USD/JPY Technical Analysis

The US dollar has recovered slightly against the Japanese yen during the early hours. But quite frankly, I think you have to look at this through the prism of a market that is just simply oversold, much like the euro has been overbought. And I think the bounce makes a certain amount of sense. Over the longer term, I anticipate that you have to pay close attention to the 142 yen level because if we break significantly below there, then it’s likely that we would see the market drop to the 140 yen level.

The 145 yen level above, I think, is an area that a lot of people will be watching as it is a large round psychologically significant figure and an area that has been important a couple of times in the past. Anything above there, the dollar probably catches a serious bid.

AUD/USD Technical Analysis

The Australian dollar is overbought against the US dollar and is threatening the 0.64 level, an area that has been a major resistance barrier multiple times in the past and is also backed up by the 200-day EMA. So, I do think you have a scenario where traders are going to be looking at this as a potential short opportunity or maybe just an overbought extension that needs to at least grind away some of this excess froth.

As we head towards Good Friday, momentum will probably drop, liquidity will almost certainly drop. So therefore, I don’t necessarily think that we have a huge buying opportunity. However, if we get a daily close well above the 0.64 level, you have to think that the trend has changed from a longer term standpoint.

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April 17, 2025 – Written by Frank Davies

STORY LINK Pound Sterling to Euro Forecast: ECB Upside, “EUR Looking Overvalued vs USD, GBP, JPY”

After finding support close to 1.1600, the Pound to Euro exchange rate strengthened to just above 1.1660 GBPEUR after the ECB expressed concerns surrounding the Euro-Zone growth outlook, although the Euro pulled away from initial lows.

Commerzbank commented; “given the factors that argue against a hawkish surprise, the risks are likely to be skewed towards a weaker euro.”

ING expects solid GBP/EUR exchange rate selling on any gains to 1.1765.

The ECB cut interest rates by 25 basis points at the latest policy meeting, in line with consensus forecasts, with the deposit rate cut to 2.25%

The central bank expressed greater reservations surrounding the outlook.

According to the statement; “The euro area economy has been building up some resilience against global shocks, but the outlook for growth has deteriorated owing to rising trade tensions. Increased uncertainty is likely to reduce confidence among households and firms, and the adverse and volatile market response to the trade tensions is likely to have a tightening impact on financing conditions.”

Bank President Lagarde stated that the economic outlook is clouded by exceptional uncertainty and that downside risks to the growth outlook have increased.

Markets are now expecting three further rate cuts this year which curbed Euro support.

Credit Agricole commented; “the ECB could further take into account the prospect for aggressive fiscal stimulus that could boost the bank’s long-term growth outlook for the Eurozone. While this could keep the EUR supported in the near term, we also note that our short-term fair value models are signalling that the EUR is looking quite overvalued vs the USD, GBP and JPY.”

UBS also notes the potential for a Euro correction; “markets have already priced in part of the fiscal boost over the last six weeks, so we see more downside than upside risk in next week’s sentiment numbers. After the euro’s recent rally, we expect next week’s data to prompt a consolidation rather than a renewed push higher.”

There were no significant UK developments during the day.

SocGen head of corporate research FX and rates Kenneth Broux commented on the outlook; “The backdrop for the UK and for sterling really is not too bad. As long as we don’t have another leg of risk-off and another spike in gilt yields, sterling should continue to do quite well.”

UBS considers that GBP/EUR fundamentals are mixed; “With its export mix vastly focused on services, the UK should fare better than others in the new goods-tariffed world. However, the GBP’s high-beta nature and trade dependency on the Eurozone would still suffer in a trade war scenario.”

It added; “Furthermore, the UK does not have the benefit of a fiscal bazooka plan like Germany, and we do not believe it will have the means to do so anytime soon.”

The bank is still broadly positive on the Pound; “Nevertheless, we still believe that GBP positives can shine through in the short run.”

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TAGS: Currency Predictions Pound Euro Forecasts

April 17, 2025 – Written by David Woodsmith

STORY LINK GBP/USD Forecast: Pound Looks to be Overbought Against Dollar

After hitting 6-month highs close to 1.3300, the Pound to Dollar exchange rate dipped to test 1.3200 before rebounding to 1.3240.

US equities posted sharp losses on Wednesday before a tentative rebound in futures on Thursday.

Scotiabank noted that the Pound is looking overbought but added; “We look to near-term resistance around 1.33, and beyond that, the September high around 1.34. Near-term support is expected between 1.3220 and 1.32.”

Although the dollar has managed to crawl away from 3-year lows, underlying confidence remains weak with the currency undermined by a fresh slide in US equities with the S&P 500 index sliding 2.2% on Wednesday. The currency index (DXY) was held below 100.

