June 6, 2025 – Written by Tim Boyer

STORY LINK Euro to Dollar Forecast: EUR Dips to 1.1370 on USD Short-Covering

The Euro to Dollar (EUR/USD) exchange posted net losses after the latest US jobs data, although the dollar still struggled for sustained support.

After stalling above 1.1450, EUR/USD dipped to lows at 1.1370 before a rebound back to just above 1.1400.

Markets were braced for a very weak US labour-market report and the actual data provided an element of dollar relief with some closing of short positions into the weekend even though there were clear signs of weakness in the details.

Traders were also monitoring the fallout between Trump and Musk, especially as there could be significant implications for the Budget Bill which is due to be debated in the Senate next week.

Scotiabank maintains a positive outlook on EUR/USD; “the trend is bullish, with a clear sequence of higher lows and higher highs.”

It added; “The 50 day MA (1.1259) is an important medium-term support level. In the near-term, we look to support around 1.1380 and resistance above 1.1480.”

ING commented; “We suspect 1.1330/1350 may be the limit of the EUR/USD sell-off should US data not be as weak as the market is positioned for.”

According to the latest US employment report, non-farm payrolls increased 139,000 for May compared with consensus forecasts of around 125,000, but there was a notable downward revision for the April increase to 147,000 from the 177,000 reported previously.

There were losses in manufacturing, retail sales and professional services jobs for the month with government jobs also marginally lower.

ING commented; “Traditional sectors that typically signify a strong US economy have not been adding jobs in any meaningful way – think tech, business services, transport & logistics, construction, financial services etc.”

The unemployment rate was unchanged at 4.2% for the month, in line with expectations. There were, however, big changes in the underlying data with a decline in employment of close to 700,000 for the month as the civilian labour force declined by 625,000 on the month.

ING added; “A respectable jobs market in May with firm employment growth and stable unemployment, but the risks are skewed toward more weakness in coming months as trade uncertainty and concerns for consumer spending lead firms to become much more cautious on hiring.”

According to Commerzbank; “to put pressure on the greenback, the labor market would probably have to be significantly worse than expected.”

MUFG commented; “We probably need to see a print below the 100k to get the market moving and for pricing on a July FOMC rate cut to increase further.”

Following the data, markets were pricing in less than a 20% chance of a Fed rate cut at the end-July meeting.

Markets were also continuing to analyse Thursday’s ECB policy meeting with the 25 basis-point cut in the discount rate to 2.00% with hawkish rhetoric helping to underpin the Euro.

According to Rabobank; “President Lagarde was a bit more outspoken than we had expected. All in all, Lagarde did not give any reason to expect another rate cut, unless there is a significant escalation of trade tensions.”

Danske Bank added; “ECB President Lagarde’s remarks during the press conference were to the hawkish side, indicating the rate cutting cycle may be nearing its conclusion. Following today’s hawkish communication, we have revised our forecast, removing the July cut and targeting a final cut in September with a terminal rate at 1.75% (prior: 1.50%).”

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TAGS: Euro Dollar Forecasts

• GBP/JPY rises above the 20-day Simple Moving Average (SMA), providing support at 194.21.
• The Relative Strength Index (RSI) is nearing 60, suggesting that momentum remains in favour of the bulls.
• A decisive break above 195.00 could push prices back to 196.00

The Japanese Yen (JPY) continues to weaken against the British Pound (GBP) on Friday, with the GBP/JPY pair edging up to near 195.20 at the time of writing. 

This move marks a continuation of bullish momentum that began earlier in the week, as the pair broke above the 20-day Simple Moving Average (SMA), signaling a shift in near-term sentiment. Despite this strength, GBP/JPY is now testing a significant resistance level that may determine the next directional bias.

The pair has encountered firm resistance at 195.29, which corresponds with the 78.6% Fibonacci retracement of the decline observed between January and April. This level has consistently limited bullish advances since early May, making it a critical technical barrier. Momentum indicators, however, suggest that bulls still have control. 

