• The euro has found itself in pretty significant trouble during the session here on Tuesday, testing a major support level in the form of the 1.15 level that also is backed up by the 50 day EMA just above it.
• So, I think it is something worth paying close attention to. Ultimately, I think this is a scenario where traders are going to be looking at this through the prism of whether or not we do break down below the 1.15 level after the FOMC.
• That will be the crucial piece. After all, the FOMC statement or meeting will give us an idea as to what it is the Federal Reserve might do in the future. A lot of traders out there are hoping for some type of reprieve from interest rates and

No Change Expected from the Federal Reserve

It’s not necessarily expected that we will get that reprieve right away, but the September meeting is still a bit of an open question for most traders. And I think it’s important to get an idea as to what the tone of the statement is coming out of the Federal Reserve and Jerome Powell. If it sounds like he’s nowhere near cutting rates, then that could send the US dollar much higher overall.

Ultimately, I think you have to look at this as a market that is right on the verge of trying to make a bigger decision. And if that’s going to be the case, I want to be there, but it’s probably going to be a situation where you are looking at this on how it closes on Wednesday to truly make that decision.

If we close above the 1.16 level, then it’s likely that this market goes looking to the 1.18 level again. If we close below the 1.15 level, then I believe the Euro drops down to the 200 day EMA. We are right on the precipice of a bigger move.

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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 GBPJPY pair provided new bearish close by its stability below the broken bullish channel’s support, forming a new resistance at 198.45 to increase the chances for the dominance of the suggested bearish bias by its fluctuation near 197.75.

The continuation of providing negative momentum by stochastic supports the negative suggestion, to keep waiting for targeting 197.50 level, where breaking it will open the way for suffering extra losses that might extend to 196.55 and 195.75, while regaining the bullish bias requires forming a strong positive rally to settle above 198.80.

The expected trading range for today is between 196.55 and 198.30

Trend forecast: Bearish

The GBPJPY pair provided new bearish close by its stability below the broken bullish channel’s support, forming a new resistance at 198.45 to increase the chances for the dominance of the suggested bearish bias by its fluctuation near 197.75.

The continuation of providing negative momentum by stochastic supports the negative suggestion, to keep waiting for targeting 197.50 level, where breaking it will open the way for suffering extra losses that might extend to 196.55 and 195.75, while regaining the bullish bias requires forming a strong positive rally to settle above 198.80.

The expected trading range for today is between 196.55 and 198.30

Trend forecast: Bearish

– Written by


David Woodsmith

STORY LINK Pound to Euro FX Forecast: GBP JUMPS 1.25% in “Huge Move” Higher

The Pound to Euro exchange rate (GBP/EUR) has extended its substantial rally seen on Monday, to trade at 1.1548 at the time of updating.

Pound Sterling rallied from the weekly open of 1.1412 to test highs of 1.1555 on Tuesday representing a 1.25 percent gain so far this week.

According to FX analysts at ING Bank, “We saw a huge move lower in EUR/GBP yesterday. Ex post, it could be seen as the UK having a better deal than the EU when it comes to trade.

“In reality, however, it was probably all to do with positioning, where opposing fiscal and monetary prospects between the eurozone and the UK had made long EUR/GBP one of the conviction trades this summer.”

The Pound-to-Euro rate had slumped to 20-month lows close to 1.1420 after Monday’s Asian open before rallying to 1.1490 as the Euro lost ground in global markets and equities made net gains.

The Euro overall lost ground amid a correction from strong gains last week as the Euro-Zone economy will still take a hit.

There are still significant reservations surrounding the UK economy.

According to ING there is the potential for strong GBP/EUR support on any dips to 1.1365. It added, “Sitting long EUR/GBP in quiet August markets is again carrying negative, and a very light UK calendar this week looks unlikely to provide the incentives to add to short sterling positions. Perhaps EUR/GBP can trade something like a 0.8700-0.8770 range this week.” (1.1400 – 1.1495 for GBP/EUR)

Risk appetite strengthened on Monday in response to the US-EU framework trade deal. The deal removed the immediate threat of 30% tariffs from August 1st and lessened the risk of a trade war between the two sides.

European equities hit a 4-month high in early trading while the FTSE 100 index posted a fresh record high.

The Pound tends to gain net support when global risk appetite strengthens.

National Australia Bank senior currency strategist Rodrigo Catril commented; “It could be a positive week, just purely from the fact that now we know the rules of the game, if you like.”

He added; “Now that there is more clarity, you would think that not only in the United States, but around the globe, there will be a little bit more willingness to look at investment, to look at expansions, and to look at where the opportunities are.”