After Wednesday’s European close, Fed Chair Powell stated that the Administration had been more aggressive than expected in imposing tariffs.

He warned that the economy was liable to be weaker and inflation higher which would complicate the task in setting policy.

According to Powell; “We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension. If that were to occur, we would consider how far the economy is from each goal, and the potentially different time horizons over which those respective gaps would be anticipated to close.”

His rhetoric was more hawkish than comments from Governor Waller earlier in the week.

Powell again considered that the central bank needed to be patient and there was no case for making any quick judgement on interest rates.

ING commented; “In normal market conditions, Powell’s hawkishness would have triggered a positive USD response. But the greenback is still responding to the narrative of relative US assets underperformance and growth concerns, which are arguably being compounded by a hawkish Fed.”

ING added; “Despite plenty of indications that the dollar is oversold and undervalued, we don’t see a catalyst for a respite today. Should US equities underperform again, DXY should extend its drop below 99.0.

Citi played down the risk of a big structural move away from the dollar; “We do not think this is a proper de-dollarisation and see no real risk to the USD reserve currency status.”

It did, however, add; “However, the world is overweight U.S. assets. Ultimately this ‘sell America’ flow could severely weigh on the USD this year.”

Confidence surrounding trade talks will also be a key element.

On Wednesday, there were some reports that China was open to talks with the US, but there were important conditions and overnight the foreign ministry stated that China will pay no attention if the United States continues to play the “tariff numbers game.”

Charu Chanana, chief investment strategist at Saxo, said markets are detecting signs of hope in US-Japan trade talks.

She added; “When the bar is low, even talks about talks can lift markets as investors rotate from fear to hope.”

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TAGS: Pound Dollar Forecasts

Created on April 17, 2025

• Currency traders failed to achieve an upward rebound for the USD/JPY currency pair; its slight gains did not exceed the 143.27 level, and it quickly returned to its stronger downward path, despite strong US retail sales figures.
• USD/JPY trading is stabilizing around the 141.66 level at the time of writing the analysis, paving the way for a more violent downward move.

Why does the USD/JPY continue to move strongly downward?

According to Forex market trading, the Japanese Yen’s gains against other major currencies increased, with the widespread weakness of the US dollar continuing. Growing concerns about the economic repercussions of a potential new round of US tariffs contributed to the decline of the US dollar. In the latest development in trade policy, US President Donald Trump ordered an investigation into the possibility of imposing tariffs on all essential US metal imports, much of which comes from China. This move has increased investor anxiety, adding pressure on the dollar. Meanwhile, attention is shifting to upcoming trade talks between Japan and the United States, as Tokyo is striving for the complete abolition of Trump’s tariffs.

On the Japanese front, traders absorbed data showing an eight-month high in Japanese manufacturing sector confidence for April. However, the outlook remains cautious amid ongoing concerns about US trade policy.

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The Future of the Bank of Japan’s Policy Amid Trump’s Tariffs

In this regard, Bank of Japan Governor Kazuo Ueda stated in an interview with the Sankei newspaper that the BOJ may consider taking policy action if US tariffs harm the Japanese economy. He added, “Taking policy action may become necessary,” noting that the risks posed by US President Trump’s trade actions have approached the “bad scenario” anticipated by the central bank.

The governor acknowledged that recent developments are already affecting business and household confidence. While the Board still plans to raise interest rates at an “appropriate pace,” Ueda stressed the importance of assessing the economic impact of US tariffs without prejudging them. He added that domestic food price inflation is likely to decline, real wages are expected to rise mid-year, and that upside and downside risks remain regarding inflation expectations.

The Bank of Japan will hold a monetary policy meeting from April 30 to May 1, where it will also release updated economic forecasts.

USD/JPY Technical analysis and Expectations Today:

Dear reader, as clearly shown on the daily chart, the overall trend for the USD/JPY currency pair remains bearish. Also, the return to the vicinity of the current support at 141.60 signals a deeper downward move. The psychological support at 140.00 will be an easy target for the bears, and until it moves towards or away from it. Furthermore, technical indicators have moved towards strong oversold zones, as is the case with signals from the MACD, RSI, and other momentum indicators. Therefore, we recommend buying USD/JPY from the vicinity of the support levels 140.90, 140.00, and 139.20 respectively, with future targets at 143.20 and 145.00 respectively, and the stop-loss remains below the 138.00 support.

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• EUR/USD declines toward 1.1350 after posting gains on Wednesday.
• The ECB is widely anticipated to lower key rates by 25 basis points.
• The technical outlook points to a loss of bullish momentum in the near term.

EUR/USD gained traction and registered its highest daily close since February 2022 at 1.1400 on Wednesday. The pair corrects lower toward 1.1350 early Thursday as investors await the European Central Bank’s (ECB) monetary policy announcements.

