Created on April 28, 2025

• Recently, equity markets have once again helped to support the British pound against other major currencies.
• According to stock market trading, the UK’s FTSE 100 index has already risen for the past nine trading sessions, coinciding with easing trade war tensions, marking its longest winning streak since December 2019.
• The crucial question for Forex currency investors is whether upcoming UK data, global developments next week, and the Bank of England’s monetary policy meeting results on May 8th could trigger a reversal in recent market trends.
• The GBP/USD price is stabilizing around the resistance level of 1.3320 at the time of writing this analysis.

Expected Bank of England Policies

If the Bank of England remains cautious about interest rate cuts and risk appetite declines, the British pound could benefit. Recently, UK economic data results were mixed on Friday, with stronger-than-expected retail sales data offset by a further decline in consumer confidence. According to the economic calendar data results, retail sales volumes rose by 0.4% for March, compared to the consensus forecast of a 0.3% decline, although the February increase was revised down to 0.7% from the original reading of 1.0%. favourable weather boosted demand for clothing and outdoor product sales, which was partly offset by a fall in supermarket sales.

First-quarter sales rose by 1.6% compared to the final quarter of 2024, the strongest increase since July 2021. According to Forex market trading, the British pound is taking some comfort from this. We wouldn’t overstate it, but it has performed well and was threatening to roll over, and it has received some support from the data, temporarily at least. On another front, doubts remain about the sustainability of spending. The UK GfK consumer confidence index fell to -23 for April from -19 previously, slightly worse than the -21 forecast, its lowest level since November 2023, with all components declining during the month.

Trading Tips:

The British pound continues to benefit significantly against other major currencies from Britain’s avoidance of US tariffs.

Will the GBP/USD Price Rise? And Where To?

According to trusted trading platforms, the GBP/USD exchange rate rose to test a three-year high of around 1.3430 before retreating slightly. With the recent decline, some currency market experts have lowered their foreign exchange market forecasts, as the dominant theme in the markets has been the increasing political turmoil in the United States, caused by escalating trade tensions, which has led to increased fears of a US recession. In the longer term, structural challenges, such as US political shifts, the trade war, and capital flight from US assets, point to a significant decline in the value of the US dollar.

Technical Analysis for the GBP/USD pair today:

According to reliable trading platforms, the GBP/USD exchange rate rose to test its highest levels in three years at around 1.3430 before a limited pullback. With the recent decline, some currency market experts lowered their foreign exchange market forecasts, as the dominant theme in the markets was increasing political turmoil in the United States, stemming from escalating trade tensions, leading to growing fears of a US recession. In the longer term, structural challenges, such as US political shifts, the trade war, and capital moving away from US assets, point to a significant decline in the value of the US dollar.

They remain cautious about the UK’s economic outlook, but the sharp decline in the dollar has led to a strong revision in the forecast for the British pound. Accordingly, the GBP/USD pair is now expected to rise to the 1.39 resistance level on a 12-month forecast, from 1.31 previously. The forecasts are driven by a high degree of uncertainty, as investors now face multiple scenarios and forecasts based on how tariff policy develops, all of which hinge on President Trump’s decisions.

Therefore, the easiest option for investors now is to reduce exposure to the US dollar and US assets in general, and reassess when developments allow more certainty about the outlook.

Regarding the British pound, the Bank of England is expected to adhere to a cautious stance; we also believe that the market is pricing in a much larger amount of monetary easing than will actually be implemented, which provides support for the pound as expectations are reassessed. Accordingly, we expect some gains for the pound against a weaker US dollar, but it may struggle to improve significantly against the euro at present.

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Created on April 28, 2025

• For five consecutive trading sessions, the USD/JPY currency pair has been attempting to rebound upwards, but its gains have not exceeded the resistance level of 144.02 before stabilizing around the 143.80 level at the time of writing this analysis.
• The pair is awaiting strong catalysts to continue its movement within an ascending channel, attempting to break out of the stronger bearish trend that pushed the USD/JPY price to the support level of 139.88, the pair’s lowest in months.

