The British pound is starting to roll over slightly from the 50-day EMA as well. Although bearish, I wouldn’t worry too much about it because we’re basically in the middle of the overall consolidation. So, therefore, we’re essentially at fair value. I do favor the US dollar over the pound. Although the British pound is a little bit of an outlier considering how it performs against the US dollar, even as we were falling during 2024, it was falling less rapidly against the greenback than many other currencies. Conversely, on the way back up, the British pound was one of the best performers. So it’s got a history of fighting the dollar a little bit more. So although it does look weaker than strong, I’m not overly concerned. I think we will stay in this range for the time being.
EUR/GBP Technical Analysis
And finally, when it comes to triangulation between the euro, the pound, and the dollar, it makes sense that the euro and the pound look pretty much the same. That’s because they’re pretty neutral towards each other. The euro is currently sitting right out of the 50-day EMA against the British pound, right in the middle of a larger consolidation area.
I think this is essentially trying to tell us something important, and that’s where the dollar goes, which will dictate where everything moves in the first two pairs in this analysis. This is about the dollar and not really about the pound and the euro. There is no strength in the euro versus the pound or vice versa. Over the longer term, the euro has risen quite nicely, but going back to the last three months or so, we’ve been pretty sideways between 0.86 and 0.8750. I don’t see that changing anytime soon.
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During the Monday trading session, the British pound has been fairly quiet against the US dollar.
We are in a range at the moment and trying to figure out exactly whether or not the buyers can push the market higher, if we are, in fact, going to start to fall apart.
As things stand right now, it’s probably worth noting that the 50 Day EMA has offered resistance, but it’s also worth noting that the high price from the Friday session still would qualify as a “lower high” if we were in fact to drop from here.
Questions Remain
I think there are still a lot of questions asked about whether or not this trend can continue, as we had pulled back rather significantly, but we also have the situation where the market had been so bullish previously. The one thing that I do know is that the British pound has been much stronger against the US dollar than most other currencies, so if this pair starts to fall apart, I think that tells you that the US dollar is about to get very strong, and therefore punish not only the British pound, but other weaker currency such as the Japanese yen, Canadian dollar, New Zealand dollar, and so on.
Alternatively, if this pair rises, then it tells is that the US dollar is probably going to soften a bit, but I actually would prefer to buy the British pound in that environment, because it has outperformed and therefore I don’t feel that there’s any reason to go looking somewhere else to really take advantage of a weaker US dollar. Ultimately, this is a very choppy currency pair, and I think that will continue to be the case in this market, and I think we remain rangebound. In fact, the larger consolidation area, I believe, is between the 1.37 level and the 1.35 level. We are currently right around the middle of that, meaning that we are essentially near “fair value.”
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 U.S. dollar strengthened sharply against the yen on Monday, rebounding from ¥150 support with a bullish hammer formation. Analysts expect continued upside toward ¥153, supported by yield differentials, while pullbacks remain buying opportunities above ¥147.
The U.S. dollar has rallied significantly during the trading session on Monday against the Japanese yen, kicking off perhaps the next leg higher as the ¥150 level has often offered a bit of support, with the Friday candlestick showing itself as a hammer.
The hammer, of course, is a very bullish sign, and therefore I think you have to look at this as a market that is probably trying to reach towards the ¥153 level.
If we break down below the hammer from the Friday session, then we start to look at the 50-day EMA, which is an indicator that a lot of people will be watching. And there’s a gap underneath there that is supported by the 200-day EMA.
Ultimately, this is a market that I think continues to see a lot of upward trajectory, mainly due to the fact that the interest rate differential continues to favor the U.S. dollar. And I just don’t see how that changes anytime soon. Ultimately, this is a market that has been breaking out for a while.
I Collect Swap When I Can
And as you get paid at the end of the day, if you’ve been watching me for several months, all the way back to somewhere in June, I think I have started to tout the strength of the idea of being long in this market, and I have been long in this market for quite some time.
