• The EUR/USD forecast is strongly bullish despite a mild pullback from YTD highs.
• A weaker dollar amid dovish Fed expectations keeps the Euro bullish.
• Markets are eyeing US Q1 GDP and US Core PCE Index data for further impetus.

The EUR/USD price is trading slightly lower on Wednesday during the early New York session, after posting a two-day rally to fresh YTD highs. Despite the pullback, the pair remains close to the highest level since November 2021, supported by global risk sentiment, weaker oil prices, and the US dollar.

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The ceasefire between Iran and Israel, announced by President Trump, sparked broader optimism across financial markets. As a result, the safe-haven demand for the dollar lost traction. Although both sides are at peace, the stability is still too fragile. Both sides can resume hostilities if provoked. However, the markets have so far welcomed the de-escalation, favoring riskier assets, such as the Euro.

The subdued dollar boosts the Euro. The Dollar Index remains depressed around mid-97.00, close to a three-year low, as it is pressured by dovish Fed expectations. Although the Fed Chair Jerome Powell maintained a cautious stance in his testimony before Congress on Tuesday, the markets are still expecting a 50 bps cut by the end of 2025.

On the European side, macroeconomic data is steady but not strong enough to drive markets. French Consumer Confidence remained unchanged at 88.0, while Spain’s Q1 GDP confirmed a growth of 0.6% q/q and 2.8% y/y.

The US Consumer Confidence Index fell from 98.4 to 93.0, revealing concerns for jobs and economic growth. As markets digest Powell’s second round of testimony today, the upcoming US data, including Q1 GDP and the Core PCE Index, are key to watch.

EUR/USD Technical Forecast: Buyers Aiming for 1.1700

The EUR/USD 4-hour chart displays a consolidating pattern near the multi-month high. The uptrend is intact as the price stays well above the 20-period SMA. Moreover, the bullish crossover of the 20-SMA and 50-SMA also presents room for upside. The RSI is also off the overbought zone but above 50.0 and sloping upwards.

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Overall, the pair is now trading within a broad range of 1.1450 to 1.1650. The price is expected to remain within these two levels unless a catalyst emerges to push it further higher towards the 1.1700 mark. The path of least resistance lies on the upside.

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• The Euro has fallen pretty significantly against the Japanese yen during the trading session on Tuesday as we continue to see a lot of noisy behavior.
• I think ultimately this is a situation where traders have to understand the fact that this is a very risk appetite sensitive pair.
• Keep in mind that the Euro is considered to be much riskier than the Japanese yen.

Therefore, if we have a sudden “risk off” move, typically this pair will fall. You do get paid to hang on to this via swap. And I think we are going to continue to see buyers willing to jump in because of this fact.

And in fact, given the fact that we are right at the previous consolidation area, somewhere in this general vicinity, I think you will start to see buyers jumping back in. I have no interest shorting the euro against the Japanese yen anytime soon, at least not until we break down below the 165 yen level, which is over three handles away. To the upside, the 170 yen level is an area that could cause a little bit of resistance, but quite frankly, we have broken above a major resistance barrier. And now I think we will eventually find ourselves much higher that where we are now.

The Longer Term Target Could Be Much Higher

Eventually, we may find ourselves all the way up at the 175 yen region. All things being equal, this is a market that I think continues to be very noisy, but this pullback I think opens up the possibility of offering a little bit of value, which is exactly what this pair has needed over the last couple of weeks. So, with this, I’m bullish. I’m either waiting for a bounce or a break to the upside.

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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.

• GBP/USD moves sideways slightly above 1.3600 on Wednesday.
• The pair could struggle to extend its weekly rally in case markets turn cautious.
• The technical outlook suggests that the bullish stance remains unchanged in the near term.

Following a late Monday rally, GBP/USD preserved its bullish momentum on Tuesday and reached its highest level since January 2022 near 1.3650. The pair stays relatively quiet early Wednesday and fluctuates in a narrow band slightly above 1.3600.

Risk flows continued to dominate the action in financial markets in the first half of the day on Tuesday as investors cheered news of the Iran-Israel ceasefire. As a result, the US Dollar (USD) struggled to find demand and allowed GBP/USD to push higher.

In the American session, Federal Reserve Chairman Jerome Powell’s cautious comments on policy-easing helped the USD find a foothold. Powell told the House Financial Services Committee that they are not in a rush to cut rates, noting that they expect a meaningful increase in inflation this year because of tariffs.

