Created on March 10, 2025

• During the trading session on Friday, we have seen the British pound dropped to the ¥190 level, only to turn around and show signs of life again.
• By doing so, the market looks as if it is trying to do everything it can to create some type of momentum from a major figure.
• After all, we have seen this market move back and forth quite wildly, as the Japanese yen has been strengthening against a multitude of currencies, but most notably the US dollar.

The question at this point in time is going to be whether or not the risk appetite remains strong enough to send this market higher, or if we are going to continue to see a lot of choppy back and forth behavior. After all, it would make a certain amount of sense considering that the Japanese yen has been strong and the British pound has been as well. In other words, you have to very strong currencies at the moment.

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Interest Rate Differential

That being said, there is a significant interest rate differential between the two currencies, and this should be forgotten. Because of this, I think this pair will have a natural proclivity to attempt a rally, but right now we just don’t have enough momentum to make that happen. The 50 Day EMA is sitting just below the ¥192 level, an area that of course is a very important level that we have seen tested multiple times and of course is also backed up by the 200 Day EMA, which I think is something worth noting.

On the other hand, if we get a daily close significantly below the ¥190 level, then the interest rate differential will obviously be ignored by a lot of traders as the Japanese yen could strengthen, sending this pair down to the crucial ¥188 support level.

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Created on March 10, 2025

Key Analysis Points:

• British Pound is a Key Risk Currency
• GBP/USD Awaits Break of 1.30 Peak
• US Dollar Faces Performance Disruption Due to Trump’s Policies

Throughout the week’s trading, the price of the GBP/USD pair was on an upward path with gains extending to the resistance level of 1.2945, the closest point for the GBP/USD pair to move towards the psychological resistance of 1.3000, which will support the strength of the upward trend. The gains of the rebound came in light of the weakness of the US dollar after Trump imposed his tariffs, in addition to the pace of risk appetite, which we have often noted will increase the gains of the British pound against the rest of the other major currencies if it happens.

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US Job Numbers Increase Currency Pair Gains

At the end of Forex market trading last week, the US dollar needed a decent jobs report above expectations to stem its weakness. Instead, it got a major US non-farm payrolls report of +151,000 for February, below expectations of 160,000. At the same time, the country’s unemployment rate rose from 4.0% to 4.1%, meaning the latest data will support the argument for at least three US interest rate cuts during the rest of the year.

Overall, it has been the rising bets that the US Federal Reserve will step on the gas pedal in the face of uncertainty caused by tariffs and economic weakness that have kept the US dollar in check recently. According to economists, “The worst is likely to be yet to come. A cocktail of shocks is being thrown at the US economy: the end of stimulus under Biden, historic political uncertainty that is limiting hiring and investment decisions, trade wars, and DOGE’s attack on the federal government and its contractors. February was too early to see the full impact, but it is very likely to happen over time.”

According to licensed trading platforms, the GBP/USD exchange rate was at 1.2904, after rising 2.62% last week, its strongest weekly gain since November 2022. Furthermore, technical analysts expect the clear push of the GBP/USD pair through the 1.29 lows to target additional corrective gains towards 1.31. Support is at 1.2865.

In general, the US dollar has turned expectations upside down by falling in response to the tariff announcements, and while the evidence that guides us into this week is that the tariffs were undoubtedly positive for the currency. The US dollar price is now tracking US bond yields and interest rate expectations lower, as investors bet that Donald Trump’s policy agenda is a major headwind for growth.

Trading Tips:

Keep in mind that the recent gains in the British pound and the dollar are strong and beware of US inflation figures this week.

US Economy in Trouble

With a wave of tariffs, government layoffs and a spending freeze, there are growing concerns that US President Donald Trump may do more to hurt the US economy than to fix it. Officially, the US labour market remains healthy with an unemployment rate of 4.1% and the addition of 151,000 jobs in February. Furthermore, Trump likes to point to investment commitments from Apple and Taiwan Semiconductor Manufacturing to show that he is getting results.

Moreover, the latest US employment report also found that the number of people stuck in part-time work due to economic conditions jumped by 460,000 last month. In the leisure and hospitality sectors, which reflect consumers having extra money to spend, 16,000 jobs were lost. The federal government cut its employees’ salaries by 10,000 in a possible harbinger of the alarm sounded by the stock market, consumer confidence and other measures about where the economy is headed.

Since January 2025, the economic policy uncertainty index has risen 41% to 334.5, a level that previously indicated recession.

Technical Analysis for the GBP/USD pair today:

According to the trading on the daily chart above, the GBP/USD pair is on an upward channel path that will confirm the bulls’ control by moving towards and above the psychological resistance of 1.3000. From now until reaching it and more, technical indicators have moved towards strong overbought levels, led by the Relative Strength Index and the MACD. In general, the closest resistance levels for the GBP/USD pair are currently 1.2985, 1.3050 and 1.3100, respectively.