At this point, it’s going to be more of a grind to the upside than anything else, but you get paid to wait, and I think that’s a huge advantage. If we were to break down below the ¥147 level, then okay, things change. But until then, this looks like a market where short-term dips offer the possibility of buying opportunities to take advantage of as market participants continue to shun the Japanese yen for a whole host of economic reasons in that country.
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.
Support Levels for EUR/USD Today: 1.1600 – 1.1550 – 1.1480.
Resistance Levels for EUR/USD Today: 1.1700 – 1.1780 – 1.1850.
EUR/USD Trading Signals:
Buy the EUR/USD from the support level of 1.1560, target 1.1800, and stop 1.1480.
Sell the EUR/USD from the resistance level of 1.1730, target 1.1600, and stop 1.1800.
Technical Analysis of EUR/USD Today:
According to recent trading, the EUR/USD pair has broken through a key resistance area at the key psychological support level of 1.1600, indicating that the uptrend may be gaining momentum. However, the price appears to be retreating to this broken resistance level, which has now become support, potentially attracting more buyers willing to join the rally. According to reliable trading platforms, the current price zone corresponds to the 50% and 61.8% Fibonacci retracement levels at 1.1637 and 1.16157, respectively, extending from the previous swing low at 1.1545 to the swing high at 1.1728. These technical areas may be sufficient to control losses and trigger a rebound to or above the previous highs.
Consequently, if the broken resistance zone and the Fibonacci levels hold as a base, the EUR/USD pair may resume its ascent and could target the psychological upward level of 1.18000 later. On the other hand, a break below these support areas could indicate a weakening of the upward momentum, leading to a deeper correction toward the swing low.
Therefore, if the broken resistance area and Fibonacci levels hold as a bottom, the EUR/USD pair may resume its upward trend, potentially targeting the psychologically significant 1.18000 level later. Conversely, a break below these support areas could indicate weakening upward momentum, leading to a deeper correction towards the swing low. Meanwhile, the 100-period simple moving average (SMA) is below the 200-period simple moving average (SMA) on the short-term timeframe, suggesting that the strongest trend was previously downward. However, the price has broken both SMAs, indicating a potential shift in momentum. The 200-period simple moving average appears to be stabilizing, suggesting that upward pressure may be increasing.
The stochastic indicator is also rising from the oversold zone, reflecting a return of buying interest. The oscillator has plenty of room to rise before reaching the overbought zone, so buyers may take control for a longer period, bringing the EUR/USD pair back to the swing high or achieving new highs above 1.17288. The Relative Strength Index (RSI) is also trending upward from the mid-range, confirming the increasing upward momentum. As long as the oscillator maintains its upward trend, the price may continue to follow the same trend.
Trading Tips:
The bullish shift in EUR/USD is at its beginning. Therefore, the currency pair may be influenced by upcoming economic data and central bank commentary as traders assess monetary policy expectations for both regions, while the US government shutdown may further weigh on the US Dollar.
EUR/USD Trading Awaits US Inflation Figures
According to Forex trading, the euro appears to be better supported at this stage; it just needs something to spark a continued recovery. This spark could come from the release of US inflation data, scheduled for the end of the week. The US dollar is likely to decline if US inflation meets or falls below expectations, which would push the EUR/USD exchange rate to extend its recent recovery to 1.1750.
In general, Markets expect US CPI inflation to reach 3.1% in September, up from 2.9% in August, while core inflation is expected to reach 3.1%. Any reading above expectations will naturally strengthen the dollar, as investors will have no choice but to lower their expectations for future interest rate cuts, a development typically considered supportive of the US dollar. Before the US inflation data is released, the euro will be subject to the Eurozone Purchasing Managers’ Index (PMI) survey, which will provide insight into the region’s economic performance in October. A strong set of PMIs will support the euro against the dollar, as they will support the European Central Bank’s stance on maintaining interest rates at their current level.
The British pound faces consolidation against the Japanese yen near ¥202 after volatile sessions.
