• EUR/USD rises toward 1.1350 in the European session on Friday.
• The US Dollar struggles to hold its ground after outperforming its rivals on Thursday.
• The technical outlook highlights ongoing buyer interest in the near term.

After snapping a three-day winning streak on Thursday, EUR/USD regains its traction and rises toward 1.1350 in the European session on Friday, supported by the broad-based selling pressure surrounding the US Dollar (USD).

The USD held its ground on Thursday and caused EUR/USD to stretch lower after the data published by S&P Global showed that the economic activity in the US’ private sector expanded at an accelerating pace in May, with Composite Purchasing Managers Index (PMI) rising to 52.1 from 50.6 in April. In this period, the Services PMI and the Manufacturing PMI both improved to 52.3.

Nevertheless, the positive impact of the upbeat PMI data on the USD remains short-lived as investors grow increasingly concerned about the US government’s debt outlook. US President Donald Trump’s sweeping tax and spending bill, which is projected to add more than $3 trillion to the national debt over the next decade, passed the Republican-controlled House of Representatives on Thursday by a slim margin. The Senate is expected to start discussions on the bill after the Memorial Day holiday on May 26.

Meanwhile, the European Central Bank (ECB) reported on Friday that Negotiated Wage Rates rose 2.38% in the first quarter, down from the 4.12% increase recorded in the previous quarter. This reading eases concerns over strong wage inflation in the Eurozone and limits the Euro’s gains for the time being.

The US economic calendar will not offer any high-tier data releases on Friday. Hence, the USD could have a difficult time staying resilient against its rivals heading into the weekend.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart rose above 60 and EUR/USD turned north after testing the 200-period Simple Moving Average (SMA) early Thursday, reflecting sellers’ hesitancy.

EUR/USD could face next resistance at 1.1380 (Fibonacci 23.6% retracement of the latest uptrend) before 1.1430 (static level) and 1.1500 (static level, round level). On the downside, a key support area seems to have formed at 1.1280-1.1270 (Fibonacci 38.2% retracement, 100-period SMA, 200-period SMA) before 1.1200 (static level, round level) and 1.1180 (Fibonacci 50% retracement).

May 23, 2025 – Written by Frank Davies

STORY LINK Pound to Euro Forecast: EUR and GBP Sterling Both Secure Data Boosts

The Pound-to-Euro exchange rate (GBP/EUR) recovered strongly from lows around 1.1825 on Thursday, but was again unable to sustain a brief move above the 1.1900 level and settled just below this level.

The Pound and Euro both gained support from Friday’s data, limiting GBP/EUR moves.

The Pound may have greater scope for gains on pure economic grounds, but the Euro looks better placed structurally given scope for capital inflows.

This 1.19 area remains a key resistance area for the pair and equates to 0.84 for EUR/GBP.

Credit Agricole commented; “After five weeks of lower weekly highs, lows and closes, EUR/GBP is struggling to extend those trends to a sixth week as the pair has found strong support around 0.84.”

Nevertheless, it added; “Any close in EUR/GBP below last week’s could thus keep the downside momentum alive.”

The bank still sees scope for GBP/EUR gains to 1.2050 within the next few weeks.

On Friday, Germany reported that GDP increased 0.4% for the first quarter compared with consensus forecasts of 0.2% and followed a 0.2% contraction for the fourth quarter of 2024.

ING commented; “All in all, today’s numbers finally brought back an almost forgotten relic from the past: the German economy can still surprise to the upside. Even if the first quarter performance is clearly the result of one-offs and doesn’t look sustainable (yet), it shows that after the recent downgrading of growth forecasts for this year, the next revision is likely to be to the upside.

Dr Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, also expects a limited setback for the second quarter.

He still expressed some optimism; “A cyclical component is also observable in manufacturing – as early indicators up to May show – and the strength in consumption is what could have been expected for some time given real wage increases. Therefore, there are several reasons to believe that the upward trend will continue here.”

Following the latest minutes, there are still expectations that the ECB will continue to cut interest rates.