According to Rabobank; “At the very least, the European Union will now not be hit by a 30% levy when the US reinstates its “reciprocal” tariffs. So, the deal should at least remove some of the uncertainty that plagued investors’ and corporates’ decision making.”

If traders are looking to engage in carry trades, high UK yields will offer net support.

The US trade stance with China will also be important with Beijing facing an August 12 deadline for a durable trade pact with the United States.

According to comments overnight, the two are expected to extend their tariff truce by three more months which would help underpin risk conditions.

The Federal Reserve will announce its latest policy decision on Wednesday with strong expectations that rates will be held at 4.50% before cutting rates later in the year.

MUFG commented; “The Fed would have to deliver a hawkish policy surprise in the week ahead to disrupt FX carry trades by dropping plans for rate cuts which appears unlikely at the current juncture.”

The UK CBI retail trade survey improved slightly to -34 for July from -46 previously, but below consensus forecasts of -28 and the 10th successive decline.

Companies expect a further significant decline August as underlying pressures continue.

CBI principal economist Martin Sartorius commented; “Firms reported that elevated price pressures – driven by rising labour costs – and economic uncertainty continue to weigh on household demand, which has contributed to sales volumes falling since October 2024.”

Mortgage lending data is due on Tuesday, but the overall UK economic calendar is light this week and parliament is in recess which will limit political chatter.

Labour disputes in the health sector will be scrutinised given concerns over underlying upward pressure on salaries which will further complicate fiscal policy.

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TAGS: Pound Euro Forecasts

• GBP/USD recovers after touching its lowest level in two months.
• The technical outlook remains bearish, with a chance of a correction in the near term.
• The US economic calendar will feature mid-tier data releases ahead of the Fed meeting.

GBP/USD trades slightly above 1.3350 after having touched its weakest level since late May below 1.3320 earlier in the day. The pair’s technical picture points to oversold conditions, suggesting that there could be a correction before the next leg lower.

The US Dollar (USD) started the week on a bullish note and caused GBP/USD to turn south on Monday, as investors’ concerns over an economic downturn in the United States (US) eased after the US reached a trade deal with the European Union (EU).

Early Tuesday, the risk-positive market environment limits the USD’s gains and helps GBP/USD hold its ground. Additionally, investors might be opting to move to the sidelines before deciding whether the USD has more room on the upside. The Federal Reserve (Fed) will begin its two-day meeting later in the day and announce policy decisions on Wednesday.

Nevertheless, the US economic calendar will offer some mid-tier data releases that could trigger a short-lasting market reaction during the American trading hours.

The Conference Board will publish the Consumer Confidence Index for July and the US Bureau of Labor Statistics will release JOLTS Job Openings data for June. In case these data come in weaker than expected, the USD could struggle to find demand and allow GBP/USD to extend its rebound.

Investors will also pay close attention to fresh developments surrounding the US-China trade negotiations. US Treasury Secretary Scott Bessent and China’s Vice Premier He Lifeng will reportedly meet again on Tuesday after having constructive talks on Monday.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays slightly above 30 after recovering from 25, suggesting that GBP/USD is in a correction phase after turning oversold earlier in the day.

On the upside, 1.3400 (Fibonacci 61.8% retracement of the latest uptrend) aligns as the first resistance level before 1.3470 (Fibonacci 50% retracement) and 1.3490-1.3500 (100-period SMA, static level). Looking south, support levels could be spotted at 1.3340 (100-day SMA) and 1.3300 (Fibonacci 78.6% retracement).

USD/JPY Technical Analysis

The US dollar initially pulled back a bit during the trading session, but we have that FOMC meeting the next day on Wednesday. So, I don’t know if we will break out to the upside. It’s possible that maybe we do, but I certainly don’t want to throw a bunch of money into the market ahead of a significant announcement that’s going to move everything.

So, with that, I think you have to look at this as a market that, quite frankly, will more likely than not find itself in a more of a buy on the dip type of scenario. Now, the FOMC and the Federal Reserve could do or say something to upset the apple cart as it were, but any pullback from here, as long as we can stay above the 146 yen level, I look at it as value.

AUD/USD Technical Analysis

The Australian dollar continues to plunge and it is getting interesting, but we need to get below the 200 day EMA for me to start shorting. Otherwise, we could just bounce right back into this channel that we’ve been stuck in for what seems like a lifetime.

This is a pair that has been very difficult to trade, in the sense that it’s been such a grind and not much of a trend, although it definitely ended up trend, but it’s been a fight the whole way. With this, I’m waiting to see if we bounce from this area here to start buying. Otherwise, I’m looking forward to break down below the 200-day EMA and offering a nice shorting opportunity.

