• USD/JPY hovers at the mid-range of the 157.00-158.00, set to finish in the red.
• Uptrend’s extension lies above 158.00 and 158.88, but BoJ intervention fears loom.
• A drop below the Tenkan-sen, opens the door towards 157.00.

The US Dollar losses some ground against the Japanese Yen on Monday amid a bank holiday in Japan as the USD/JPY shrugged off a rise in the US 10-year T-note yield. At the time of writing, the pair trades at 157.54, down by 0.11%.

USD/JPY Price Forecast: Technical outlook

The USD/JPY daily chart remains upward biased, but faces strong resistance at 158.00, amid fears that the Bank of Japan (BoJ) might intervene in the Forex markets. Momentum favors further upside, after the 50-day Simple Moving Average (SMA) at 154.58 crossed above the 200-day SMA, forming a ‘golden cross,’ implying that further upside is seen.

For a bullish continuation, the USD/JPY first ceiling level would be the 158.00 figure followed by the January 10 peak hit following US NFP data on Friday at 158.88. A breach of the latter will expose 159.00.

If USD/JPY tumbles below Tenkan-sen, the next support would be the January 6 low of 156.24, followed by the December 31 pivot low of 156.02.

USD/JPY Price Chart – Daily

• EUR/USD forecast remains bearish ahead of US CPI and Chinese GDP data
• Market Sentiment: Strengthening bond yields keeps EUR/USD, stocks under bearish pressure
• Economic Concerns: Weak Eurozone and Chinese growth add to Euro weakness

The EUR/USD has been struggling to find its footing, slipping to a new multi-year low today of just below the 1.0200 handle. The pair remains on a downward trajectory, now eyeing a potential fourth consecutive monthly decline. The bearish momentum has been fuelled by a surging US dollar, which has been supported on the back of stronger labour market data and expectations inflationary pressures will return under Trump. Combined with weak economic data from the Eurozone and China, this is all helping to keep the EUR/USD forecast and trend bearish.

EUR/USD forecast: How high will the dollar rise?

The greenback continues to dominate, supported by rising US bond yields and robust economic data. Investors have been repricing US interest rates higher, driven by persistent inflation concerns and unexpectedly strong labour market data. December’s non-farm payrolls report showed remarkable resilience, with job gains significantly outpacing expectations. While revisions shaved 8,000 jobs off previous months’ totals, the unemployment rate dipped to 4.1% from 4.2%, reinforcing the case for a prolonged pause in Federal Reserve policy shifts. Wage growth, although steady, underscores a resilient labour market, adding to the dollar’s appeal.

As a result, US bond yields have climbed further, with the benchmark 10-year yield nearing its October highs of 5.02%. This upward trajectory in yields continues to attract capital into the US dollar, keeping the EUR/USD forecast under bearish pressure.

Rising yields also hurting risk appetite

Of course, it is not just the euro that the dollar is rising against. Rising bond yields and diminishing hopes for further US rate cuts have given the Dollar Index a solid boost, pushing it higher for the seventh straight week and setting it up for a fourth consecutive monthly gain. On Friday, US 30-year bond yields hit 5%, inching closer to October’s peak of 5.178%, while the 10-year yields aren’t far behind, hovering near 4.80%.

It’s not just the US seeing this trend. In Europe, bond yields are climbing steadily, with German, French, Spanish, and Italian yields all extending their upward momentum. Over in the UK, the 10-year yield has surged past last year’s high of 4.755%, touching levels not seen since the 2008 financial crisis at nearly 5%. Even Japan has joined the mix, with its 10-year yields hitting 1.20%, their highest level since May 2011, although still relatively modest.

The takeaway? Bond yields are rising across the board, fuelled by resilient US economic data and persistent global inflation—except for China. With higher yields offering attractive returns, investors may hesitate to buy overbought growth stocks and government debt is proving a tempting alternative. This is an additional bearish factor for risk-sensitive currencies like the euro.

US CPI and Chinese GDP among this week’s highlights

All eyes will be on the US Consumer Price Index (CPI) release this Wednesday. Any indication of stubborn inflation could dash any remaining hopes of a Fed rate cut in the first half of the year, further bolstering the dollar. Conversely, a surprisingly weak CPI print could offer the Euro some breathing room, although a significant shift in market sentiment seems unlikely without a major downside surprise.