Support lies around ¥200 and resistance at ¥204–¥205, with the broader trend remaining bullish and positive carry favoring long positions.
The British pound initially rallied during the trading session on Monday against the Japanese yen. As we continue to see a lot of noisy trading over the last four sessions, we have seen a hammer, an inverted hammer, a hammer, and then another inverted hammer. With that being said, it looks very much like a market that is stuck at the ¥202 level. Even if we break down from here, I think there’s a lot of support near the ¥200 level, which also has the 50-day EMA coming into the picture.
The Importance of the 50-day EMA
The 50-day EMA is a famous trend-following type of indicator that I think will attract a lot of attention. And the fact that it’s right there at that ¥200 level, of course, has even more people paying attention to it. If we can break above the ¥204 level, then it opens up the possibility of the ¥205 level rather quickly.
Overall, we are in a positive trend, with the British pound offering a positive swap against the Japanese yen. And when you look around the forex world at the moment, all of the yen-related pairs look the same. They all gapped higher, pulled back a bit, and now they look as if they are trying to at least grind to the upside.
That being said, this is a very noisy couple of sessions, so I don’t think we’re in the all clear to get overly bullish yet. But you get the payment at the end of every day via swap to at least make this pair work out over the longer term, assuming that the trend continues. I see nothing on this chart that changes that trend anytime soon.
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.
Despite the weakness of the EURJPY pair last trading, its stability within the bullish channel’s levels and the continuation of forming extra support at 175.25 level supports our bullish suggestion in the near trading, to keep waiting for targeting 177.05 level reaching the top at 177.85.
Note that reaching below the current support and providing negative close will force it to activate the bearish corrective track, reaching 174.15 initially, and breaking this level will force it to decline towards 173.40, approaching the support of the main bullish channel.
The expected trading range for today is between 175.25 and 177.05
The Euro to Dollar exchange rate (EUR/USD) was unable to hold above 1.1700 on Friday and traded around 1.1660 on Monday with some support near 1.1650.
ING noted French concerns but added; “this week the focus should stay on the US, and a further souring of credit sentiment could send EUR/USD on a path to 1.180.
There will be important data releases late in the week with the PMI business confidence releases and the US consumer prices report.
The US banking sector, government shutdown and political rhetoric will all be potentially market-moving events.
There has been some relief surrounding the US banking sector with equity markets making gains.
Danske Bank noted that earnings releases from the major UK banks have been solid. It added; “Those earnings helped stabilize sentiment and provided some support to the sector overall, even as worries linger around smaller regional lenders.”
ING remained cautious; “Indications that lending issues don’t extend beyond Zions Bancorp and Western Alliance could offer some further relief to the dollar, but it might not be enough to fully price out concerns about the underlying health of the credit market and have the greenback reclaim all losses.
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It added; “As Jamie Dimon warned, there may be more ‘cockroaches’ (i.e. distressed lenders) out there after two US regional banks reported credit issues last week. Markets will be looking very closely for evidence of that, and the dollar continues to face substantial downside risks.”
At this stage, markets are pricing in close to 100% chance of rates being cut next week with over a 95% chance that the central bank will cut rates again at the December meeting.
The Fed is now in a blackout period ahead of the meeting and there should be no official comments.
Any unofficial media briefings will be watched closely if there are sharp moves in equity markets.
US-China trade stresses will continue to be a key element. Rhetoric from President Trump was slightly more conciliatory over the weekend, increasing hopes that pressure on China will be successful.
MUFG market participants remain cautiously optimistic that much higher tariffs are unlikely to remain in place for long and may not even be implemented at all helping to dampen the negative market reaction.
Rabobank; “Before we get too carried away with buying the dip on the latest hopes of TACO perhaps it is worth remembering that the advocates of TACO theory are mostly the same people who told us that universal tariffs would never happen, yet here we are.
It added; “To predict what is likely to be the direction of travel on trade there is only one indicator you need to watch, and that is the US goods trade balance.”