MUFG noted; “The tone of the minutes pointed to increased confidence in inflation returning to target, which if maintained, certainly points to the scope for the ECB to lower the policy rate into accommodative territory.”

It added; “Two more rate cuts seems likely and if global conditions worsen or EU-US trade conflicts emerge, three cuts would be very feasible.”

Rabobank noted some evidence of hawkish ECB elements, but added; “we do not believe that this changes the outlook for the June meeting: a rate cut is still very likely.”

Overall yield spreads will tend to limit Euro support, but there is also evidence of further inflows into the Euro.

According to ING; “We think the euro is continuing to benefit from being the most liquid alternative to the dollar. There is also evidence that portfolio re-allocation is helping the euro.”

UK data was also broadly favourable with retail sales increasing 1.2% for April compared with consensus forecasts of a 0.3% gain, although the March increase was revised to 0.1% from 0.4%.

The GfK consumer confidence index also improved to -20 for May from -23 the previous month.

The data boosted expectations over the short-term UK outlook.

Credit Agricole commented; “The GBP was still able to fare better than the EUR yesterday, as a material improvement in the UK flash PMI for May contrasted with an unexpected deterioration in the same marks for the Eurozone.”

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TAGS: Pound Euro Forecasts

• GBP/USD trades at its highest level since February 2022 near 1.3500.
• Retail Sales in the UK rose at a stronger pace than expected in April.
• The US Dollar stays under heavy selling pressure on fiscal concerns.

After struggling to find direction on Thursday, GBP/USD extends its weekly uptrend and trades at its highest level since February 2022 near 1.3500 in the European morning on Friday. The technical outlook points to overbought conditions but the pair’s correction attempts could remain short-lived.

The UK’s Office for National Statistics reported early Friday that Retail Sales rose by 1.2% on a monthly basis in April, following the 0.1% increase recorded in March. This print came in better than the market expectation of 0.2% and boosted Pound Sterling to begin the European session.

On the other hand, the US Dollar (USD) stays under strong selling pressure after managing to keep its footing on the back of upbeat flash S&P Global Purchasing Managers Index (PMI) data releases for May on Thursday. Investors grow increasingly concerned over the US debt staying on an unsustainable path after United States (US) President Donald Trump’s sweeping tax and spending bill passed the Republican-controlled House of Representatives on Thursday.

The bill now moves to the Senate, which will kick off deliberations after the Memorial Day holiday and will try to have a vote before July 4.

In the absence of high-impact macroeconomic data releases, the USD could have a difficult time finding demand heading into the weekend, allowing GBP/USD to end the week decisively higher.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart rose above 70 for the first time since late April, reflecting overbought conditions in the near term.

On the downside, 1.3440-1.3450 (static level, former resistance) aligns as immediate support before 1.3400 (static level, round level) and 1.3360 (50-period Simple Moving Average). Looking north, additional gains toward 1.3560 (static level from February 2022) and 1.3600 (static level, round level) could be seen once GBP/USD stabilizes above 1.3500 (static level, round level).

• The USD/CAD forecast indicates a growing likelihood that Trump’s tax bill will be passed into law.

• Traders are pricing a 67% chance of a Fed rate cut in September.

• Market participants are pricing a 27% chance of a BoC rate cut in June.

The USD/CAD forecast indicates a growing likelihood that Trump’s tax bill will be passed into law, increasing the US government’s debt and hurting the dollar. Meanwhile, in Canada, BoC rate cut expectations have fallen significantly, supporting the loonie. 

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The US dollar fell on Thursday and Friday after Trump’s tax bill passed through the House of Representatives. This development increased US fiscal health worries, prompting investors to dump US assets. On Monday, Moody’s cut the US government’s credit rating due to its growing debt. The move hurt investor confidence. If Trump’s bill passes, it will increase the government’s debt, further shaking confidence in the economy. 

Furthermore, the fiscal worries overshadowed a report on Thursday showing an improvement in US business activity. Fed policymakers are still cautiously watching incoming data for signs of weakness after Trump’s tariffs. Downbeat economic data will increase pressure on the central bank to lower borrowing costs. At the moment, traders are pricing a 67% chance of a cut in September. 

