Created on April 03, 2025

• Amid strong upward momentum, the GBP/USD pair rose to the 1.3128 resistance level, the highest level in about six months, driven by a sharp decline in the US dollar.
• Obviously, this was due to traders’ reaction to the latest round of reciprocal tariffs announced by US President Donald Trump.
• The US is set to impose a 10% tariff on all imports, with some countries subject to much higher rates. British imports will be subject to these tariffs.

Reactions to Trump’s Tariffs

This announcement triggered a flight to safe havens and a shift towards low-risk assets, as investors grew increasingly concerned about the potential impact on the global economy. For her part, British Foreign Secretary Reynolds stated that the US is Britain’s “closest ally” and that the government’s approach is to “remain calm and committed to securing this deal, which we hope will mitigate the effects of what was announced today.”

UK inflation was a factor in the pound’s decline ahead of the US tariffs. According to forex trading, the pound fell below $1.29, its lowest level in nearly two weeks, as traders reacted to the weaker-than-expected February inflation reading and the Spring Statement. Chancellor Reeves said that UK inflation is expected to average 3.2% in 2025, up from the 2.6% forecast in October. At the same time, growth forecasts for 2025 were lowered to 1% from 2%, and public sector net borrowing is expected to fall from £137.3 billion (4.8% of GDP) this year to £74.0 billion (2.1% of GDP) by 2029-30. However, compared to the October estimate, borrowing for 2025-26 is expected to be £12.1 billion higher (0.4% of GDP).

The UK government has already announced several policy changes to restore the government’s budget, including social welfare reforms, cuts in administrative spending, and a small set of tax changes. The UK’s annual inflation rate fell to 2.8% in February, slightly lower than the expected 2.9% but in line with the Bank of England’s forecast.

Trading Tips:

The pound will remain supported for some time, but beware of profit-taking.

UK avoids Trump’s tariffs, good for the exchange rate.

The British pound is experiencing sharp fluctuations following US President Donald Trump’s announcement of a 10% tariff on British imports. The 10% tariff imposed on Britain is much more lenient than those imposed on other countries, pushing the pound higher.

Here’s a look at some of the most significant tariffs:

20% on the European Union
34% on China
46% on Vietnam
24% on Japan

According to licensed trading company platforms, the British pound is rising against most major currencies, confirming its role as a safe haven in tariff trading. The GBP/USD exchange rate is higher at 1.3120, confirming that the dollar is a complete loser. This is understandable; ultimately, US consumers and businesses bear the costs of high imports. Also, the GBP/EUR exchange rate rose to 1.1989, a rise indicating that the EU’s 20% tariffs were lower than expected. In other markets, China-related currencies, such as the Australian dollar and the New Zealand dollar, are experiencing selloffs.

Trump asked a crowd gathered in the White House Rose Garden: “They’re charging us tariffs, and we’re charging them tariffs. How can anyone be upset?” Among other things, he specifically mentioned China and the European Union. “They’re deceiving us. It’s very sad to see this. It’s pathetic.”

He said, “India is very difficult. Very difficult.”

Regarding exchange rate reactions, we reported that the British pound entered the tariff announcements as a hedge due to its relatively low exposure. This is due to Britain’s declining manufacturing base, which keeps it balanced in goods trade with the United States.

Technical Analysis for the GBP/USD pair today:

Based on the performance on the daily chart, the GBP/USD pair is witnessing a strong upward movement towards levels that confirm this shift. Technically, from the resistance levels of 1.3120 and 1.3230, technical indicators will move towards strong overbought levels. Conversely, the currency pair will not abandon its upward recovery path without moving towards the support level of 1.2880 again. Finally, the GBP/USD may remain on its upward path until the reaction to the US jobs numbers tomorrow.

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• The USD/JPY outlook remains strongly bearish after Trump’s tariffs.
• BoJ and Fed divergence, along with falling US yields, lend more support to the yen.
• Tariffs pose a threat to Japan’s export-driven economy as well, igniting further uncertainty.

The USD/JPY outlook is predominantly bearish as the yen capitalizes on safe-haven appeal due to President Trump’s sweeping trade tariffs. The pair plummeted 1.2%, marking fresh 3-week lows near 147.20 during the early Asian session. With mounting fears of a US recession, investors are fleeing to the JPY, reinforcing its strength against the US dollar.