Later in the week, Friday’s Chinese GDP release, along with retail sales and industrial production data, will also be in the spotlight. The Chinese economy’s sluggish performance has already impacted global markets, with weaker growth dampening demand for European exports. Any further signs of economic slowdown in China could exacerbate concerns about the Eurozone’s growth prospects, amplifying the bearish EUR/USD forecast.

Where is EUR/USD headed?

Source: TradingView.com

The near-term outlook for EUR/USD remains tilted to the downside, with the pair likely to test and possibly break below the parity (1.000) level if data this week favours the dollar, or we see further rising in US yields. Persistent geopolitical tensions and weak economic performance in the Eurozone only add to the challenges for the Euro. Traders should stay cautious and watch for significant shifts in market sentiment, particularly around Wednesday’s CPI data. While the dollar’s bullish momentum shows no immediate signs of slowing, a potential inflection point could arise if inflation surprises to the downside or Chinese data beats expectations, offering a glimmer of hope for the Euro.

In terms of resistance levels to watch, 1.0300-1.0340 now marks a key resistance zone, having previously served as support. The bearish trend line comes in just above this zone, too. While below these levels, the path of least resistance on the EUR/USD is unambiguously bearish.

— Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

• EUR/USD forecast remains bearish ahead of US CPI and Chinese GDP data
• Market Sentiment: Strengthening bond yields keeps EUR/USD, stocks under bearish pressure
• Economic Concerns: Weak Eurozone and Chinese growth add to Euro weakness

The EUR/USD has been struggling to find its footing, slipping to a new multi-year low today of just below the 1.0200 handle. The pair remains on a downward trajectory, now eyeing a potential fourth consecutive monthly decline. The bearish momentum has been fuelled by a surging US dollar, which has been supported on the back of stronger labour market data and expectations inflationary pressures will return under Trump. Combined with weak economic data from the Eurozone and China, this is all helping to keep the EUR/USD forecast and trend bearish.

EUR/USD forecast: How high will the dollar rise?

The greenback continues to dominate, supported by rising US bond yields and robust economic data. Investors have been repricing US interest rates higher, driven by persistent inflation concerns and unexpectedly strong labour market data. December’s non-farm payrolls report showed remarkable resilience, with job gains significantly outpacing expectations. While revisions shaved 8,000 jobs off previous months’ totals, the unemployment rate dipped to 4.1% from 4.2%, reinforcing the case for a prolonged pause in Federal Reserve policy shifts. Wage growth, although steady, underscores a resilient labour market, adding to the dollar’s appeal.

As a result, US bond yields have climbed further, with the benchmark 10-year yield nearing its October highs of 5.02%. This upward trajectory in yields continues to attract capital into the US dollar, keeping the EUR/USD forecast under bearish pressure.

Rising yields also hurting risk appetite

Of course, it is not just the euro that the dollar is rising against. Rising bond yields and diminishing hopes for further US rate cuts have given the Dollar Index a solid boost, pushing it higher for the seventh straight week and setting it up for a fourth consecutive monthly gain. On Friday, US 30-year bond yields hit 5%, inching closer to October’s peak of 5.178%, while the 10-year yields aren’t far behind, hovering near 4.80%.

It’s not just the US seeing this trend. In Europe, bond yields are climbing steadily, with German, French, Spanish, and Italian yields all extending their upward momentum. Over in the UK, the 10-year yield has surged past last year’s high of 4.755%, touching levels not seen since the 2008 financial crisis at nearly 5%. Even Japan has joined the mix, with its 10-year yields hitting 1.20%, their highest level since May 2011, although still relatively modest.

The takeaway? Bond yields are rising across the board, fuelled by resilient US economic data and persistent global inflation—except for China. With higher yields offering attractive returns, investors may hesitate to buy overbought growth stocks and government debt is proving a tempting alternative. This is an additional bearish factor for risk-sensitive currencies like the euro.

US CPI and Chinese GDP among this week’s highlights

All eyes will be on the US Consumer Price Index (CPI) release this Wednesday. Any indication of stubborn inflation could dash any remaining hopes of a Fed rate cut in the first half of the year, further bolstering the dollar. Conversely, a surprisingly weak CPI print could offer the Euro some breathing room, although a significant shift in market sentiment seems unlikely without a major downside surprise.

Later in the week, Friday’s Chinese GDP release, along with retail sales and industrial production data, will also be in the spotlight. The Chinese economy’s sluggish performance has already impacted global markets, with weaker growth dampening demand for European exports. Any further signs of economic slowdown in China could exacerbate concerns about the Eurozone’s growth prospects, amplifying the bearish EUR/USD forecast.