Meanwhile, BoC rate cut bets continued falling after Canada’s hotter-than-expected core inflation figures. Market participants are pricing a 27% chance of a rate cut in June, meaning there is a higher likelihood of a pause. However, policymakers will keep studying incoming data. 

USD/CAD key events today

• Canada core retail sales m/m
• Canada retail sales m/m

USD/CAD technical forecast: Bears eye the 1.3800 support level

On the technical side, the USD/CAD price has continued its slide after breaking out of its triangle pattern. The price trades well below the 30-SMA, while the RSI is nearing the oversold region. This shows the bearish bias is strong. 

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After the breakout, the price paused its decline to make a lower high. At the moment, bears have returned and are about to break below the previous low. Such a move would strengthen the bearish bias. Moreover, a strong move could push the price below the 1.3800 level, confirming a new downtrend.

On the other hand, if the 1.3800 support holds firm, the price might bounce to retest the 1.3900 resistance level. Still, the bearish bias will hold if the price remains below the 30-SMA.

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Copper price began today’s trading with a new positivity by surpassing the barrier at $4.6600, announcing its readiness to activate the bullish track in the current period, the unionism of providing positive momentum by the main indicators will reinforce the chances for achieving several gains, to reach the initial target at $4.7500, to press on 61.8% Fibonacci correction level at $4.8100.

Note that activating the negative track requires forming a sharp decline, to settle below $4.5000 level, to confirm targeting several negative stations that begin at $4.4300 and $4.3100.

The expected trading range for today is between $4.6100 and $4.7500

Trend forecast: Bullish

May 23, 2025 – Written by Ben Hughes

STORY LINK GBP/USD Forecast: Pound Sterling “Mid Performer” Following US, UK PMIs

The Pound-to-Dollar exchange rate (GBP/USD) was rangebound on Thursday following the release of the US’s and UK’s preliminary S&P Global PMIs.

At the time of writing, GBPUSD was trading at approximately $1.3425, virtually unchanged from the start of Thursday’s session.

The US Dollar (USD) advanced against most major peers on Thursday, supported by stronger-than-expected PMI data for May.

Fresh figures from S&P Global revealed an uptick in both the manufacturing and services sectors, surprising markets who had projected a slowdown.

Manufacturing activity jumped to 52.3, defying expectations of a decline to 50.1, while the services PMI also rose to 52.3, indicating a broad-based expansion.

Commenting on the data, S&P’s Chris Williamson noted an encouraging rebound in business sentiment, crediting the easing of tariff pressures for lifting outlooks.

The upbeat economic data boosted confidence in the US economy and helped lift the ‘Greenback’ against a range of currencies, although gains against the Pound were more limited.

Sterling traded steadily on Thursday, and even rose against several of its counterparts, following the release of the UK’s latest PMI readings for May.

Although manufacturing activity remained in contraction, with the index edging down to 45.1, the services sector surprised to the upside.

The services PMI climbed back above the 50 threshold, exceeded economists’ expectations by hitting 50.2, and signalled a return to modest growth.

This glimpse of resilience in the UK’s dominant services industry offered some reassurance to markets, helping the Pound maintain its footing during Thursday’s European session.

“GBP is down 0.2% vs. the USD and a mid-performer among the G10, trading relatively well despite a generally disappointing preliminary PMI release. The manufacturing print disappointed with a relatively deep contractionary print of 45.1 while services climbed just above the expansion threshold, printing 50.2.” – Scotiabank

The Pound US Dollar (GBP/USD) exchange rate could come under pressure on Friday, with investors eyeing the UK’s latest retail sales data for direction.

April’s figures are expected to indicate a slowdown in consumer activity, with sales growth forecast to ease from 0.4% to 0.2%.

Any downside surprise could sour sentiment towards Sterling by fuelling concerns about the UK economy.

Meanwhile, with a quiet end to the week for US economic releases, the spotlight may shift to a scheduled speech from a Federal Reserve policymaker.