The Relative Strength Index (RSI) is hovering around 60, showing that while the pair isn’t overbought, there is still upward momentum supporting further gains, provided the resistance can be decisively broken.

GBP/JPY daily chart

Can GBP/JPY reclaim 196.00?

Should GBP/JPY manage a daily close above 195.29, the path could open toward the psychological 196.00 mark, with the next potential resistance levels near 197.30, which aligns with previous swing highs. However, failure to breach the current resistance could trigger a short-term pullback.

On the downside, the 194.00 psychological level offers initial support. This level is reinforced by the 20-day SMA, which now acts as a dynamic support zone. A break below this area could expose deeper corrective targets near 193.00, which is aligned with the 61.8% Fibonacci retracement at 192.97. Further bearish pressure could bring the 200-day SMA near 192.80 into focus, a level that may serve as a more significant support zone.

The GBPJPY pair renewed the bullish attempts by its rally above 194.55 level, attempting to confirm the suggested bullish scenario, achieving some gains by hitting 195.30 level.

Note that the beginning of providing positive momentum will reinforce the chances for forming strong bullish waves, to expect attacking 195.70 level, and surpassing it will make it target new bullish stations, by reaching 61.8%Fibonacci correction level at 197.35, while the decline below 194.00 will force it to delay the rise and provide mixed trading again.

The expected trading range for today is between 194.45 and 195.70

Trend forecast: Bullish

June 6, 2025 – Written by Frank Davies

STORY LINK Pound to Euro Forecast: Near-Term GBP/EUR Gains Capped Near 1.19

The Pound to Euro (GBP/EUR) exchange rate dipped after Thursday’s ECB rate cut was accompanied by hawkish rhetoric and a recovery faded quickly with the pair trading close to 1.1850 on Friday.

The US jobs report could spark choppy trading later in the session.

Although Pound sentiment remains relatively firm and the currency now holds a wider yield premium, a shift in Euro interest rate expectations has supported the Euro with greater doubts whether there will be further rate cuts.

UBS maintains a constructive Pound outlook, but expects GBP/EUR resistance close to 1.19.

MUFG also expects any near-term GBP/EUR gains will be capped near 1.19.

President Lagarde noted that the ECB is currently “well-positioned” to deal with the uncertain outlook and confirmed that the ECB is near the end of the current policy cycle.

Unofficial rhetoric from ECB sources following the meeting indicated that a further rate cut was unlikely at the July meeting.

Nordea commented; “We hold onto to our forecast that no further cuts will be seen, though risks remain tilted to the downside.”

It added; “We think the ECB is done cutting rates now, but this view is contingent on no major negative surprises surfacing and economic outlook to gradually become more robust in line with the ECB’s forecasts. Such negative surprises could stem for example from a collapse in the trade talks between the EU and the US, the imposition of further major tariffs, a more notable fall in sentiment data or further downside surprises in the inflation data.”

Danske Bank also pointed to Lagarde’s rhetoric; “Lagarde’s repeated emphasis on the ECB’s ‘good position’ was striking and suggests a significantly higher threshold for additional rate cuts.”

Ihe considers that hawkish voices have secured greater influence and added; “We remove a July cut from our forecast, now assuming a final 25bp cut in September to 1.75%, with risks tilted towards one additional cut in Q4.”

Rabobank We still believe that today’s rate cut marks the end of the cutting cycle, unless trade tensions escalate.

According to Nick Rees, head of macro research at Monex Europe; “We are inclined to treat Lagarde’s hawkishness with a degree of caution, albeit given this shift in tone, we no longer see our previous forecast for a 1.50% terminal rate as the most likely outcome.”

He now expects a low point at 1.75%

There will be a heavier UK calendar next week with the latest labour-market and GDP data.

The government is also scheduled to release its spending review which will outline departmental spending limits for the remainder of this parliament.