For a look at all of today’s economic events, check out our economic calendar.

Copper price is under negative pressures, which forces it to provide bearish correctional trading, but its stability above the support at $5.3200 forms the main factor to confirm the continuation of the positivity in the near and medium period trading, therefore, we will keep waiting for gathering the positive momentum to motivate it to target $5.7100, then wait to reach the next main target near $5.9700.

Note that the price decline below the mentioned support and holding below it, so that will confirm delaying the bullish scenario, to begin providing strong bearish correctional trading, to expect reaching $5.0650, then reach the next support base at $4.7200 level.

The expected trading range for today is between $5.4000 and $5.7100

Trend forecast: Bullish

Copper price is under negative pressures, which forces it to provide bearish correctional trading, but its stability above the support at $5.3200 forms the main factor to confirm the continuation of the positivity in the near and medium period trading, therefore, we will keep waiting for gathering the positive momentum to motivate it to target $5.7100, then wait to reach the next main target near $5.9700.

Note that the price decline below the mentioned support and holding below it, so that will confirm delaying the bullish scenario, to begin providing strong bearish correctional trading, to expect reaching $5.0650, then reach the next support base at $4.7200 level.

The expected trading range for today is between $5.4000 and $5.7100

Trend forecast: Bullish

– Written by


Tim Boyer

STORY LINK Pound Sterling to Dollar Forecast: GBP/USD Targeted at 1.37 by End of 2025

The Pound to Dollar exchange rate (GBP/USD) has struggled to hold gains above 1.3450 as a firmer USD, boosted by the latest US-EU trade deal and upcoming Fed policy signals, weighs on near-term sentiment, though long-term forecasts, including from Wells Fargo, still point to a move towards 1.37 by end-2025.

The Pound-to-Dollar rate briefly hit 1.3450 in Asia on Monday before a retreat to test 1.3400 as the US currency gained net support following the US-EU trade deal.

Pound Sterling settled around 1.3430 as it attempted to resist a firm dollar and Sterling did have a firm tone on the crosses with net gains across most major pairs, notably the Euro.

ING sees the risk of further losses for the pair amid a firm US currency; “GBP/USD looks more vulnerable. Here, we favour a retest of decent support at 1.3370, below which losses can accelerate – perhaps all the way to 1.3150 if the US data/FOMC event risk this week is dollar positive enough.

According to UoB; “From here, we expect GBP to trade with a downward bias, but it is too early to determine if GBP can reach the major support at 1.3365.”

Wells Fargo sees scope for GBP/USD gains to 1.37 by the end of 2025 before a relapse to 1.30 by the end of 2026.

Overall risk appetite held firm with overall volatility grinding lower which helped underpin the Pound in global markets.

MUFG commented; “The biggest risk of market volatility that could undermine the positive FX carry momentum will come at the end of the week – with the release of the non-farm payrolls report.”

According to ING; “there is a huge amount of macro data and central bank action this week, which we think can provide some support to the dollar.

The Federal Reserve will announce its interest rate decision on Wednesday with strong expectations that rates will be held at 4.50%.

ING expects a mixture of solid data and residual inflation concerns will influence the decision.

It added; “This should leave the majority of the Federal Reserve comfortable in their patient position on interest rates (FOMC meeting on Wednesday) and see a further pricing out of the prospects of a September Fed rate cut.”

Markets remain very confident that the Fed will leave rates at 4.50%. There is the possibility of dissenting votes from Waller or Bowman and the guidance from Chair Powell will be watched very closely, especially given political pressure from the Administration.

According to Scotiabank; “For the statement, we note the risk of dovish dissents from both members of the board of governors as well as the regional Fed presidents.”

Rabobank commented; “US data release will be overshadowed by an FOMC decision. Has Trump’s visit to the Federal Reserve changed Powell’s mind? Have the recent trade deals – which bring lower tariffs than perhaps feared? And if not, will Powell’s reluctance to back a rate cut change Trump’s mind about letting the Fed Chair sit out his term?

It added; “Our US strategist expects the FOMC to stay on hold a little while longer, as they try to gauge the impact of tariffs on the US economy.”

According to MUFG; “Recent trade deals will be welcomed by the Fed as they help to dampen downside risks to growth and upside risks to inflation. We expect Chair Powell to continue to signal that they want to assess economic data over the summer to better determine the best path for policy going forward while sticking to plans to resume rate cuts later this year if inflation doesn’t surprise to the upside.”

ING also considers that the US Dollar is not an attractive funding currency, limiting potential selling pressure.

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TAGS: Pound Dollar Forecasts