If the remarks lean dovish, the US Dollar could extend its recent losses, adding another layer of volatility to the currency pair heading into the weekend.

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In today’s session, USD/JPY trades 0.03% higher, having fallen below the key level of 144.000 courtesy of a weaker dollar, increased safe-haven demand, and a narrowing interest rate differential.

USD/JPY Key Takeaways

• Primarily due to a fall in dollar value, USD/JPY currently trades at around ~144.058, representing two-week lows for the currency pair
• Renewed tariff fears, geopolitical tensions, and general uncertainty on the US economy are allowing the Japanese yen to strengthen against the U.S. dollar

USD/JPY: Yen benefits from renewed safe-haven flows

With global equities somewhat wobbly this week, markets have made a notable shift towards yen strength, renewing demand for typical safe-haven assets.

Compounded by a credit rating downgrade on U.S. sovereign debt last week, nervousness surrounding US trade policy and the latest developments on Trump’s ‘big, beautiful’ tax bill have done little to calm market nerves, with questions rising on how the current administration will address a ballooning US deficit and rising interest costs.

At least in part, the outcome has been a weaker dollar, with USD/JPY trading around ~1.09% lower in this week’s trading.

USD/JPY: Tide turning on Japanese bond yields

Snoynmous with ultra-low interest rates for the best part of 20 years, the Bank of Japan’s change in monetary policy, bookmarked by the appointment of Kazuo Ueda, represents a profound shift in perception for the Japanese economy, and by extension, the yen.

At least one outcome has been rising Japanese bond yields, with longer-dated treasuries gaining value massively under the new monetary policy outlook. Recently, the 30-year yield hit a 25-year high of ~3.2%, while the 40-year yield reached over ~3.5%, its highest point since inception in 2007.

With the differential between US and Japanese treasuries becoming increasingly narrow, the dollar is becoming less attractive to hold, especially when considering the stark difference in current predictions on future monetary policy of the Fed and the Bank of Japan, respectively.

Worsened by a continuing unwinding of the infamous yen carry trade, any further reduction in the yield differential between US and Japanese treasuries will likely encourage further USD/JPY downside.

USD/JPY: Increased US rate cut bets weaken dollar-yen exchange rate

With markets currently pricing in two Fed rate cuts and one Bank of Japan rate hike before year-end, the attractiveness of holding the dollar over the yen, at least by some metrics, is set to be reduced.

While the latest US data shows inflation cooling faster than first predicted, Japanese inflation remains stubborn, further cementing current monetary policy predictions.

Further commitment to this narrowing interest rate differential trajectory, whether in policy decisions or general commentary, will likely lead to further USD/JPY downside.

A chart showing the recent price action of USD/JPY. OANDA,TradingView, 22/05/2024

USD/JPY technical analysis

• Breaking a 6-day losing streak in today’s session, USD/JPY remains bearish at a technical level. Decisively breaking the key level of 145.000 earlier this week, bears will likely target previous lows at ~142.384 in price breaks down further

• Bearish USD/JPY Scenario: Renewed trade tensions, weak housing data, or dovish Fed rhetoric could drag USD/JPY toward 142.5.
• Bullish USD/JPY Scenario: Positive trade developments, stronger housing data, or hawkish Fed cues may lift USD/JPY toward 145 and potentially the 50-day EMA.

See today’s full USD/JPY forecast with chart setups and trade ideas.

AUD/USD in Focus: US-China Trade News in Spotlight

On May 23, US-China trade developments and policy news from Beijing will influence AUD/USD trends. RBA Governor Michele Bullock recently underscored the threat of a trade war. She stated on May 20 that such conflict could push Australia into recession. She also warned:

“Australia’s economy could easily be compromised if a trade war between the US and China escalates… The market path is reflecting a possibility of a really bad outcome, pointing to a lower RBA cash rate.”

