Polygon’s currency price (MATICUSDT) fell in the intraday levels, while hurt by a negative divergence in the RSI after it reached overbought levels compared to the price’s movements, thus sending out negative signals, while readying to breach the pivotal support of $0.286, amid the dominance of the main downward trend, as it traded alongside the secondary short-term trend line, with negative pressure due to trading below the 50-day SMA. 

Therefore we expect more losses for the price, provided the support of $0.286 was breached, thus targeting the next one at $0.149.

Trend forecast for today: Bearish 

Created on February 25, 2025

• The British Pound has rallied a bit in the early hours of Monday, as we continue to see a lot of noisy behavior, but I also recognize that this is a market that is paying close attention to multiple things at the same time.
• Keep in mind that the British Pound against the Japanese yen is considered to be a risk sensitive currency pair as the British pound offers more in the way of interest rates and swap than the Japanese yen, which of course has been the victim of the carry trade for years.
• However, the bank of Japan now is suggesting that they are going to raise interest rates to 0.75% by the end of the year.
• And while kind of pointless, it does pay something, and it does attract some money back into the Japanese mainland as the carried trade struggles. Nonetheless, I do think that there is the possibility that we bounce rather significantly given enough time. After all, the swap at the end of every day does eventually add up.

On a Move Higher

If we can break above the 190 yen level, then it opens up the possibility of a move to the 192 yen level. On the other hand, if we break down from here, it’s the 188 yen level that I will be watching very closely because it opens up the possibility of a move down to the 185 yen level. It’s worth noting that pretty much all of the yen related pairs all look the same. So I think that tells us that the Japanese yen is the main driver that’s going on overall. This chart looks quite a bit different than the British pound does against the Swiss franc, which is the other carry trade currency, mainly because the Swiss have been cutting rather aggressively. As long as Japan is not cutting, then it makes a lot of sense that we will continue to see more choppy volatility. That being said, I’m comfortable going long, not so much shorting, at least not until we break down below the latest swing below. Expect a lot of noise but expect a lot of volatility due to the shifting expectations of the carry trade in general.

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The GBPJPY pair failed to resume the negative attack despite the consolidation within the bearish channel, affected by the additional support at 188.10, to start forming sideways trades by fluctuating near 189.00.

We expect to witness more sideways trades until gathering the additional negative momentum to manage to break the current support and open the way to target the additional negative stations that might start at 186.90, while rallying above 189.75 will force it to postpone the decline until testing the bearish channel’s resistance line at 191.10.

The expected trading range for today is between 187.00 and 189.70

Trend forecast: Bearish

KILT/USD kept falling in the intraday levels, amid the dominance of the main downward trend in the medium term, while trading alongside the secondary short-term trend line, with negative pressure due to trading below the 50-day SMA, coupled with negative signals from the RSI despite settling at oversold levels. 

Therefore we expect more losses for the price, targeting the support of $0.034, provided the resistance of $0.121 holds on.

Trend forecast for today: Bearish 

KILT/USD kept falling in the intraday levels, amid the dominance of the main downward trend in the medium term, while trading alongside the secondary short-term trend line, with negative pressure due to trading below the 50-day SMA, coupled with negative signals from the RSI despite settling at oversold levels. 

Therefore we expect more losses for the price, targeting the support of $0.034, provided the resistance of $0.121 holds on.

Trend forecast for today: Bearish 

• GBP/USD retreats from multi-month high it set early Monday.
• The pair needs to flip 1.2650-1.2655 into support to keep the bullish stance.
• Several BoE policymakers will be delivering speeches later in the day.

After closing the previous week in positive territory, GBP/USD stretched higher early Monday and touched its strongest level since December 18 at 1.2690. The pair seems to have entered a consolidation phase following the bullish weekly opening and it was last seen trading below 1.2650.

The risk-positive market atmosphere in the early Asian session caused the US Dollar (USD) to come under selling pressure and helped GBP/USD gain traction. Although the market mood remains upbeat, with US stock index futures gaining between 0.5% and 0.7%, GBP/USD finds it difficult to preserve its bullish momentum.

In the second half of the day, the Federal Reserve Bank of Chicago’s National Activity Index will be the only data featured in the US economic docket, which is unlikely to trigger a noticeable market reaction. Meanwhile, investors will pay close attention to comments from Bank of England (BoE) Deputy Governor Dave Ramsden and BoE policymaker Swati Dhingra.