S&P downgraded the French credit rating to A+ from AA- after Friday’s market close due to persistent unease over fiscal trends.
ING commented; “Given the fragility of the government, it remains too early to price out the French effect from the euro fully.”
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The Pound US Dollar exchange rate (GBP/USD) was mostly rangebound on Monday amid a lack of both UK and US data releases.
At the time of writing, GBP/USD was trading at approximately $1.3437, virtually unchanged from the start of Monday’s session.
The US Dollar (USD) held largely steady against most of its major peers on Monday, as a lack of significant US economic releases left the currency without a clear directional driver.
Ongoing uncertainty surrounding the government shutdown has led to the postponement of several key data releases, limiting opportunities for USD investors to take decisive positions.
As a result, the ‘Greenback’ traded in a tight range throughout Monday’s European session, struggling to make any meaningful gains against its rivals.
The Pound (GBP) also treaded water against most of its major peers on Monday, as the absence of notable UK economic releases left Sterling without a clear catalyst.
With no fresh domestic data to influence movement, investors remained cautious, holding back from making significant bets on the currency ahead of this week’s key releases, including the UK’s consumer price index (CPI) due on Wednesday.
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As such, GBP exchange rates stayed largely rangebound throughout Monday’s European session, with the currency showing little momentum and remaining subdued against its major counterparts.
Adding to the subdued tone, analysts at Scotiabank highlighted that Sterling began the week on a softer footing, struggling to gain traction against most of its G10 peers.
Chief FX Strategist Shaun Osborne noted that while the Pound remains relatively stable, underlying sentiment and positioning continue to act as key near-term drivers.
According to Osborne: “The GBP is soft, down a marginal 0.1% vs. the USD and underperforming most of the G10 currencies into Monday’s NA open. This week’s release calendar is dominated by Wednesday’s CPI and Friday’s retail sales. Preliminary PMI’s will also be released on Friday. Fundamentals remain a secondary driver for the pound, as yield spreads extend their two-month consolidation and correlation studies reveal a newly negative relationship between GBP and spreads. Sentiment appears to be more dominant as a near-term driver, with risk reversals showing a 0.64 correlation to GBP on a 21-day rolling basis. Risk reversals remain deeply negative (pricing a premium for puts) but appear to be in the early stages of a recovery.”
Looking ahead to Tuesday’s European session, the GBP/USD exchange rate is expected to be shaped primarily by a speech from Federal Reserve official Christopher Waller, as both the US and UK economic calendars remain notably quiet.
Last week, Waller signalled the possibility of another US interest rate cut this year, citing ongoing concerns over the labour market and broader economic conditions.
Should he echo these dovish remarks this week, the ‘Greenback’ could come under renewed pressure, potentially seeing USD exchange rates slip against its major rivals.
Meanwhile, the UK data calendar is also devoid of notable releases, leaving Sterling without fresh domestic catalysts once more.
In this environment, GBP exchange rates are likely to remain confined within a narrow range, with trading largely guided by market sentiment and risk appetite rather than fundamental data.
Investor attention is expected to remain focused on Wednesday’s CPI release, meaning traders may continue to exercise restraint, maintaining a cautious approach and limiting significant GBP/USD movement ahead of the key inflation figures.
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Support Levels for EUR/USD Today: 1.1640 – 1.1570 – 1.1490.
Resistance Levels for EUR/USD Today: 1.1740 – 1.1800 – 1.1880
EUR/USD Trading Signals:
Buy EUR/USD from the support level of 1.1580 with a target of 1.1800 and a stop-loss of 1.1490.
Sell EUR/USD from the resistance level of 1.1800 with a target of 1.1600 and a stop-loss of 1.1880.
Technical Analysis of EUR/USD Today:
Based on recent Forex market trading. Euro trading has turned the tide against the US dollar, and further gains are likely as a result. The US dollar has come under renewed pressure against the euro following a sharp sell-off in US regional bank stocks. Zions Bank shares fell 13% after a $50 million write-off linked to a loan to California Bank & Trust, while Western Alliance Bank shares fell 11% after revealing its exposure to the same borrowers. Overall, these developments point to the potential emergence of vulnerabilities in US credit markets.
