• The British pound rallied a bit during the trading session on Wednesday against the US dollar, as we are now threatening the 1.36 level this is a market that’s been very bullish for quite some time, although we did recently have a bit of a pullback.
• That pullback could offer a little bit of value, and I do think that eventually people start to look at this through the prism of trying to find value.
• The 50 Day EMA sits near the 1.3472 level and could offer dynamic support. Underneath there, we also have a massive uptrend line, followed by the 1.3350 level for support.

Technical Analysis

The technical analysis for this market is very bullish as long as we can stay above the 1.3350 level, but I would be concerned if we were to break down below there. At that point, we could come into the 200 Day EMA, near the 1.3118 level. All things being equal, the British pound has been a strong performer against the US dollar for some time, even when we were falling, because quite frankly “the British pound was less bad than the others.” In other words, the British pound has been relatively stronger than most of his contemporaries against the greenback, so that should translate in both directions unless something specific comes out London that we need to be worried about.

If we were to pull back in reach toward the 200 Day EMA, anything underneath there would be a very negative turn of events, and we would probably see the US dollar strengthen against almost everything around the world. The British pound may fall slower than other currencies, but if the British Pound finds itself under that much pressure, it’s likely that other currencies like the Canadian dollar, Japanese yen, euro, etc. will all be struggling against the US dollar. All things being equal though, this looks like a market that’s much more likely to go higher than lower

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

• USD/JPY bearish scenario plays out as price rejects the 148.029 key resistance level, confirming a distribution.

• Dollar weakness confirmed by DXY breakdown, amplifying the bearish momentum across USD/JPY as safe-haven yen flows accelerate.

• Technical bias remains bearish below 145.75, unless the Fair Value Gap is reclaimed with targets toward 149.80 or further downside toward 142.70.

Bearish scenario plays out, bullish trap confirmed

USD/JPY opened the week with a clear upside bias, trading above key Fair Value Gaps and appearing poised for a continuation move toward 150.00 and 151.00. The structure favored a bullish move following a retracement sweep and reclaim of the FVG near 148.056–148.277, as mentioned in the previous forecast: Nasdaq and S&P 500 hit all-time highs, XRP leads crypto breakout, Gold eyes $3,400

However, the market instead validated the alternate bearish scenario, reversing precisely from the 148.029 resistance level. This marked a distribution phase, not an accumulation to the upside, and the price has since fallen decisively.

DXY breakdown confirms Dollar weakness – Triggers USD/JPY selloff

As shown in the recent Dollar price action, the DXY has decisively broken down from a key Bearish Fair Value Gap, currently trading below 97.30. This marks a significant structural shift that reinforces the broader USD weakness narrative, which is now dragging USD/JPY lower as the yen regains dominance.

This price action confirms that the entire USD complex is under pressure, not just a reaction to isolated JPY strength. The rejection from the 98 level and the subsequent lower high formation has invalidated any near-term bullish correction, signaling a continuation of the downtrend.

Why the bearish reversal happened

1. Technical rejection from key supply

The 148.029 level acted as a magnet for liquidity, drawing in breakout traders only to reverse sharply. This zone coincided with:

• A 4H Fair Value Gap

• An internal liquidity pocket used to trap late buyers

• Smart Money selling interest that engineered a false breakout, then broke structure aggressively to the downside

2. Safe-haven Yen demand

• A new U.S.–Japan tariff agreement reduced tensions and opened the door for JPY strength, as markets priced in a stronger Japanese export outlook.

• Investors also shifted into the yen amid domestic political volatility, with the ruling coalition losing control of the upper house. Though not extreme, it reinforced uncertainty, supporting JPY flows.

3. USD weakness and fading Risk Appetite

• The DXY rejected 99.00 and dropped below 98.00, erasing USD strength.

• With US indices hitting all-time highs, investors began rotating into safe-haven currencies as a hedge—pushing down USD/JPY.

Technical outlook

USD/JPY is currently trading around 146 level, navigating a key Bearish Fair Value Gap. The pair has retraced toward a support cluster between 145.75 and 146.00.

Bullish scenario: Short-term base and FVG reclaim

If USD/JPY validates and reacts at the 145.75 support, USD/JPY could be forming a short-term bottom. A retracement into the Bearish FVG may turn into a reclaim, indicating strength and potential reversal back toward previous distribution zones.

This would continue to go bullish if:

Upside Targets:

Bearish scenario: FVG rejection and breakdown toward lower liquidity zones

If price gets rejected from the FVG and fails to hold above 145.75, it would confirm the continuation of the broader bearish structure. This aligns with current DXY weakness and JPY strength driven by macro sentiment.

This would continue to go bearish if:

• Price is rejected from 146.90–147.60 FVG zone

• A clear breakdown below 145.75 occurs with a momentum candle

• DXY continues sliding toward 96.70 or lower

Downside Targets:

• The EUR/USD forecast shows the euro steady ahead of the European Central Bank meeting.

• Market participants expect the ECB to keep interest rates unchanged.

• The European Union is nearing a trade deal with the US.

The EUR/USD forecast indicates that the euro remains steady ahead of the European Central Bank meeting. Meanwhile, business activity data from major Eurozone economies aligned mainly with expectations.  Market participants are also closely watching the progress in trade talks between the US and the European Union. 