Where is EUR/USD headed?

Source: TradingView.com

The near-term outlook for EUR/USD remains tilted to the downside, with the pair likely to test and possibly break below the parity (1.000) level if data this week favours the dollar, or we see further rising in US yields. Persistent geopolitical tensions and weak economic performance in the Eurozone only add to the challenges for the Euro. Traders should stay cautious and watch for significant shifts in market sentiment, particularly around Wednesday’s CPI data. While the dollar’s bullish momentum shows no immediate signs of slowing, a potential inflection point could arise if inflation surprises to the downside or Chinese data beats expectations, offering a glimmer of hope for the Euro.

In terms of resistance levels to watch, 1.0300-1.0340 now marks a key resistance zone, having previously served as support. The bearish trend line comes in just above this zone, too. While below these levels, the path of least resistance on the EUR/USD is unambiguously bearish.

— Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

• Taking a look at the dollar against the Japanese yen and you can see it was an extraordinarily volatile session during the trading session on Friday after the jobs report came out stronger than anticipated, which naturally had people running to the Japanese yen.
• This was a very difficult trading session for anybody who was involved and therefore if you find yourself on the wrong side of the trade, don’t be too upset about it.

I think at this point, you have to look to the longer term outlook for both of these central banks. And the reality is, even though Japan’s getting a little better, the U.S. economy is still very strong. And as a result, you should continue to see the U.S. dollar strengthen against most currencies, including the Japanese yen, but I also recognize that with the sell-off that we had seen in the stock market, it does make a certain amount of sense that people might’ve been looking for the safety of the Japanese yen, specifically Japanese investors involved in America.

Long Term

But in the longer term, you do get paid to hang on to this USD/JPY pair. And I think that’s something that a lot of people ignore, at least in the retail space. If we can break above the 158 yen level, then I think you’ve got a situation where we could make another attempt to break out completely, but right now it looks like we’re going to bounce around a little bit and just panic.

That’s not that unusual for this pair, but it’s difficult to make an argument for anything other than an uptrend right now. So I wouldn’t read too much into this other than there might’ve been some liquidity issues. The Bank of Japan might’ve been involved. We just don’t know, and of course, there was a lot of repositioning after that non-farm payroll announcement. I remain bullish, but I recognize this is going to be a headache.

Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.

Created on January 13, 2025

• Over the past week, the GBP/USD pair plummeted below the support level of 1.2200, the lowest level for the currency pair in about 14 months and closed the week’s trading near these losses.
• Sterling losses against other major currencies increased as concerns about rising borrowing costs in Britain undermined the currency pair.
• Overall, the rise in government bond yields and the decline in the pound sterling were a clear reflection of the market’s discomfort with the fact that Reeves must now find billions of pounds in additional taxes or spending cuts to ensure compliance with a fiscal rule to ensure that debt as a percentage of GDP declines by 2029.

Pressure Factors on the Pound Sterling

According to reliable trading company platforms, the pound sterling (GBP) faced further losses against other major currencies as ongoing concerns about rising borrowing costs in Britain continued to weigh on sentiment. Recently, the yield on 10-year UK government bonds rose to its highest level since 2008, raising concerns about the country’s financial stability and the ability of the British government to effectively manage its economic challenges.

Trading Tips:

The pressure on the pound and the US dollar are still receiving more strength, which will ensure that the downtrend in the pound/dollar will remain for some time.

Will the selling of the pound continue?

In this regard, according to analysts from Deutsche Bank, the fundamental shifts that could work against the pound in the future include:

Loss of volatility-adjusted carry. This is where capital flows to countries with higher interest rates, which the UK prides itself on. But for this strategy to work, volatility must be low. According to the analysts: “Recent volatility is harmful.”

Meanwhile, the UK is printing “significantly weaker-than-expected economic data”. The first half of 2024 saw the opposite, with the UK growing faster than all its G7 peers.

Deutsche Bank therefore believes that the economic deterioration means there is a growing possibility of further interest rate cuts by the Bank of England this year compared to the current 50 basis points in money markets. Furthermore, the improvements in the current account deficit seen over recent years are also likely to fade as energy prices rise again. Deutsche Bank analysts added, “A wider current account deficit ahead increases the case for sterling weakness in an environment where UK yield rises are limited by the need for monetary policy easing,”.