As currency investors know, when market concerns focus on US-specific issues, the US dollar tends to come under pressure: EUR/USD jumped to 1.1720 following these headlines before quickly rebounding and closing last week’s trading session around 1.1650, awaiting strong catalysts for a rapid rebound.
However, as the stock market sell-off extended to major European bank stocks last Friday, this US-centric feature faded somewhat, allowing the US Dollar to recover some of those losses, bringing the EUR/USD pair back to 1.1690. Nevertheless, the US Dollar fell by $0.65%$ against the Euro over the week, and the EUR/USD pair is heading for a rally again amidst a shift in momentum, with some analysts predicting a potential test of the 1.18 resistance level soon.
Factors supporting the euro’s rise
Recently, according to currency experts, French Prime Minister Lecornu’s resilience in two no-confidence votes last Thursday contributed to the euro’s trading. He survived after announcing plans to suspend pension reforms until after the next presidential election in 2027, sacrificing fiscal discipline for political necessity. According to experts, the French government’s stability, albeit volatile, is enough for the euro to offset a significant portion of France’s risk premium. Unless a new French government collapses before the end of the year, this should allow the EUR/USD pair to refocus on fundamental market drivers (interest rates and stocks).
On the other hand, the US dollar has also been under pressure due to the Federal Reserve’s ambition to cut interest rates by another quarter percentage point at its October meeting, seeking to support growth while avoiding rising inflation. As a result, the EUR/USD pair is now heading towards the resistance level it will reach in early October at 1.1750/1.1770. Overall, the Fed’s dovish tone has anchored the EUR/USD pair around the 1.18 resistance level, and this gap is expected to close quickly in light of the above developments.
The Future of US Interest Rates in the Coming Months
In this regard, US Federal Reserve Chairman Jerome Powell indicated in a speech he delivered at the annual meeting of the National Association for Business Economics (NABE) last week: “This policy stance, which I see as still constrained, is… A bit, it puts us in a good position to respond to potential economic developments.” In this context, Powell says the Federal Reserve has ample room to cut interest rates without risking inflation. The rise in stock prices and subsequent decline in the dollar confirm traders’ adoption of this interpretation. In light of these developments, forex market analysts see the 1.18 resistance level as a potential target for the EUR/USD pair in the near term.
Today’s EUR/USD trading is not anticipating any significant European or US economic releases, so forex investor sentiment will be the most important factor driving currency prices today.
Trading Tips:
The bullish shift for the EUR/USD pair needs more stimulus for confirmation, and that may only happen with stability above the 1.1800 resistance, which increases the positive expectations for the psychological resistance of 1.2000. Otherwise, selling pressure will remain the stronger force.
The British pound initially tried to rally during the trading session against the US dollar but then fell to reach the 1.34 level. If we break down below the 1.34 level, then the 200-day EMA could be targeted at the 1.3272 level. Short-term rallies, I think, ultimately are situations where you look to fade signs of exhaustion. The 1.35 level, of course, is an area that has been resistant recently. And if we can break above there, then the 1.36 level could be targeted. All things being equal, this is more or less a neutral and sideways market as far as I can see.
EUR/GBP Technical Analysis
And new for today, we’re going to start looking at the euro against the British pound. The euro has gone back and forth against the British pound as we are in a very tight and kind of neutral range of about 150 pips. We have 0.86 offering support and 0.8750 above offering resistance. We are sitting right here on the 50-day EMA.
So, I think this remains a market that trades roughly in about a 50 pip range between 0.8666 and 0.8730, give or take a few pips on each turn. So ultimately, if we get to the bottom of that range, I’m interested in short-term longs. If we get to the top of that range, I’m interested in short-term shorts. That being said, if we break out of the 150 pip range, then obviously a much bigger move would be at foot.
For a look at all of today’s economic events, check out our economic calendar.