US Dollar Strengthens Amid Easing Tensions:

According to Forex market trading, the USD/JPY price continued its upward rebound path as the US dollar’s value rose amid receding global trade tensions. Last week, Japanese Finance Minister Katsunobu Kato and US Treasury Secretary Scott Bessent held a closed-door meeting on the sidelines of the International Monetary Fund and World Bank Spring meetings in Washington. While Kato remained silent on the discussions, he emphasized that Japan and the United States would continue close and constructive dialogue on exchange rates, hinting that currency issues could be part of broader trade negotiations.

Senior Japanese trade negotiator, Hirose Akazawa, is also scheduled to visit Washington this week for a second round of bilateral talks. At the same time, the Bank of Japan is widely expected to keep its interest rate steady at 0.5% this week as it monitors the potential impact of US tariffs on the export-driven Japanese economy.

Trading Tips:

I still recommend buying the US dollar against the Japanese yen at every downward trend level, but without risk, while monitoring the factors influencing currency rates.

USD/JPY Technical analysis and Expectations Today:

At the end of last week’s trading and in the short term, the USD/JPY pair rebounded from the trendline support level at around 142.48 to trade at around 143.80. The pair is trading within an ascending channel. The USD/JPY pair has now advanced to trade above the 100-hour moving average by a few levels. As a result, the pair is approaching entering overbought levels on the 14-hour RSI. Therefore, bulls will aim to extend the current gains towards the resistance at 144.30 and then to the resistance at 145.00. Conversely, bears will seek to capitalize on renewed profit-taking selling at the support level around 143.20 or lower at the support of 142.50.

In the long term, based on the daily chart, the USD/JPY pair is trading within a descending channel. However, the 14-day RSI has recently rebounded to avoid entering an oversold condition. Therefore, bulls will seek to extend their current rebound towards resistance at 146.00 or higher, reaching resistance at 149.00, respectively. On the other hand, and over the same period of time, bears will seek to take profits at the support level of 141.00 and then at the support level of 139.00, respectively.

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Created on April 28, 2025

• You can see that the Euro initially pulled back a bit against the US dollar but turned around to show signs of life again.
• By doing so, this shows that perhaps we have the ability to get back to the 1.15 level.
• The area looks like a range just waiting to form between the 1.12 level and the 1.15 level, as the market is trying to digest some of those massive gains from the past.

I do believe that the market’s overbought, so sideways action makes more sense than not, and it’s also likely to be a scenario where things are very noisy, and the latest Twitter spat might cause a move, at least with certain players such as President Donald Trump.

The Levels to Watch Matter More with This Price Action

If the EUR/USD pair were to break down below the 1.12 level, then it’s likely that we could drop down to the 50 day EMA right around the 1.0965 level. On the other hand, if we were to break above the 1.16 level, then it’s possible that the market could go to the 1.23 level, an area on the longer term charts that matter.

As things stand right now, it looks more or less like a buy on the dip type of situation, but ultimately, we are more likely than not going to see a lot of sideways action, at least in the meantime, until we get a better read on where the global economy is going, central banks, obviously, and of course, what the trade tariff situation ends up being. I don’t think this is an easy trade in either direction, but you have to think that this does suggest that we have a lot of noise in the process to find a new trend in general.

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Copper price provided slow trading recently, due to the contradiction between the main indicators, to delay the negative attack and settles near $4.7500 level, reminding you that the bearish scenario will remain valid by the continuation of forming main barrier at $4.9100 against the current trading, which increases the chances for forming bearish waves to press on 50%Fibonacci correction level at $4.6600, and breaking it will extend the losses towards $4.5600, to face the moving average55.

The price rally above the mentioned barrier and holding above it, will confirming delaying the negative attack, and provide chances for recording some extra gains before reaching the previously waited negative targets.

The expected trading range for today is between $4.6600 and $4.8400

Trend forecast: Bearish

Copper price provided slow trading recently, due to the contradiction between the main indicators, to delay the negative attack and settles near $4.7500 level, reminding you that the bearish scenario will remain valid by the continuation of forming main barrier at $4.9100 against the current trading, which increases the chances for forming bearish waves to press on 50%Fibonacci correction level at $4.6600, and breaking it will extend the losses towards $4.5600, to face the moving average55.

The price rally above the mentioned barrier and holding above it, will confirming delaying the negative attack, and provide chances for recording some extra gains before reaching the previously waited negative targets.