They added, “After profiting on our long sterling positions at mid-December highs, we now recommend selling sterling,”.

Technical Analysis for the GBP/USD pair today:

Dear reader, according to recent trades, the overall trend of the GBP/USD currency pair is increasingly downward, and its recent losses were enough to push technical indicators towards oversold levels, led by the Relative Strength Index and the MACD. Currently, the closest support levels for the pound sterling are 1.2155, 1.2080, and the psychological support of 1.2000. Forex investors may look for buying opportunities, but this may be cautious until sentiment towards the sterling improves.

Conversely, and over the same timeframe, any attempts by bulls to rebound upwards may encounter resistance at levels of 1.2440 and 1.2600 respectively. Until then, gains in the pound sterling will remain vulnerable to a rapid collapse.

Ready to trade our daily GBP/USD Forex forecast? Here’s some of the best forex broker UK reviews to check out.

Created on January 13, 2025

USD/JPY Forecast: The Psychological Resistance Level of 160.00 Remains in Sight

• In the last trading session of last week, the bulls’ control over the USD/JPY pair culminated in a move towards the resistance level of 158.88, the highest level for the pair in six months.
• Its gains increased as uncertainty persisted over the timing of Japan’s interest rate hike.
• In addition, Japanese Economy Minister Ryusei Akazawa stated that the economy is at a “critical stage” in overcoming the public’s deflationary mindset, but he did not provide any clear indication of when the Bank of Japan might raise interest rates.
• However, on the same trading day, the USD/JPY pair was exposed to profit-taking despite stronger-than-expected US jobs figures, with losses extending to 157.22 before closing trading stable around 157.70.

On the economic data front, household spending in Japan fell 0.4% year-on-year in November, while household income rose 0.7%. Externally, the Japanese yen faced additional pressure from the recent widening of the yield differential between the United States and Japan, driven by hawkish signals from the US Federal Reserve.

On the US side, according to economic calendar data, US job growth rates increased and unemployment rates decreased last month. According to an official announcement, the US economy added a total of 256,000 jobs last month, up from 212,000 jobs in November. The country’s unemployment rate, which was expected to remain at around 4.2%, fell to 4.1% last month. Overall, the final US jobs report for 2024 confirms that the economy and employment were able to grow at a strong pace even with interest rates significantly higher than before the pandemic. As a result, the likelihood of the US Federal Reserve cutting borrowing costs again in the coming months may be much lower.

Overall, the Federal Reserve has cut US interest rates three times in the past year in part due to concerns about slowing employment and growth. Strong jobs numbers suggest the economy is entering a post-Covid period of steady growth, higher interest rates, low unemployment and slightly higher inflation.

Trading Tips:

Don’t be fooled by the recent USD/JPY sell-off, it’s a natural thing after recent gains. The foundations of bullish control are in place and eyes are still easily set on the psychological resistance of 160.00

Expectations of a Pause in US Interest Rate Cuts

Following the latest economic data, expectations have increased that the US Federal Reserve may pause the pace of US interest rate cuts in the coming months amid concerns that Trump’s aggressive trade policies towards major global economies could re-ignite inflation.

Overall, the US numbers are likely to support policymakers’ intention to move cautiously this year – their December forecasts showed only two US interest rate cuts by 2025 – amid a clear pause in progress towards the 2% inflation target. Recently, Wall Street investors and economists had already scaled back expectations for rate cuts after the release. Also, this week’s US consumer and wholesale price reports will provide further clues on where inflation is headed ahead of the Fed’s next policy meeting on January 28-29.

USD/JPY Technical Analysis and Expectations Today:

Based on recent trading, USD/JPY is now trading slightly below its 100-hour moving average. However, the currency pair still has plenty of room to run before reaching oversold levels on the 14-hour RSI. In the near term, bears will look to extend the current decline towards 157.48 or lower to the support at 156.90. Bulls, on the other hand, will look to rebound higher with gains to the resistance levels at 158.00 and 158.65, respectively.

In the long term, based on the daily chart, the USD/JPY pair is trading in an ascending channel formation. Also, the 14-day RSI supports a long-term bullish bias as it approaches overbought levels. Therefore, bulls will seek to extend the overall uptrend gains towards the psychological resistance level of 160.00 or higher to the resistance of 162.60 respectively, which is enough to push all technical indicators towards strong overbought levels. On the other hand, and in the same time frame, bears will seek to benefit from pullbacks around 155.00 or lower at the support of 152.30 respectively.

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