Renewed US-China tensions could impact Aussie dollar demand on recession fears, dragging AUD/USD lower. However, Beijing may counter with fresh stimulus, targeting domestic demand and consumption. Improving demand may drive AUD/USD higher, given China accounts for one-third of Aussie exports and Australia’s high trade-to-GDP ratio.

AUD/USD: Key Scenarios to Watch

• Bearish Aussie dollar Scenario: Renewed US-China friction, Beijing’s silence on stimulus, or dovish RBA cues may send AUD/USD toward the 50-day EMA and the $0.63623 support level.
• Bullish Aussie dollar Scenario: De-escalation in US-China trade tensions, Beijing stimulus, or hawkish RBA signals could drive the pair above the 200-day EMA toward the May 14 high of $0.65008.

Click here for a more comprehensive analysis of AUD/USD trends and trade data insights.

Aussie Dollar Daily Outlook: Fed Impact and Home Sales Data

The USD side of the equation will also influence AUD/USD later today. Weak US housing data may boost Fed rate cut bets, narrowing the US-Aussie interest rate differential in favor of the AUD. A more dovish Fed could send AUD/USD above the 200-day EMA toward $0.6450 and the May 7 high of $0.65144. On the other hand, strong data may widen the rate differential, dragging AUD/USD toward the 50-day EMA and the $0.63623 support level.

May 22, 2025 – Written by Tim Boyer

STORY LINK Pound to US Dollar Forecast: “Trend in GBPUSD Remains Bullish”

US Dollar exchange rates have remained under pressure in global markets with ongoing fears surrounding US fiscal policy, especially with the Big Beautiful Budget Bill approved in the House of Representatives.

The Pound to Dollar exchange rate (GBP/USD) dipped to just below 1.3400 before a recovery to 1.3420.

According to Scotiabank, “With investor focus on US fiscal policy intensifying amid US budget negotiations, the performance of US Treasury bonds will likely continue to influence the USD and risk appetite.”

The Pound has not been able to take full advantage of dollar weakness due to reservations surrounding the UK budget position with weaker risk appetite and a fresh increase in UK bond yields also hampering Sterling.

According to Scotiabank; “The trend in GBPUSD remains bullish, with consolidation just below Wednesday’s multi-year high. The RSI is just below 60, leaving ample room for further near-term gains.”

A sustained break above 1.3450 would lead to an initial target of 1.35, but is likely to be dependent on further dollar losses.

According to ING “the USD can find some support, but a sustained recovery looks unlikely.”

The dollar initially came under pressure in Wednesday’s New York session.

There was a weak 20-year bond auction which triggered fresh concerns over the outlook and there was a sharp decline in Treasuries with a jump in yields.

MUFG commented; “The auction has basically resulted in another day of triple selling of US assets which will only reinforce the doubts over confidence in US assets.”

Just ahead of Thursday’s New York open, the House of Representatives approved the Budget Bill and it will now head to the Senate.

The 10-year yield moved sharply higher to a 3-month high above 4.60% after the Bill was approved by a 215-214 vote with equity futures also sliding.

Unease is likely to be magnified by last-minute changes to Bill which puts further upward pressure on deficits and debt.

MUFG added; “Nearly all of the S&P’s drop yesterday (-1.6%) came in response to the auction and underlines the increasing sensitivity of investors risk appetite to bad news for US Treasuries and underlines the risks being taken by the Trump administration in relation to the ‘One Big Beautiful Bill Act’.

Domestically, the April borrowing requirement increased to £20.2bn for April from £19.2bn the previous year

RSM economist Thomas Pugh commented; “With the public finances in a pretty dire state going into what is likely to be a much tougher Q2 and second half of the year for the economy, some fiscal consolidation in October, probably in the form of higher taxes, looks likely.”

The UK 10-year yield has moved above the 4.80% level to 6-week highs and is not far below January highs which will increase fears over debt interest payments, the deficit and wider damage to the economy.

Citi commented; “GBP has outperformed on relatively more hawkish BoE market pricing and trade deals with the EU and US; however, we suspect any increase in term premium risk that spills into the Gilt market can quickly see GBP weakness, especially as fiscal issues remain unresolved in the UK keeping term premium elevated.”