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Riskier assets saw a broader sell-off after the latest round of Trump’s tariffs. The stocks slipped, and bond yields dipped, creating a demand for conventional safe-haven assets. The US 10Y hit a YTD low at 4.0%, reinforcing the potential for a Fed rate cut.

The ongoing divergence between the Federal Reserve and the Bank of Japan further fueled the JPY rally. While the Fed is widely expected to cut rates, BoJ remains uncertain. Previously, market participants were expecting an aggressive stance from BoJ. However, Japan’s export-driven economy may suffer as a result of recent tariffs. Still, the recent Tokyo consumer inflation figures suggest that the BoJ may retain its hawkish stance.

Despite Trump’s tariffs favoring the US dollar in the long run, the likelihood of a rate cut and the risk of a recession has undermined the Greenback. According to Wells Fargo analysts, monetary easing is expected to be more pronounced in 2025-26, which could keep the dollar defensive.

Key Events for USD/JPY

Looking ahead, traders will primarily focus on the following:

• Weekly jobless claims
• ISM Services PMI

Still, the broader focus remains on trade development and China’s potential reaction.

USD/JPY technical outlook: Sellers looking at 146.55

The USD/JPY 4-hour chart shows a gloomy picture. The price is slipping towards the key support level at 146.55. The pair lies well below the 30-period SMA, posing a risk of a deeper downside. However, the RSI value reaches 30.0, which indicates an oversold zone. Hence, corrective upside can be expected.

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On the upside, the 30-period SMA is one tough nut to crack for the buyers. Meanwhile, a strong resistance level emerges at 151.15. The path of least resistance lies on the downside.

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• EUR/USD trades at its highest level since early October above 1.1000.
• US Dollar stays under strong bearish pressure following US Pres. Trump’s tariff announcements.
• The pair turns technically overbought in the near term.

EUR/USD gathers bullish momentum in the European session on Thursday and trades at its highest level since early October above 1.1000. Although the pair’s near-term technical outlook points to overbought conditions, buyers could retain control amid the broad-based US Dollar (USD) weakness.

US President Donald Trump announced on “Liberation Day” that they will impose a 10% baseline tariff, effective April 5, on all imports to the US. The Trump administration will also impose higher reciprocal tariffs, which will go into effect on April 9, on about 60 countries they describe as “worst offenders.” The European Union will be within that list, facing 20%, tariffs.

In response, European Commission President Ursula von der Leyen said early Thursday that the US’ tariffs will be a major blow to the world economy. “We are preparing a further package of measures to protect our interests,” she added.

Investors grow increasingly concerned over the potential negative impact of the US’ new trade regime on the economic outlook. In turn, the USD suffers large losses against its major rivals. At the time of press, the USD Index was down about 1.4% on the day at 102.25.

In the second half of the day, the US economic calendar will feature weekly Initial Jobless Claims and March ISM Services Purchasing Managers Index (PMI) data. Investors are likely to ignore these releases and remain focused on trade war-related headlines.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart rises toward 80, reflecting overbought conditions for EUR/USD. On the upside, 1.1040 (static level) aligns as next resistance level before 1.1100 (static level, round level).

In case EUR/USD drops below 1.1000 (static level, former resistance) and starts using this level as resistance, it could extend its correction toward 1.0950 (static level) and 1.0900 (static level, round level).

EUR/USD price surged in latest intraday trading, confirming its exit from a descending correctional price channel in the short term, while also shaking off negative pressure from the 50-candle SMA, regaining its footing amid the dominance of the main upward trend, while readying to tackle the pivotal resistance of $1.0945.

NZD/USD price engaged in highly volatile trading in the intraday levels after managing to exit the descending correctional price channel in the short term yesterday, however, it quickly bounced lower after the current resistance of $0.5762 held on, as the price tries to gather positive momentum that could help it pierce that resistance, thus leaning on the support of the 50-candle SMA and bouncing higher once more after receiving a boost.