Conversely, and over the same time frame, a return to the vicinity of the 1.2740 support threatens the bullish reversal and the return of bear control over the overall trend. Keep in mind that US inflation figures this week, led by the announcement of the consumer price index and the producer price index, will greatly affect the currency pair’s performance, as the data, along with recent US job numbers, will determine the future of US Federal Reserve policies.

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• The USD/JPY forecast shows higher demand for the yen.

• The yen rallied last week amid uncertainty regarding the global economy.

• The US economy added a smaller-than-expected 151,000 new jobs in February.

The USD/JPY forecast shows higher demand for the yen due to US trade policy uncertainty and a weak dollar. Market participants remain concerned about the impacts of Trump’s tariffs on the global economy. At the same time, labor market data on Friday confirmed fears of a slowdown in the US economy. 

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Last week, the yen rallied as uncertainty regarding the global economy led to a migration from risky assets. Trump initially implemented tariffs on Canada, China, and Mexico, causing panic in the market. However, he later suspended tariffs on Canada and Mexico for another month. Still, it was not enough to ease trade war fears since Canada and Mexico are ready to respond to tariffs. Moreover, starting in April, Trump promised a reciprocal tariff on more countries. 

Elsewhere, data on Friday revealed that the US economy added 151,000 new jobs in February. This number came in below the forecast of 159,000. Meanwhile, the unemployment rate rose to 4.1%, above estimates of 4.0%. The weak labor market data increased expectations for Fed rate cuts. Currently, traders are pricing three rate cuts in 2025. The more dovish outlook has weighed on Treasury yields and the dollar.

USD/JPY key events today

Market participants do not expect any high-impact reports from the US or Japan. Therefore, the price might consolidate.

USD/JPY technical forecast: Bears looking to break the 147.00 support

On the technical side, the USD/JPY price has paused near the 147.00 support level. However, it remains below the 30-SMA, with the RSI under 50, supporting a bearish bias. The price maintained a downtrend below the 30-SMA until it reached the 149.00 key level. There was a consolidation period as the price broke above the SMA. However, bears resumed the previous downtrend when the price eventually broke below the 149.00 support level.

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Therefore, the pause at the 147.00 level might only be brief to allow bears to rest and the SMA to catch up. Given the strong bearish bias, the price might soon break below 147.00 to retest the 145.00 support level. The downtrend will continue as long as the price keeps making lower highs and lows.

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• EUR/USD trades in a narrow range above 1.0800 to start the week.
• The pair could stay in a consolidation phase in the near term.
• The US economic calendar will feature February inflation data later in the week.

EUR/USD gained more than 4% in the previous week and touched its highest level since early November near 1.0890 on Friday. The pair stays relatively quiet and fluctuates in a tight channel above 1.0800 in the early European session on Monday.

The US Dollar (USD) remained under heavy selling pressure last week as the disappointing macroeconomic data releases, in addition to US President Donald Trump’s tariff decisions, fed into fears over an economic downturn in the US.

The data published by the US Bureau of Labor Statistics showed on Friday that Nonfarm Payrolls rose by 151,000 in February. This reading missed the market expectation for an increase of 160,000. Other details of the employment report showed that the Unemployment Rate edged higher to 4.1% from 4% in January, while the annual wage inflation rose to 4% from 3.9% in the same period. Later in the day, Federal Reserve (Fed) Chairman Jerome Powell said that the uncertainty around the Trump administration’s policies are high. Powell reiterated that they can maintain policy restraint for longer if inflation progress stalls, or that they can ease the policy if the labor market unexpectedly weakens. These comments failed to trigger a market reaction and allowed EUR/USD to stabilize in the upper half of its weekly range.

The Fed will be in the blackout period this week. On Wednesday, February Consumer Price Index (CPI) will be featured in the US economic calendar. 

Meanwhile, US stock index futures were last seen losing between 0.4% and 0.6%. Although a bearish action in Wall Street could help the USD find demand, investors could refrain from betting on a steady recovery in the currency.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the four-hour chart retreated slightly below 70, suggesting that the bullish bias remains intact following a technical correction. On the downside, 1.0800 (static level, 20-period Simple Moving Average (SMA), round level) aligns as first support before 1.0760 (static level) and 1.0730 (200-day SMA).

Looking north, first resistance could be spotted at 1.0870 (200-week SMA) ahead of 1.0900 (round level, static level) and 1.0940 (static level).

(This story was corrected on March 10 at 09:48 GMT to say that the annual wage inflation in the US rose to 4% from 3.9%, not 4.9%.)