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On Thursday, the European Central Bank will hold its policy meeting. Market participants expect the central bank to maintain its current interest rate policy. The ECB’s monetary easing campaign has had a positive impact on the economy and inflation. Therefore, policymakers are under no pressure to cut interest rates. Still, traders are pricing one more rate cut this year, likely in December. 

Meanwhile, the outcome of business activity data from France and Germany was largely expected. Germany’s services sector continued growing, supporting the case for a pause in rate cuts. 

Elsewhere, reports have shown that the European Union is nearing a trade deal with the US. The deal would impose a 15% reciprocal tariff on goods from the Eurozone. It would be half of the 30% Trump had promised. Therefore, it would allow the economy to continue its recovery.

EUR/USD key events today

• ECB main refinancing rate
• ECB monetary policy statement
• US unemployment claims
• ECB press conference
• US flash manufacturing PMI
• US flash services PMI

EUR/USD technical forecast: Steep rally nears the 1.1800 resistance

On the technical side, the EUR/USD price trades above the 30-SMA, indicating bulls are in the lead. At the same time, the RSI trades near the overbought region, showing solid bullish momentum. The price recently broke above the 1.1701 key resistance, which solidified the bullish bias. Bulls are now eyeing the next hurdle at the 1.1800 level. 

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Initially, EUR/USD was in a downtrend, trading below the 30-SMA, with the RSI under 50. However, this changed when the price reached the 1.1600 key support level. Bulls emerged with solid momentum, and the downtrend failed to continue lower. Instead, the price broke above the SMA, indicating a shift in sentiment. 

Given the solid bullish bias, the price may soon reach the 1.1800 resistance level. A break above will strengthen the bullish bias. However, the price might pull back to retest the SMA before climbing higher.

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Copper price soars high in its last intraday trading, to reach the critical resistance at $5.89, which represents our yesterday’s target amid the dominance of the main bullish trend on the short-term basis and its trading alongside a supportive minor bias line for the trend, taking advantage of the dynamic support that is represented by its trading above EMA50, this rise came after the success in offloading its overbought condition on the (RSI), opening the way for achieving more gains.

Therefore, our expectations suggest a rise in (copper) price in its upcoming intraday trading, especially when breaching the mentioned resistance at $5.89, to target the next resistance level at $6.1820.

The expected trading range for today is between $5.7344 and $6.0500

Trend forecast: Bullish

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July 23, 2025 – Written by David Woodsmith

STORY LINK Pound-to-Euro Forecast: GBP Tipped to FALL to 1.1365 says UK Bank

After failing to make headway on Monday, the Pound Sterling to Euro exchange rate (GBP/EUR) has retreated to around 1.1520 on Tuesday.

The latest UK government borrowing requirement has increased concerns over tax hikes in the Autumn as well as unsettling the bond market which has hampered the Pound in global markets.

Equity markets, however, have held firm which has provided some Sterling relief and helped avoid a larger sell-off.

Rabobank is uneasy over UK fundamentals and has a 6-month GBP/EUR forecast of 1.1365.

ING notes that the Pound has not been able to take advantage of more favourable yield spreads which indicates that markets are putting a higher risk premium on the UK currency.

The bank added; “That GBP risk premium is partly because of the euro’s idiosyncratic strength (due to its appeal as a reserve currency) but may also embed some UK budget concerns. Those were fuelled further this morning as the UK unveiled larger borrowing for June than expected by the UK fiscal watchdog.”

The UK government borrowing requirement surged to £20.7bn for June from £14.1bn the previous year. This was above consensus forecasts of £17.4bn and the second-highest June deficit on record.

The deficit was also above the 17.1bn OBR forecast for the month.

For the first three months of fiscal 2025/26, the deficit widened to £57.8bn from £50.3bn the previous year which is close to the OBR target for the first quarter of the year.

Looking at induvial components, debt interest payments more than doubled to £16.4bn from £8.0bn the previous year.

There was an increase in receipts with a big increase in NIC contributions to £17.4bn from £14.3bn, but this was offset by a strong increase in overall spending.

ONS acting chief economist Richard Heys commented; “The rising costs of providing public services and a large rise this month in the interest payable on index-linked gilts pushed up overall spending more than the increases in income from taxes and National Insurance contributions, causing borrowing to rise in June.”

Gilts lost ground after the data with the 10-year yield increasing to 4.63%.

The yield, or interest rate, on 10-year UK bonds has risen by two basis points (0.02 percentage points) to 4.634%.

Longer-dated, 30-year, bond yields have risen by almost three basis points to 5.47% and only 13 basis points below 27-year highs seen in April.

Higher yields will put further upward pressure on debt servicing, increasing the risk of a vicious cycle for the Pound.

The data triggered fresh market fears surrounding the budget outlook and policy implications.

According to Capital Economics UK economist Alex Kerr; “the government’s u-turns on spending cuts and potential upward revisions to the OBR’s borrowing forecasts means the Chancellor will probably need to raise £15-25bn at the Autumn Budget to maintain the £9.9bn of headroom against her fiscal mandate.”

He added; “And given that she is struggling to stick to existing spending plans and we doubt the gilt market will tolerate significant increases in borrowing, she will probably have to raise taxes instead.”

Goldman Sachs added; “We think a rising fiscal risk premium is the main driver of the recent outperformance of EUR/GBP.”

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