Meanwhile, Bank of England (BoE) Governor Andrew Bailey told the Lords Economic Affairs Committee on Tuesday that they are starting to observe labor market softening. Additionally, BoE Deputy Governor Dave Ramsden said that if evidence becomes stronger that inflation will undershoot the target, they can speed up rate cuts. Although these comments failed to trigger an immediate market reaction, they might be contributing to GBP/USD’s indecisive action midweek.

The economic calendar will not feature any high-impact macroeconomic data releases later in the day. Hence, investors could react to changes in risk perception. In case Wall Street’s main indexes correct lower following Tuesday’s risk rally, the USD could gather strength and make it difficult for GBP/USD to hold its ground.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart holds above 60, suggesting that the bullish bias remains intact. On the upside, 1.3630 (static level) aligns as an immediate resistance level ahead of 1.3700 (static level, round level) and 1.3740 (static level).

Looking south, support levels could be seen at 1.3580 (static level), 1.3530 (100-period Simple Moving Average) and 1.3500 (static level, round level).

• The US dollar found itself rather soft against the Japanese yen during trading on Tuesday, as we have broken below the ¥146 level quite drastically.
• I think ultimately, we are looking at this as a scenario where we are just simply going to move on the idea of risk appetite and where that is going.
• The market is likely to continue to pay close attention to the ¥145 level, which is where we crashed into and started to find a little bit of buying pressure.

Technical Analysis

The technical analysis for this pair is starting to flatten out a bit, as we had previously been so horribly negative. With this being the case, the market is likely to continue to see buyers underneath, especially if we get anywhere near the ¥142 level, an area that has been important a couple of times. If we were to break down below that level it would be a bit surprising to me, but it of course is possible.

On the upside, if we can break back above the ¥146 level, then I think we have the possibility of a move back to the 200 Day EMA, essentially where we had peaked during the trading session on Monday.

If we were to break above that 200 Day EMA and by extension, the ¥148 level, the market would more likely than not really start to take off, perhaps targeting the crucial ¥150 level. Anything above there opens of a longer-term “buy-and-hold” type of scenario. While I don’t necessarily expect that to happen easily, it is something that’s very realistic if we get a sudden run to the US dollar. The interest rate differential continues to favor the US dollar against the Japanese yen, so I don’t like shorting this pair, unless it is for a very short term move. I think we are in the midst of trying to find the longer term bottom, which of course is very noisy.

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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.

• The Euro has rallied against the US dollar during early trading on Tuesday, as the world waited for the congressional testimony from Jerome Powell.
• All things being equal, the market is just simply continuing the move that it has made previously, so I don’t know that there’s a whole lot to talk about here.
• It’s just a simple continuation play, which is focused on the 1.16 level, an area that has been important multiple times, and I do think that if we can break a significant amount of distance above there, then we could get something going.

Otherwise, I think this is a market that will continue to be very noisy, with the massive amount of support at 1.13 underneath worth paying attention to. If we were to break down below there, then it would change a lot of things.

Right now I just don’t see a reason to think that things will change drastically enough to send the market below the 1.13 level, unless we get some type of major escalation in the Middle East, which has seen a cease-fire between the Iranians and the Israelis, which is more helpful for “risk on behavior”, which typically works against the value of the US dollar. We should be careful to make that assumption though, because a lot will come down to whether or not the US is starting to grow again.

Watching Closely

I’m watching closely to see if we can get a daily close above the 1.1650 level, because if we do, that could end up being a very bullish sign for this pair. However, I also recognize that this is a market that tends to be very noisy and grinds a lot, especially when you have a lot of geopolitical risks out there that could come into the picture in cause absolute chaos. Short-term dips are very possible and very likely, but the art necessarily reasons to start shorting the market at this juncture. I believe it is a scenario that continues to favor the overall back and forth choppiness that we have seen, and I also recognize that range bound traders will continue to be drawn to this stagnant, yet slightly bullish market.

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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.

Copper price failed to breach the $4,8900 level, which represents an extra obstacle against the attempts to resume the bullish attack, forcing it to provide sideways fluctuation near $4.8600, attempting to gather the required positive momentum.

Therefore, we will keep waiting for achieving the required breach, to open the way towards recording more of the gains that begin at $5.0300 and $5.1300, while the failure to breach might increase the chances of forming a temporary negative rebound, to expect targeting $4.7500 level before any attempt to achieve any of the suggested bullish targets. 

The expected trading range for today is between $4.8200 and $4.9000

Trend forecast: Sideways until achieving the breach