The broad-based US Dollar (USD) weakness helped EUR/USD push higher on Wednesday as reports suggesting that the United States (US) President Donald Trump was planning to use ongoing tariff negotiations to pressure US trading partner to isolate China fed into fears over a deepening trade conflict.

The ECB is widely anticipated to lower key rates by 25 basis points (bps) following the April policy meeting. Since the ECB will not be releasing revised economic projections this time, investors will scrutinize the statement language and comments from President Christine Lagarde in the post-meeting press conference.

Earlier in the week, Bloomberg reported that the European Union (EU) was expecting a bulk of the tariffs imposed by the US to remain in place after little progress was made in talks on Monday. In case the ECB puts more emphasis on upside risks to inflation because of tariffs, rather than the growth outlook, markets could assess that as a hawkish tone. In this scenario, the Euro is likely to preserve its strength.

On the flip side, the Euro could struggle to find demand if the ECB, or President Lagarde, reaffirms confidence in the ongoing disinflation process and hints at a continuation of policy-easing.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart retreated slightly below 60 and EUR/USD declined to test the 20-period Simple Moving Average, reflecting a loss of bullish momentum.

On the downside, 1.1280 (static level) aligns as first support level below 1.1230 (lower limit of the ascending channel) and 1.1200-1.1190 (static level, 50-period SMA). Looking north, resistances could be spotted at 1.1400 (static level, mid-point of the ascending channel), 1.1470 (static level) and 1.1500 (round level).

The GBPJPY pair activated the negative attack in yesterday’s trading, achieving the initial negative target by hitting 187.55 level, then it rebounded to settle above 38.2%Fibonacci correction level at 188.00, to gather the required negative momentum to confirm the continuation of the bearish trend in the upcoming trading.

In general, the bearish scenario would remain valid if the trading settled below the main resistance at 189.90, as confirming breaking 188.00 level makes us expect targeting new negative stations, and 186.50 level represents the next target for the negative trading, while the attempt of breaching the mentioned resistance will cancel the bearish suggestion in the near trading, as there is a chance for achieving some gains by the price rally towards 190.50 initially.

The expected trading range for today is between 186.50 and 189.20

Trend forecast: Bearish

The GBPJPY pair activated the negative attack in yesterday’s trading, achieving the initial negative target by hitting 187.55 level, then it rebounded to settle above 38.2%Fibonacci correction level at 188.00, to gather the required negative momentum to confirm the continuation of the bearish trend in the upcoming trading.

In general, the bearish scenario would remain valid if the trading settled below the main resistance at 189.90, as confirming breaking 188.00 level makes us expect targeting new negative stations, and 186.50 level represents the next target for the negative trading, while the attempt of breaching the mentioned resistance will cancel the bearish suggestion in the near trading, as there is a chance for achieving some gains by the price rally towards 190.50 initially.

The expected trading range for today is between 186.50 and 189.20

Trend forecast: Bearish

• The GBP/USD forecast shows a strong pound despite downbeat UK inflation figures.

• Consumer inflation in the UK increased by 2.6%, softer than the forecast of 2.7%.

• Market participants are waiting to see the state of consumer spending in the US.

The GBP/USD forecast shows strong bullish sentiment despite downbeat UK inflation figures. The pound rose to new highs on Wednesday as the dollar resumed its decline amid economic uncertainty. Meanwhile, market participants were looking forward to the US retail sales report for monetary policy clues. 

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Data on Wednesday revealed that consumer inflation in the UK increased by 2.6%, softer than the forecast of 2.7%. At the same time, it declined from the previous reading of 2.8%. The poor numbers led to an increase in Bank of England rate cut expectations. The likelihood of a rate cut in May rose from 80% to 86%. 

However, economists believe inflation will rebound in April. At the same time, BoE policymakers have cautioned that it is too early to judge the impact of Trump’s tariffs on inflation. As a result, the pound barely reacted to the news. 

Meanwhile, the dollar remained fragile as the outlook for the US economy dimmed. Trump’s tariff moves have discouraged investors from holding US assets. As a result, the greenback has lost some of its safe-haven appeal. Market participants are waiting to see the state of consumer spending in the US. The sales report will shape the outlook for Fed rate cuts.

GBP/USD key events today

• US core retail sales m/m
• US retail sales m/m
• Fed Chair Powell speaks

GBP/USD technical forecast: Higher high signals a strong uptrend

On the technical side, the GBP/USD price has made a higher high, strengthening the bullish bias. It has broken past the 1.3200 resistance level and is trading well above the 30-SMA. Meanwhile, the RSI has entered deeper into the overbought region, indicating solid bullish momentum. 