ING remains uneasy over the fiscal policy outlook and commented; “It’s not a budget, and doesn’t come with a forecast from the Office for Budget Responsibility, a prerequisite for making major changes to tax and spending. But tax increases are inevitable later this year, we think. And not just because of departmental spending pressures.”

Unease over tax hikes would tend to hamper the Pound while the UK bond market will be watched very closely.

UBS focussed on the yield spreads and remains broadly positive on the Pound; “the latest UK growth-inflation data mix speaks against swift policy easing by the Bank of England (BoE), which should help preserve the GBP’s attractive carry in the near term.”

Elsewhere, the Halifax reported that UK house prices declined 0.4% for May with the annual increase slowing to 2.5% from 3.2%.

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TAGS: Pound Euro Forecasts

• GBP/USD retreats after setting a new multi-year high on Thursday.
• Markets await the May employment report from the US.
• The technical outlook highlights buyers’ hesitancy in the near term.

GBP/USD edges lower on Friday and trades below 1.3550 after touching its highest level since February 2022 above 1.3600. The May employment report from the US could influence the US Dollar’s (USD) valuation and drive the pair’s action heading into the weekend.

GBP/USD gathered bullish momentum in the early American session on Thursday after the data published by the US Department of Labor showed that weekly Initial Jobless Claims rose to 247,000 in the week ending May 31 from 239,000 in the previous week.

In the second half of the day, renewed optimism about the US and China coming to terms on trade helped the USD hold its ground and capped GBP/USD’s upside. US President Donald Trump said that he held a phone call with Chinese President Xi Jinping to discuss trade and noted that their respective teams will soon meet for the next round of talks.

Nonfarm Payrolls (NFP) in the US are expected to increase by 130,000 in May, at a softer pace than the 177,000 reported in April.

In case there is a significant negative surprise in the NFP data, with a reading below 100,000, the USD could come under bearish pressure and allow GBP/USD turn north, once again. On the flip side, the USD could gather strength against its rivals and weigh on the pair if the NFP data comes in above 170,000 and shows that labor market conditions are still relatively healthy. In this scenario, markets could reassess the odds of a Federal Reserve rate cut in July. According to the CME FedWatch Tool, investors are currently pricing in about a 67% probability of the policy rate remaining unchanged after the July meeting.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays slightly below 50 and GBP/USD trades near the 20-period Simple Moving Average (SMA), suggesting that buyers move to the sidelines.

Resistances could be seen at 1.3590-1.3600 (static level, round level), 1.3700 (round level, static level) and 1.3770 (upper limit of the ascending regression channel).

Looking south, support levels align at 1.3500 (50-period Simple Moving Average(SMA), static level), 1.3450 (100-period SMA) and 1.3380 (Fibonacci 23.6% retracement level of the latest uptrend).

If you think this week’s calm in will last, think again. With the US labour market and inflation in focus, history suggests volatility is just around the corner.

USD/JPY Payrolls Primer

USD/JPY has been rangebound this week heading into a period laden with major risk events, as flagged in the released last weekend. Given the historical precedent around this time of the month, the flaky price action seen recently may soon give way to something more meaningful, with U.S. and set to shake things up.

These reports could act as catalysts to either reignite the broader bearish trend or trigger a sharp bullish reversal, especially given how pessimistic sentiment towards the U.S. outlook is among investors right now.

Major Volatility Events Near

While USD/JPY has been especially volatile over the past year, driven by divergent monetary policy settings, new political leadership in both nations, heightened geopolitical tensions, and another U.S.-initiated trade war—payrolls and CPI reports have consistently packed a punch.

Source: LSEG, David Scutt

Over the past 12 months, USD/JPY’s average daily trading range has been 160 pips, or 1.07% of the prior close. On payrolls days, that climbs to 198 pips (1.32%), and on CPI days it’s even higher at 205 pips (1.35%).

Granted, these are just averages—and a data release alone doesn’t guarantee fireworks. But when a surprise hits, the moves can be big. Of the last 12 payrolls reports, the largest reaction was 2.25%, with the smallest at 0.66%. For CPI, the range was even wider—2.68% at the top and 0.76% at the bottom.