In case BoE officials adopt a cautious tone about the inflation outlook, the initial reaction could help Pound Sterling hold its ground. On the flip side, GBP/USD could push lower if policymakers voice their willingness to continue to ease the policy despite the stronger-than-forecast UK inflation readings for January.

On Tuesday, regional manufacturing surveys from the US and the Conference Board’s Consumer Confidence Index data from the US will be looked upon for fresh impetus.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart retreats toward 50, reflecting a loss of bullish momentum. Additionally, GBP/USD failed to make a daily close above the 100-day Simple Moving Average (SMA), currently located at 1.2655, despite rising above this level for three consecutive trading days.

On the downside, first support could be seen at 1.2600 (round level, static level) ahead of 1.2530 (Fibonacci 61.8% retracement of the latest downtrend) and 1.2500 (round level, static level). In case GBP/USD rises above 1.2650-1.2655 (Fibonacci 78.6% retracement, 100-day SMA) and confirms that area as support, it could face next resistance levels at 1.2700-1.2710 (round level, static level) and 1.2750 (static level).

Created on February 24, 2025

• Strong signals from the Bank of Japan about continuing to work on tightening its monetary policy have brought more gains to the Japanese yen against the rest of the other major currencies.
• The performance was clear regarding this in the performance of the USD/JPY pair, which plummeted last week to the 148.92 support level, the lowest for the currency pair in nearly three months, before closing the week’s trading stable around the 149.25 level.
• This week in Japan will be a busy week with economic data, with retail sales, industrial production, and housing starts for January at the forefront of the events.
• In addition, Tokyo’s inflation data for February will share the spotlight after hawkish signals from Bank of Japan members kept investors attentive to the timing of the next interest rate hike by the Japanese central bank.

In the US, the personal consumption expenditure report and comments from US Federal Reserve officials will be the centre of attention. Personal consumption expenditure prices will provide crucial insights into evolving price pressures, following US consumer price index and producer price index figures that came in higher than expected. US personal spending growth is expected to slow to 0.2%, while personal income is likely to rise by 0.4%, in line with the increase in December.

Meanwhile, the second estimate of GDP growth for the first quarter of 2025 is expected to confirm that the US economy grew at an annual rate of 2.3%, in line with the initial estimate. Additionally, durable goods orders are expected to rise 1.3% after a 2.2% decline in December.

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Trading Tips:

Watch the recent performance of the US dollar against the Japanese yen carefully as it moves towards good buying levels, so be on time to seize the most suitable trading opportunities, but without risk

The Bank of Japan is Ready to Strengthen Bond Purchases

Bank of Japan Governor Kazuo Ueda said that the Japanese central bank is ready to intensify its purchases of government bonds if long-term interest rates rise sharply. Speaking before parliament last Friday, he acknowledged that bond yields fluctuate, but he stressed that the Bank of Japan will move quickly in exceptional cases to ensure stable yield formation. Ueda pointed out that the recent increase in bond yields indicates market expectations for economic recovery in Japan and strengthening core inflation.

The Japanese central bank ended its massive stimulus program, which lasted for a decade last year, which included setting 10-year yields around zero through aggressive bond purchases, as it saw Japan approaching its 2% inflation target. In addition, the Bank of Japan reduced its bond purchases under a plan announced in July, with the aim of halving monthly purchases to 3 trillion yen by March 2026.

USD/JPY Technical Analysis and Expectations Today:

According to trading on the daily chart, the general downward trend of the USD/JPY pair is increasing in strength. As mentioned before, the movement of the currency pair below the psychological support level of 150.00 will strengthen the bears’ control over the direction and thus prepare for stronger downward breaches. The technical indicators are now closer to testing strong oversold levels, and this may be confirmed if the bears move towards the support levels of 148.70 and 147.00, respectively. In contrast, and over the same time period, a first break of the downward trend will not occur without moving towards the resistance levels of 152.40 and 154.60, respectively. The path of central bank policies, especially from the Japanese central bank, will continue to affect the performance of the USD/JPY currency pair.

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Created on February 24, 2025

• The British pound initially tried to break above the 200-day EMA on Friday but has given back those gains to show signs of weakness.
• By doing so, it is a technical trade.
• I think this is as much a technical trade as anything else, given the 200-day EMA’s strong influence on market behavior.
• However, it’s also worth noting that Friday’s PMI data impacted the market—manufacturing PMI in the UK came in lower than expected, while services PMI was higher than anticipated but included negative revisions.