The CBI industrial trends survey retreated to -30 for May from -26 previously while PMI data was mixed with on-going manufacturing weakness, but a limited recovery in services.

Commerzbank Head of FX and Commodity Research Ulrich Leuchtmann commented; “Cable did gain ground yesterday, but this was more a USD story than GBP-driven. The strong inflation figures did not help against the Euro or the G10 average. For me, this means that for the pound to continue to gain ground across the board in the coming days and weeks, something new will have to happen.”

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EUR/USD Analysis Summary Today

• Overall Trend: Upward.
• Today’s Euro-Dollar Support Levels: 1.1290 – 1.1230 – 1.1180.
• Today’s Euro-Dollar Resistance Levels: 1.1385 – 1.1455 – 1.1520.

EUR/USD Trading Signals:

• Buy Euro-Dollar from the 1.1255 support level with a target of 1.1440 and a stop-loss of 1.1180.
• Sell Euro-Dollar from the 1.1410 resistance level with a target of 1.1150 and a stop-loss of 1.1500.

EUR/USD Technical Analysis Today:

The continued weakness of the US dollar in the forex markets allowed EUR/USD bulls to complete the upward trajectory, culminating in a move towards the resistance level of 1.1362, the pair’s highest level in two weeks. Concurrently, the pair is stabilizing around its gains ahead of the announcement of the Purchasing Managers’ Index (PMI) readings for the manufacturing and services sectors for the Eurozone and US economies. The European readings will begin with France at 10:15 AM Cairo time, followed by the German readings a quarter of an hour later, concluding with the Eurozone readings as a whole at 11:00 AM Cairo time.

US manufacturing and services PMI readings will be announced at 2:45 PM EEST. Prior to that, weekly US unemployment claims will be released. Overall, the results of these economic data will have a strong and direct impact on the performance of the EUR/USD pair, determining whether the week closes higher or lower.

Why Did Euro-Dollar Gains Persist?

According to performance across licensed currency trading platforms, Euro-Dollar gains have increased, supported by widespread US dollar weakness amid growing concerns about the American financial outlook. Discussions surrounding a proposed US tax cut bill have heightened fears that the budget deficit could worsen more rapidly than previously expected, following Moody’s recent downgrade of the US credit rating.

Trading Tips:

Dear TradersUp follower, keep in mind that breaking the 1.14 resistance is an important sign of the bulls’ strong control over the Euro-Dollar’s direction. Monitor the factors influencing the currency pair and don’t take undue risks.

In Europe, the European Central Bank’s (ECB) Financial Stability Review for May 2025 highlighted increasing concerns about financial stability in the Eurozone, pointing to escalating geopolitical tensions and continued policy uncertainty. The ECB warned that a weak economic outlook and trade disruptions could negatively impact businesses and households, while new spending pressures – such as increased defence budgets – could challenge long-term debt sustainability.

Earlier in the same week, investor confidence was boosted by news of a preliminary agreement between the European Union and the United Kingdom on key issues including defence and security cooperation, fisheries, and youth mobility.

Technical Levels for the Euro vs. the US Dollar:

Dear TradersUp trader, based on the daily timeframe chart, the EUR/USD pair is moving within an upward channel. A move towards the psychological resistance of 1.1400 will strengthen the upward outlook, preparing for further technical upward breakouts. Despite recent gains, technical indicators still have room to move towards stronger upward levels before confirming an overbought trend. This is evident in the performance of the 14-day RSI and the MACD indicator, both poised for upward movement.

Currently, the nearest and most important resistance levels for Euro-Dollar are 1.1400, 1.1465, and 1.1530, respectively. Conversely, over the same period, the 1.1160 support level will remain a strong and real threat to the current upward trajectory. Overall, the rise in the Euro’s price against the US dollar is driven by US financial risks. Speculation about coordinated intervention in the currency market is also weighing in. Consequently, the EUR/USD exchange rate continues its ascent amid a renewed deterioration in demand for the US dollar.

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