Unemployment Key Figure

Source: TradingView (U.S. EDT Shown)

Even if Friday’s payrolls release produces an average-sized move, the modest range we’ve seen this week could easily be broken, depending on the details in both the establishment and household surveys. Initially, markets tend to respond to whether payrolls beat or miss expectations, often brushing aside significant revisions to prior reports.

But if the payrolls figure sends a conflicting signal to the , don’t be surprised if the latter drives direction once initial volatility fades. After all, when officials release economic projections, they forecast unemployment, not payrolls. And given the mechanics of the household survey, the labour force participation rate arguably carries just as much weight for the Fed given the implications for unemployment and wage pressures.

USD/JPY Range May Come Under Threat

Source: TradingView

USD/JPY trades in the lower half of its recent range heading into the payrolls report. Each day this week, the price has tested and failed at 144, reinforcing its importance. On the downside, 142.42 was tagged once and bounced, adding to five prior failed attempts to close below the level since early May. That gives traders a well-defined range to work with ahead of the release.

With RSI (14) sitting marginally below 50 and trending lower, and MACD beneath the signal line in negative territory, momentum tilts to the downside—suggesting selling rallies may offer better risk-reward than buying dips in the current environment.

Beneath 142.42, the May 27 low of 142.12 is the next level of interest. A break there could put sub-142 levels back in play. While minor support is located at 141.65, recent dips below 142 have tended to reverse quickly—outside of periods of extreme market stress. That makes price action below 142 especially important, if it trades there. A clean break of 141.65 would increase the likelihood of a retest of the April swing low at 139.88.

Above 144, Wednesday’s high of 144.40 is the next level to watch. A break above could trigger a squeeze toward the 50-day moving average or resistance at 146, depending on the payrolls details and how risk assets respond.

Lately, stronger economic data has been met with a positive response across risk assets, even as it reduces the likelihood of near-term Fed cuts—suggesting that for now, good news is still good news.

Original Post

• GBP/USD holds above 1.3550 in the European session on Wednesday.
• The pair clings to a bullish bias in the near term.
• Technical buyers could take action with a break above 1.3590-1.3600.

GBP/USD holds its ground and trades above 1.3550 in the European session on Thursday after posting small gains on Wednesday. In case the pair manages to break above the 1.3590-1.3600 resistance area, it could continue to stretch higher in the near term.

The renewed selling pressure surrounding the US Dollar (USD) helped GBP/USD gain traction on Wednesday.

Ahead of Friday’s highly-anticipated Nonfarm Payrolls data, the disappointing private sector employment reading, which showed an increase of 37,000 in May, weighed on the USD on Wednesday. Moreover, the Institute for Supply Management (ISM) reported that the Services Purchasing Managers Index (PMI) fell into the contraction territory at 49.9 in May from 51.6 in April. This reading came in below the market expectation of 52.

In the second half of the day, weekly Initial Jobless Claims data from the US will be watched closely by market participants. Investors expect the number of first-time applications for unemployment benefits to edge lower to 235,000 in the last week of May from 240,000. In case there is a noticeable decline in this data, with a reading below 220,000, the USD could stay resilient against its rivals and limit GBP/USD’s upside. Conversely, a disappointing print at or above 240,000 could open the door for another leg higher in the pair.

Investors will also pay attention to the European Central Bank’s (ECB) policy announcements. A dovish ECB tone could trigger capital outflows out of the Euro into Pound Sterling. In this scenario, GBP/USD could push higher even if the data releases from the US seem USD-positive at first.

GBP/USD Technical Analysis

GBP/USD trades above the ascending trend line and the Relative Strength Index (RSI) indicator on the 4-hour chart stays near 60, suggesting that the bullish bias remains intact.