The expected trading range for today is between $4.6600 and $4.8400

Trend forecast: Bearish

April 27, 2025 – Written by Tim Boyer

STORY LINK Pound to Euro Week Ahead Forecast: Overvalued Sterling “Vulnerable to Correction”

Foreign exchange analysts at Danske Bank now forecast the Pound Sterling (GBP) will slide to 1.1365 against the Euro (EUR) on a 12-month view amid a persistent slide in global risk appetite.

In contrast, Credit Agricole, expects Pound to Euro (GBP/EUR) exchange rate gains to 1.2050 by the end of 2025 with the Euro overvalued.

During the week, GBP/EUR was able to secure a tentative net gain to 2-week highs near 1.1730. Risk conditions were more benign during the week which helped underpin Sterling.

According to Credit Agricole; “we note that our estimates of short-term fair value that are based on FX drivers like relative rate spreads and risk aversion suggest that the GBP is looking quite undervalued vs the EUR.”

It added; “the very overvalued EUR/GBP could remain vulnerable to a correction lower in the near term.”

ING commented that there will be scope for further GBP/EUR gains if it can break above 1.1730.

The Pound will tend to gain support if there is a further improvement in confidence, but any renewed setback would put the currency under renewed pressure.

Danske Bank commented; “The key risk to seeing EUR/GBP trade substantially higher than our forecast is a sharp sell-off in global risk and/or renewed focus on the UK’s fragile fiscal position.”

MUFG noted the importance of safe-haven demand and noted; “the recent divergence in TWI performances for EUR and GBP with EUR supported by safe-haven demand that GBP is unlikely to see.”

Danske expanded its analysis; “While we see domestic factors and the relative growth outlook between the UK and the euro area as GBP positives, we think the global investment environment will be in the driver’s seat for EUR/GBP in the coming months.”

It added; “An investment environment characterised by elevated uncertainty, widening credit spreads and a positive correlation to a USD negative environment, in our view, favours a weaker GBP. The UK runs a large current-account deficit, which makes GBP vulnerable when capital inflows fade.”

As far as monetary policy is concerned, there are very strong expectations that the Bank of England will cut interest rates by a further 25 basis points to 4.25%.

In comments this week, Governor Bailey expressed concerns over the global growth outlook due to trade tariffs, but there are also inflation concerns which will make policy setting notably difficult.

Caution would help underpin the Pound on yield grounds.

MUFG commented; “While a 25bp cut at the next MPC meeting on 8th May is highly likely and fully priced, further cuts beyond could quickly be questioned if supply-side issue create inflationary pressures in the UK. Much stickier wage growth could force the BoE into a more cautious approach to rate cuts given fiscal uncertainties and Gilt market concerns.”

There has been dovish commentary from ECB officials with Governing Council member Rehn, for example, stating that the ECB should not rule out a larger 50bp rate cut if the conditions supported a bigger move.

There are expectations that there will be a further rate cut in June.

MUFG added; “Disinflation and the demand shock are the focus underlining rate cut prospects.”

Credit Agricole noted that Euro gains will curb Euro-Zone growth and put downward pressure on inflation.

It added; we believe a continuation of the recent EUR strength could be self-defeating as it would increase the risk of a more dovish ECB pivot.

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TAGS: Currency Predictions Pound Euro Forecasts

April 27, 2025 – Written by David Woodsmith

STORY LINK Pound to Dollar Forecast: RSI Firmly Bullish, Resistance Closer to 1.34

In view of sharp dollar losses, most investment banks have dropped their forecasts for sustained Pound to Dollar exchange rate (GBP/USD) losses.

Danske Bank and UBS both now have 12-month GBP/USD forecasts of 1.39.

Standard Chartered is more cautious and has a 12-month GBP/USD forecast of 1.34.

After testing 3-year highs around 1.3430, GBP/USD consolidated just above 1.3300 as the dollar recovered some ground.

President Trump rowed back on his threat to dismiss Fed Chair Powell which triggered a Wall Street rebound and dollar recovery.

The Pound was underpinned by steady gains in the FTSE 100 index as well as stronger than expected retail sales data.

Confidence in US assets and currency will remain crucial for global markets with trade and tariff developments inevitably playing a big part.

The Administration remains upbeat over the outlook for trade deals for countries such as Japan, but any positive headlines may not be backed up with substance.

US-China relations remain very difficult despite China’s move to cut tariffs on some key imports.