Created on April 02, 2025

• The euro has initially tried to rally a bit during the trading session on Tuesday, only to turn around and show signs of negativity.
• That being said, we felt rather drastically, only to see a weaker than expected Manufacturing PMI number in the United States suggesting that perhaps the US economy is starting to slow down a bit.
• If that is going to be the case, then it makes quite a bit of sense that we would see traders bet on the idea that the Federal Reserve might have to get a little bit looser with monetary policy.
• Whether or not that’s actually true remains to be seen, but it is the thought process that a lot of people are contemplating.

Uptrend Still Here

The euro is still technically in an uptrend, as we launched straight up in the air a few weeks ago, and despite the fact that we have been somewhat quiet recently, the reality is that we have pulled back just a bit, but we have also seen quite stable trading, that’s actually a good sign for the uptrend to continue given enough time, so we will have to wait and see how that plays out. Ultimately, this is a situation where we will have to pay close attention to whether or not momentum picks up, because the momentum is the one thing that will really get this thing going. As things stand right now, there just isn’t a lot going on, although risk is most certainly skewed to the upside.

A short-term pullback at this point in time could send this market looking to the 200 Day EMA, just below the 1.07 level. If we were to pull back to that area, technical traders would more likely than not look at the 200 Day EMA in order to try to find some type of technical support. Whether or not it would get it remains to be seen, but I recognize that it’s more likely than not that we would find buyers jumping in between here and there.

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• The GBP/USD forecast is mixed amid tariff uncertainty. 
• Volatility may spike as tariffs could be imposed relentlessly. 
• Easing UK wage growth boosts BoE’s dovish stance. 

The GBP/USD forecast remains elevated as the US dollar stays weak on Wednesday. The pair wobbled around 1.2950 during the New York session. The heat from reciprocal tariffs continues to affect the US dollar. The DXY has dropped to 104.00, reflecting the market jitters.

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Trump’s policies continue to stir sentiment, with April 02 named “Liberation Day” for the US economy. According to a White House representative, the fresh levies will take effect immediately after the announcement. Market participants suggest a tariff of up to 20% on most American imports.

US Treasury Secretary Scott Bessent stresses that the administration aims to impose the maximum tariffs on major trading allies. However, countries willing to ease non-trade barriers may receive concessions. Risk aversion is expected to surge on the day. Moreover, Trump has proposed redistributing tariffs to US households through refunds or tax dividends that could fuel inflationary pressure. Hence, the Fed may retain its restrictive stance for an extended period.

The ADP report was upbeat. A whopping 155k jobs were added in March, against an expected 105k, while the previous reading was 84k. This signals a resilient US labor market, reinforcing a delayed rate cut.

The pound trades cautiously ahead of Trump’s tariff announcement. Concerns over global trade disruptions and a potential slowdown in economic growth have dampened investor sentiment.

The UK economy is particularly vulnerable, with the Office for Business Responsibility (OBR) warning that Trump’s policies could deplete the UK government’s fiscal buffer and shrink the economy by up to 1%.

Additionally, delays in finalizing a UK-US economic deal beyond the so-called “Liberation Day” have created further uncertainty. There is speculation that the terms of the agreement could be revised post-announcement, adding to investor apprehension.

On the domestic front, easing wage growth in the UK adds to dovish expectations for the Bank of England (BoE). The Incomes Data Research (IDR) reported that median pay growth slowed to 3.5% in the three months to February, the lowest in three years.

This suggests employers are holding back on wage hikes in response to higher National Insurance (NI) contributions introduced in the Autumn Statement by Chancellor of the Exchequer Rachel Reeves.

GBP/USD Technical Forecast: No clear bias

The 4-hour chart for the GBP/USD shows a perplexing scenario. The prices remain locked in a tight range under 1.2950. The volume bars are positive for the buyers.

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However, the recent bearish candle also had a high volume. This indicates that the market is volatile but indecisive. The key level on the upside remains 1.3000, which may cap the gains, while 1.2900 is tough support to break.

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Created on April 02, 2025

• Fears of the repercussions of US tariffs on major trading partners continue to dominate Forex markets and all financial markets.
• In the case of the EUR/USD pair, it declined to the support level of 1.0777 before stabilizing around 1.0788 at the time of writing.
• As we predicted earlier, the stability of the EUR/USD below the 1.08 support level will increase selling pressure on the EUR/USD.

