory at these psychological and technical junctures. The 100-day and 200-day simple moving averages currently converge within this range, further emphasizing its technical significance. Meanwhile, momentum indicators like the Relative Strength Index (RSI) frequently oscillate between oversold and neutral territory without reaching overbought extremes, confirming the range-bound nature with a bearish tilt.

Key Technical Levels for Q2 2025

The following table summarizes the critical technical zones identified by UOB and corroborated by market price action:

Fundamental Drivers Behind the Range and Bias

The technical pattern directly reflects a stalemate in fundamental monetary policy divergence. On one side, the European Central Bank maintains a cautious stance despite easing inflationary pressures. The ECB’s Governing Council emphasizes data dependency, particularly regarding wage growth trends in the Eurozone. Therefore, market expectations for rate cuts remain measured and gradual. Conversely, the Federal Reserve’s policy trajectory dominates the dollar’s narrative. Strong U.S. labor market data and resilient consumption figures have prompted the Fed to delay its own easing cycle. This policy differential creates a fundamental headwind for the euro, explaining the pair’s downside bias. However, the range persists because neither central bank exhibits urgency for aggressive action, leading to a equilibrium of expectations.

Furthermore, global risk sentiment and geopolitical developments provide alternating support and pressure. For instance, periods of market stress typically bolster the U.S. dollar’s safe-haven status, testing the lower bounds of the range. Conversely, improving global growth prospects or de-escalation in geopolitical tensions can trigger euro rallies toward range resistance. Economic data releases, especially inflation prints (CPI) and Purchasing Managers’ Index (PMI) surveys from both regions, act as frequent catalysts for volatility within the established boundaries. Traders consistently monitor these releases for signals that could break the stalemate.

Comparative Economic Indicators

The range-bound price action mirrors closely matched economic indicators. Key metrics include:

• Inflation Trends: Both Eurozone and U.S. headline inflation have converged toward 2.5-3.0%, reducing a major policy divergence driver.
• Growth Expectations: IMF forecasts for 2025 GDP growth show marginal differences, with the U.S. slightly ahead.
• Yield Differentials: The 2-year government bond yield spread between Germany and the U.S. has stabilized, anchoring the currency pair.

Market Implications and Trader Positioning

This technical setup presents distinct scenarios for different market participants. For short-term tactical traders, the defined range offers clear opportunities. The strategy involves selling rallies near resistance and buying dips near support, always respecting the range boundaries. Position sizing and strict stop-loss management become paramount, as false breakouts remain a constant risk. For longer-term institutional investors and corporate treasurers, the environment necessitates a focus on hedging currency exposure. The persistent range reduces the urgency for directional bets but increases the value of options strategies that profit from continued volatility and time decay. According to Commitments of Traders (COT) data from the Commodity Futures Trading Commission, speculative net positioning on the euro remains near neutral levels, reflecting market indecision and alignment with the range-bound thesis.

Moreover, the downside bias suggests a slight preference for bearish strategies. This includes put option structures or ratio spreads that benefit more from a decline than a rally. However, the strength of the range support at 1.0650 tempers expectations for a sustained collapse. A decisive weekly close below this level would signal a potential breakdown, shifting the technical outlook and likely triggering a wave of stop-loss orders. Conversely, a sustained move above 1.0980 would invalidate the immediate downside bias and open the path toward higher resistance levels near 1.1100. The market currently assigns a higher probability to a test of the lower boundary before any sustained upward breakout.

Historical Context and Range Persistence

Extended trading ranges are not uncommon for major currency pairs. The EUR/USD spent most of 2023 oscillating within a 1.0500-1.1000 band before breaking higher. Historical analysis shows that such consolidation phases often precede significant directional moves. The duration of the current range, now exceeding five months, suggests building energy for a future breakout. The eventual direction will likely hinge on which central bank shifts its communication stance more dramatically. Analysts also watch for exogenous shocks, such as significant changes in energy prices or unforeseen political events within the Eurozone or United States, which could serve as catalysts to break the technical deadlock. Monitoring trading volume during tests of range boundaries provides crucial clues; weakening volume on bounces and increasing volume on sell-offs would confirm the downside bias.

Conclusion

The EUR/USD pair presents a classic case of conflicting market forces resulting in constrained price action. The technical analysis from UOB correctly identifies a downside bias within a broad and resilient trading range. This configuration reflects a fundamental standoff between the ECB and the Fed, with economic data flows alternately supporting each currency. For market participants, this environment demands discipline, favoring range-trading strategies while preparing for an eventual breakout. The critical levels of 1.0650 support and 1.0950 resistance will continue to define the pair’s trajectory in the second quarter of 2025, serving as the primary benchmarks for assessing any shift in market structure.

FAQs

Q1: What does ‘downside bias within a broad range’ mean for EUR/USD?
It means the currency pair is more likely to move toward the lower end of its established trading channel (e.g., 1.0650) than the upper end (e.g., 1.0950), but a complete breakdown below the range is not the base case. Sellers generally have more control in the short term.

Q2: What fundamental factors are causing this range-bound trading?
The primary cause is a convergence in monetary policy outlooks between the European Central Bank and the U.S. Federal Reserve. Both are in a data-dependent holding pattern regarding interest rates, eliminating a major driver of sustained directional trends for the exchange rate.

Q3: How should a trader approach this market setup?
Traders often employ range-bound strategies, such as buying near identified support levels and selling near resistance, with tight risk management. They also monitor for a decisive breakout above or below the range with increasing volume, which would signal a potential new trend.

Q4: What would signal a break of the current EUR/USD range?
A sustained daily and weekly close, confirmed by strong trading volume, above the 1.0980 resistance or below the 1.0650 support level would signal a valid breakout. A single spike outside the range is often a false signal.

Q5: Who is UOB and why is their analysis significant?
United Overseas Bank (UOB) is a major Asian financial institution with a respected Global Economics & Markets Research team. Their analysis is closely followed because it provides a well-informed, institutional perspective on forex markets, combining technical and fundamental insights.

Copper price stayed below $5.5100, maintaining its negative stance and increasing the likelihood of forming short-term corrective downward waves. Since yesterday, the price has been fluctuating near $5.4200, affected by the ongoing divergence in key indicators, particularly the moving average 55 positioned above current trading levels.

It is important for the price to gather bearish momentum during today’s sessions, which would facilitate targeting first $5.2700, followed by the next key support near $4.9500. However, a strong push above $5.5100 with a positive close would cancel this bearish outlook and give the price a chance to start recovering, potentially moving first toward $5.6300.

The expected trading range for today is between $5.2700 and $5.5100

Trend forecast: Bearish

The GBPJPY pair repeats the attempts of forming bullish waves, taking advantage of its stability within the minor bullish channel’s levels that appear in the above image, besides the continuation of forming an extra support at 212.00 level, to rally towards 213.20 in this morning trading.

The price needs a new bullish momentum, which allows it to surpass the intraday barrier at 213.30, opening the way towards the main bullish stations that are located near 214.05 reaching to 215.2, while changing the main trend is represented by the attempt of breaking the bullish channel’s support at 211.40.

The expected trading range for today is between 212.10 and 214.05

Trend forecast: Bullish