In the United States, we have seen services PMI come out lower than anticipated, but manufacturing coming out higher to previous announcements. So pretty mixed story here. And I think at this point in time, you have to look at this through the prism of whether or not we are actually a little overextended, which I think that might be part of the case here as well. Ultimately, I think we need to watch this area between the 200-day EMA and the 50-day EMA for potential consolidation.

Is This Enough Info?

I don’t know that we have enough information to get moving longer term one way or the other at the moment, but I certainly am cognizant of the fact that a move above maybe 1.2750 or even 1.28 could open up a much bigger move, but that is a significant resistance barrier that will have to be dealt with and will more likely than not be very difficult to deal with for those who are trying to send the market higher.

On the downside, if we were to break down below the 1.25 level, I think at that point in time, the British pound falls under serious pressure, and this would probably be a pro-US dollar move across the forex world. So we’ll see how that plays out. But this is how I see the British pound at the moment. I think it is in a state of flux. We’ll have to see whether or not the trend changes or if this was just simply a relief rally.

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Created on February 24, 2025

• The US dollar has initially tried to rally a bit during the trading session on Friday, but has given back gains as the inflation numbers were a bit of a mixed bag and therefore, we start to focus on the Bank of Japan again.
• After all, people are assuming that the Bank of Japan will find a reason to tighten monetary policy this year.
• And while that’s probably true, the reality is that the interest rate differential is going to be huge for quite some time.

With that being the case, I think you’ve got a situation where traders will start to look at this through the possibility of trying to see if this area that we are in right now actually holds. If it does not, then the US dollar is probably plunging back down to the 142 yen level. This nonsense coming out of the Federal Reserve and the Bank of Japan has made trading very difficult. And then of course, people are worried about the tariff wars. So, I think volatility is going to get worse, not better. Japan increasing its interest rate to 0.75% isn’t much of a big deal, but traders right now are worried about the rate of change.

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Federal Reserve

The question then becomes will the Federal Reserve start cutting later this year? Maybe they do, maybe they don’t, and if they don’t, then eventually the Japanese yen will have to give up some of these gains. Right now though, it’s obvious that the US dollar is basically flat on its back when it comes to the yen, so while I don’t like buying this USD/JPY pair, I certainly wouldn’t sell it quite yet either below the 148 yen level, then I think we start to see a pretty significant acceleration to the downside. At this juncture, I think a lot of questions are still out there, and I do think this is one of the more difficult pairs to trade at the moment, as the fundamentals suggest more interest rates in Japan and inflation, but the inflation in the United States is very unlikely to go anywhere.

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• EUR/USD started the new week on a bullish note and rose above 1.0500.
• The CDU/CSU, led by Friedrich Merz, won the German election.
• Improving risk mood could help EUR/USD push higher.

EUR/USD edged lower on Friday and closed the previous week marginally lower. The pair opened on a bullish note and climbed above 1.0500 early Monday as investors reacted to the outcome of the German election outcome. Although the pair inches lower in the European morning, the technical outlook and the improving risk sentiment suggests that it could post additional gains in the near term.

The CDU/CSU, led by Friedrich Merz, won the German election by securing about 28.6% of total votes, while the far-right AfD came second with 20.8%. Finally, Olaf Scholz’s SPD received 16.4% of votes to drop to third. The Euro gathered strength as these results offered no major surprises. Experts now expect a two-party coalition to be formed with CDU/CSU and SPD.

In the second half of the day, the US economic calendar will not feature any high-impact data releases that could influence the US Dollar’s (USD) valuation in a noticeable way.

Meanwhile, US stock index futures were last seen rising between 0.3% and 0.45%. A bullish opening in Wall Street could make it difficult for the USD to stage a rebound and support EUR/USD.

On Tuesday, the Conference Board will release the US Consumer Confidence Index data for February.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart holds above 50, suggesting that the bullish bias remains intact.

EUR/USD faces the first resistance area at 1.0500-1.0510 (round level, Fibonacci 78.6% retracement of the latest downtrend). Once the pair flips that area into support, 1.0550 (static level) could be seen as the next resistance level before 1.0600 (beginning point of the downtrend).

Looking south, supports could be spotted at 1.0440 (Fibonacci 61.8% retracement), 1.0390-1.0400 (100-period Simple Moving Average (SMA), 50-day SMA, Fibonacci 50% retracement of the latest downtrend) and 1.0375 (200-period SMA).