Euro Price Negatively Affected by Tariff Concerns

According to forex market trading, selling pressure on the EUR/USD has increased following reports that the US administration is proposing to impose tariffs of approximately 20% on most US imports, although a final decision has not yet been made. Investors are eagerly awaiting further details on President Trump’s reciprocal tariffs, which are set to take effect today, April 2, following last month’s imposition of tariffs on aluminium, steel, and automobiles, and increased tariffs on all Chinese goods.

Inflation Rates and the Future of ECB Policies

On another market-influencing front, economic data revealed that consumer price inflation in the Eurozone fell to 2.2% in March, the lowest since November 2024, driven primarily by a slowdown in services price growth. Core inflation fell more than expected to 2.4%, the lowest reading since January 2022. With slowing inflationary pressures and rising global trade tensions, expectations have grown that the European Central Bank (ECB) may cut interest rates by 65 basis points this year.

According to currency market trading, the euro rose 3% last month, supported by broad weakness in the US dollar amid a shift in US tariff policies and Germany’s approval of a major fiscal package.

Trading Tips:

The EUR/USD will remain in its downward trajectory until the reaction to US jobs data and the future of the global economic recovery after the US tariffs are implemented.

The European Central Bank is scheduled to issue its next interest rate decision on April 17, and market expectations now indicate a 72% probability of a rate cut. By then, the size of the upcoming US tariffs will become clear, as will any inevitable adjustments the White House will make.

European stocks rise ahead of a major event

During yesterday’s trading, European stock market indices rose. According to trading, the STOXX 50 and STOXX 600 indices rose by more than 1%, recovering from a four-session losing streak. This comes after the indices fell by about 1.5% the previous day to reach their lowest levels in two months, as investors prepare for the new tariffs imposed by President Trump, which are scheduled to take effect on Wednesday.

Overall, the scope of these tariffs remains unclear, with reports indicating a 20% tax on most US imports. Meanwhile, eurozone inflation slowed to 2.2% in March, in line with expectations. In corporate news, Thyssenkrupp shares rose more than 7% after analysts at Kepler Cheuvreux raised their rating to “buy,” citing increased steel and defence spending in Germany.

EUR/USD Technical Analysis Today:

According to daily chart trading, the bears’ control over the EUR/USD pair has been confirmed by stabilizing below the 1.0800 support level, paving the way for a stronger downward move. The nearest support levels for the EUR/USD today are 1.0720 and 1.0600, respectively. From the last level, technical indicators will move towards strong oversold levels. Conversely, on the same timeframe, a real reversal of the general trend to upward will not occur without moving towards and above the psychological resistance of 1.1000 again. The performance of the EUR/USD will remain subject to signals from global central bank officials, the reaction to US tariffs, and investor risk appetite, as well as the reaction to US jobs data.

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Created on April 02, 2025

• The British pound initially plunged against the Japanese yen, but we are starting to see a certain amount of technical support right around the 193 yen level.
• It’s also worth noting that the 50 day EMA and the 200 day EMA indicators are sitting right there.
• So that does suggest that there are some traders willing to step in and pick this market up.

That does make a certain amount of sense due to the fact that we get paid to hang on to this GBP/JPY pair to the long side, the interest rate differential between the United Kingdom and Japan still remains a mile wide. And of course, recently, we’ve seen the Bank of Japan suggests that they are not quite as bullish as they once were. If that does in fact end up being the case, then I think we’ve got a situation where traders are going to continue to see a lot of volatility here because this is a pair that’s driven by a lot of risk appetite issues. So that is something worth watching.

In General, I am a Buyer

But ultimately, I also think that you have to favor the upside in general, but you have to be very cautious with your position size. If we can rise above the 196 yen level, then it opens up a move toward the 200 yen level and all things being equal. That’s actually what I prefer, but if we were to break down below the lows of the trading session for Tuesday, we might have to reset and test that crucial 190 yen level underneath, which of course is a large round psychologically significant figure and an area that has been important multiple times. I am bullish, but that’s more of a long-term outlook. In the short term, expect a lot of choppy behavior.

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