On the upside, 1.3590-1.3600 (static level, round level) aligns as the first resistance area. A daily close above this region could attract technical buyers and pave the way for an extended uptrend toward 1.3700 (round level, static level) and 1.3760 (upper limit of the ascending regression channel).

Looking south, support levels could be seen at 1.3540 (mid-point of the ascending channel, ascending trend line), 1.3500 (static level, round level) and 1.3450 (100-period SMA).

June 5, 2025 – Written by Frank Davies

STORY LINK EUR/USD Forecast: Euro Price Above 1.1450 on Dollar Vulnerability

The Euro to Dollar exchange rate (EUR/USD) was resilient after the ECB rate cut and it tested resistance above 1.1450 to trade around 1.1465 in choppy trading with traders eying 1.1500.

The dollar secured a limited boost following news that President Trump and Chinese President Xi had held a phone call, but the currency failed to gain sustained support.

According to Scotiabank the overall trend remains bullish; “the latest resistance has been observed in the mid-1.14s. A break of the local high would shift the focus to the April 21 high in the upper 1.15s.”

ING sees the risk of a decline to at least 1.1350, but added; “we would expect more buying to emerge there ahead of what could be dollar bearish NFP release tomorrow.”

Overall confidence in the US economy remains notably fragile.

US initial jobless claims increased to 247,000 in the latest week from a revised 239,000 previously. This was above consensus forecasts of 236,000 and the second-highest reading since July 2023.

Continuing claims edged lower to 1.90mn from 1.91mn the previous week.

Challenger reported that layoffs had increased 47% over the year.

The data maintained concerns over the labour market heading into Friday’s monthly jobs report.

Consensus forecasts are for an increase in non-farm payrolls of around 125,000 with the unemployment rate expected to remain at 4.2%.

Scotiabank commented; “Market expectation appear to be adjusting in anticipation of a soft NFP report Friday but a weak number will undercut the USD further.”

Scotiabank also expressed reservations surrounding the wider US fundamentals; “Beyond the data, news of tariff negotiation progress remains scant and signs of friction in the Republican part around President Trump’s tax cut bill adds to the unhelpful uncertainty around the outlook.”

It added; “We think the DXY could lose as much as another 5-10% in the next few months.”

The ECB cut interest rates by 25 basis points following the latest council meeting which was in line with strong consensus forecasts.

According to the central bank the decision was based on its updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission.

The bank is confident that inflation will settle close to the 2% target while increased government investment and military spending will help underpin the growth outlook.

The statement provided little in the way of guidance while bank President Lagarde called the inflation outlook more uncertain than usual.

Schroders Eurozone Economist Irene Lauro commented; “While the ECB delivered a widely expected rate cut today, we would not count on a follow-up next month. Inflation was lower than expected in May, with services inflation falling sharply. Yet, with no signs trade tariffs are weakening growth, we expect the ECB is likely to pause from today.

She added; “With rates now at the midpoint of their estimated neutral range, the bar for further cuts has risen. Having already eased by 1.75% in this cycle, the ECB can afford to shift from urgency to patience.”

ING, however, expects a further rate cut; “Even if the eurozone economy has shown some unexpected resilience and trade tensions could still fade, the risk of inflation undershooting target has become pressing enough for the ECB to cut rates once again.”

The Euro-Zone continues to run a substantial current account surplus which will provide important Euro protection.

Rabobank commented; “This year has brought periods when US equities, treasuries and the USD have all dropped at the same time illustrating that ‘sell America’ is the dominant theme. Creditor countries have been the beneficiaries.”

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TAGS: Euro Dollar Forecasts

June 5, 2025 – Written by Ben Hughes

STORY LINK Pound sterling to Dollar Forecast: “USD Remains Skewed to Downside”

The Pound to Dollar exchange rate (GBP/USD) advanced to 1.3585 in Europe on Thursday, just below the 39-month high recorded last month.

The dollar has lost ground amid further reservations over the economy and increased pressure on the Federal Reserve to cut interest rates.