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GBP/USD has sustained a solid bullish rally without any significant pullbacks to the 30-SMA. However, bulls are getting exhausted. The price is making much smaller candles and is approaching the 1.272 Fib extension level. 

This level might be a strong hurdle that will trigger a pullback. Such an outcome would allow the price to retest the recently broken 1.3200 key level. However, the bullish bias will remain as long as the price stays above the SMA.

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USD/JPY Technical Analysis

The US dollar has fallen against the Japanese yen during the early hours again on Wednesday. But just like what we’ve seen over the last couple of days, there does seem to be a bit of a pushback in this area as 142 yen has become very important. After that, we have the 140 yen level, which I think will end up being a massive floor as well.

This doesn’t mean that I think the market’s going to suddenly take off to the upside. I just think that a bounce makes some sense. The 145 yen level will be difficult to get above, but if we were to break above that level, it would obviously be a very bullish sign. If we were to turn around and break down below the 140 yen level, then the market probably enters some type of freefall at that juncture.

AUD/USD Technical Analysis

The Australian dollar has rallied again during the trading session, but we continue to see a lot of resistance near the 0.64 level, as it is not only a major resistance barrier recently, but it also is where the 200-day EMA currently resides. With that being the case, I still think you’re looking for signs of exhaustion to short, or maybe we enter some type of range between 0.62 and 0.64 above, which is basically what we did for a couple of months there.

So, you could make a bullish argument here, but you need to clear the 200 day EMA decisively in order to make that argument. Furthermore, you would have to ignore the fact that the market is extraordinarily overbought, at least in the short term. So, this is why I’m not as excited about the Aussie dollar as I could be, just simply because I think gravity will continue to be an issue, at least for the short term.

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

April 16, 2025 – Written by James Fuller

STORY LINK Pound to Euro Forecast: “GBP to Underperform EUR as Dollar Weakens”

The Pound to Euro exchange rate has stalled a fresh round of demand for safe-haven assets.

GBPEUR was quoted at 1.16747 as risk conditions dominated the Pound Sterling on Wednesday, even though the latest UK inflation data did nudge the currency lower.

Market confidence dipped again following the warning from Nvidia that it faced $5.5bn in additional costs due to US Administration export controls to China on H20 chips.

Equities came under renewed pressure while gold surged to a fresh record high and the Euro secured fresh backing.

In this environment of US-China trade-war fears, the Pound to Euro dipped to lows around 1.1660.

There was, however, a brief recovery to near 1.1700 after China stated that it is open to talks if Trump shows respect and names a point person.

Inevitably, very choppy trading will continue in the short term.

ING commented; “The new EUR/GBP trading range could be something like 0.8500-0.8750 for the second quarter.” This would be a 1.1430 – 1.1765 GBP/EUR range.

According to MUFG; “We expect GBP to continue to underperform EUR as the dollar weakens but quicker than expected progress on a US-UK trade deal would help to quickly reduce that underperformance.”

Rabobank expects underlying tensions will continue; “even if tariff heat is dialled up and down, they are unlikely to disappear and other economic statecraft tools such as subsidies, export controls, and the politicised use of capital flows and FX policy are likely to join them.”

The Euro area recorded a current account surplus of EUR34bn for February which took the 12-month total to EUR411bn and 2.7% of GDP compared with EUR291bn last year (2.0% of GDP).

The strong balance of payments position will provide underlying Euro support, especially when risk appetite deteriorates.

The headline UK inflation rate declined to 2.6% for March from 2.8% previously and slightly below consensus forecasts of 2.7%.

The core rate edged lower to 3.4% from 3.5% and in line with market expectations.

The largest downward contributions came from recreation and culture, together with fuel, offset to some extent by higher clothing prices.

The CPI goods inflation rate declined to 0.6% from 0.8% while the services sector rate retreated to 4.7% from 5.0%.

MUFG commented; “While this is good news for the BoE and makes a 25bp rate cut a near certainty on 8th May, inflation is set to pick up in Q2 given the NICs tax increase on employers, the minimum wage increase and the rise in the utility energy price cap. All of these will see the headline CPI advance potentially to levels around 4.0%.”

The bank still sees a careful and gradual approach to monetary policy as justified.

As far as the ECB is concerned, there are strong expectations of a further 25 basis-point ECB rate cut at Thursday’s council meeting.

Guidance from the bank will be watched closely.

According to Danske Bank; “We expect Lagarde to highlight the downside risks to growth from the trade war while abstaining from giving any clear guidance on future rate decisions.

It added; “Going forward, we expect the ECB to deliver three 25bp cuts at the upcoming meetings, bringing the deposit rate to 1.50% by September 2025.”

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TAGS: Pound Euro Forecasts