Resistance levels may be tough to break down unless US data over the remainder of this week is notably weaker than expected or US-China relations deteriorate further.

According to UoB, “currently, GBP does not appear to have enough momentum to break clearly above 1.3600.”

US data released on Wednesday was weaker than expected, with the ADP private payrolls increase held to 37,000 for May from 60,000 in April and the lowest increase since February 2022.

The ISM services-sector index also dipped to an 11-month low of 49.9 for May from 51.6 the previous month.

There was mixed evidence in the latest Federal Reserve Beige Book on US economic conditions.

According to the survey, “All Districts reported elevated levels of economic and policy uncertainty, leading to a cautious approach.”

It added, “Tariff uncertainty continues to complicate business planning, with firms hesitant to commit capital or increase hiring.”

There will be ongoing concerns that uncertainty will damage the economic outlook.

Danske Bank maintains a cautious stance on the dollar; “Overall, the balance of risks for the USD remains skewed to the downside amid renewed trade policy volatility, weakening domestic data momentum, and persistent uncertainty premia embedded in USD assets.”

As far as trade policy is concerned, Danske commented, “Our view remains that broad-based, US-centric tariffs are inherently more negative for the USD than for its trading partners. The US is more exposed on the import side, and rising trade-related uncertainty is likely to weigh on capital expenditure and hiring decisions – particularly if the Fed remains constrained by inflation credibility concerns.”

In response to weaker data, there have been further calls from President Trump that interest rates should be cut immediately with another round of attacks on Fed Chair Powell.

ING commented, “We’re also looking out for whether political pressure on the Fed to cut rates increases the term or risk premium in Treasuries. That would be a dollar negative. This also serves as a reminder that the end of Fed Chair Powell’s tenure in May next year could be a difficult time for both bond markets and the dollar.”

Rabobank added, “Markets might shrug, but we get a new Fed Chair in under a year.”

Forthcoming data will be potentially crucial.

According to MUFG, “The decline in US yields indicates that market participants are putting more weight on loosening labour market conditions than higher inflation from tariff hikes when determining the outlook for Fed policy.”

In this context, Friday’s employment report will inevitably be a key element for markets.

Mansoor Mohi-uddin, chief economist at Bank of Singapore, commented, “May’s payrolls data tomorrow will be important to see if investor concerns are valid or overdone. A soft labour market report is likely to result in outsize falls in the U.S. dollar.”

Consensus forecasts are for an increase in non-farm payrolls of around 125,000 for May from 177,000 the previous month with the unemployment rate holding at 4.2%.

The dollar will have scope for at least a limited and temporary recovery if there is stronger-than-expected data, while a weak release would trigger renewed selling pressure.

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TAGS: Pound Dollar Forecasts

• The US dollar initially tried to rally against the Japanese yen, only to fall pretty significantly.
• This is a pattern that we have been in for some time, as the ¥142 level has been a major support level.
• With that being the case, the market is likely to continue to pay close attention to the ¥142 level where we have seen the market bounce multiple times, and I do think that could be an area that we may have to test.

If we can stay above that level, then I think it’s a very bullish sign, as even with the poor ADP Non-Farm Payroll numbers and the ISM Services PMI numbers coming out of 49.9, this would suggest that there is quite a bit of strength in the US dollar as it did not break down through support. That being said, the US dollar against the Japanese yen is a little bit different as far as currency markets are concerned.

Central Banks

Keep in mind that the Bank of Japan has a major issue on its hands, as people are not buying government bonds, with a couple of days where we’ve had absolutely no bid. This means that the Bank of Japan may very well be in a situation where they have to start quantitative easing again, stepping into the market to buy those very well bonds. However, it’s also worth noting that the data softening in the US might make people think that the Federal Reserve is likely to drop rates by the end of the year, but even if they do, the reality is that the interest rate differential between the United States and Japan is about a mile wide. In other words, the interest rate differential will attract traders sooner or later, and they will hold onto US dollars, collecting the swap along the way pad their trading accounts.

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

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.