Markets will continue to track shipping data and evidence on the impact of tariffs.

ABN Amro expects there will be long-term dollar damage; “In trying to bring back manufacturing, and reducing its dependence on China, the US is destroying its reputation and risks losing its dominance of the financial system, perhaps even to China. Tariffs can be unwound quickly, but regaining the world’s trust will take much longer.”

According to Danske the dollar is still vulnerable; “In the near term, the brewing confidence crisis in US assets and mounting US recession concerns are likely to remain dominant market themes, offering continued support for the cross.”

Danske added; “Longer term, we believe the evolving structural backdrop — including the seismic shift in US politics, the ongoing trade war, and signs of capital rotation out of US assets — will leave the USD facing the greatest relative downside.”

Standard Chartered commented; “We now see downside risks primarily driven by renewed tariff noise. Reduced US policy uncertainty or a decisively hawkish turn in Fed policy is an upside risk for the USD.”

There are strong expectations that the Bank of England will cut rates at the May policy meeting with most banks expecting a further two cuts over the second half of the year.

UBS expects the Pound can hold its own in global markets and take advantage of a soft dollar; “While we do not believe investors are yet considering the GBP a safe haven, we acknowledge its high correlation to the EUR during these uncertain times. Its liquidity and carry profile do seem attractive to global investors. Both should remain in place for the time being, barring any yield blow ups.

The Pound could benefit if the Federal Reserve engages in sharp interest rate cuts.

According to Standard Chartered; “expectations of rising near-term inflation should keep the Fed cautious in its approach to interest rate adjustments, supporting the USD in the near term. However, trade policy uncertainty may hinder US economic growth and lead to fund rotations out of the US, potentially leading to a softer dollar over a 12-month horizon.”

The UK fiscal 2024/25 budget deficit was £151.9bn, £14.6 billion more than forecast by the Office for Budget Responsibility (OBR).

Commerzbank is not confident in the UK outlook; “the UK’s recent growth has been almost entirely based on the public sector. So, not a good sign for the pound: less growth and more rate cuts at the same time.”

RBC Capital Markets added; “less than a month after the Spring Statement it already looks likely that the Chancellor will have to make further policy changes at the Budget in the Autumn.”

Nevertheless, it considers that the structural process of updated forecasts overstates potential vulnerability.

The bank added; “For sure, it’s not that the UK has a great story to tell, it’s just that its story isn’t a significantly worse one than many of its peers.”

UBS expects global developments will dominate for now; “The UK data calendar is relatively light next week suggesting that the near-term outlook for the GBP could remain a function of global drivers like the resilience of market risk sentiment and the evolution of the USD across the board.”

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TAGS: Currency Predictions Pound Dollar Forecasts

April 27, 2025 – Written by Frank Davies

STORY LINK Euro to Dollar Forecast: EUR Uptrend in Tact, 1.15 Resistance

Currency forecasters at MUFG expect the Euro to Dollar exchange rate (EUR/USD) to strengthen to 1.20 by the end of 2025 and extend gains over the following two years.

Credit Agricole is less convinced that the Euro can hold gains and forecasts a EUR/USD retreat to 1.12 by the end of 2025.

The underlying tone was consolidation during the week with EUR/USD little changed around 1.1370 after failing to sustain a surge to 3-year highs above 1.1550.

MUFG considers that the dollar will continue to correct the long-term over-valuation.

It considers that the tariff policies will damage the dollar; “Firstly, damage to some degree is already done. By announcing tariffs of such a scale, investors will remain cautious over what could come next. Secondly, we expected a cyclical slowdown to take place anyway in the US and Trump’s actions only reinforce that prospect and a policy reversal now won’t change that.”

The bank also considers that other global factors are in play including the EU fiscal boost and Japan’s move away from extreme monetary easing. It added; “There are key international factors that drove the dollar to overvalued levels and those factors should now help bring dollar valuation back down.”

ING commented on the short-term view; “As to the dollar more broadly, it could find a little support as trade tensions calm a little.”

As well as trade developments, US data over the next week will be watched very closely.

According to ING; “The next big chapter here will be whether all this volatility has hit real world decisions – especially in the US jobs market. There is plenty of US jobs data released next week and any deterioration here could trigger another round of dollar losses – albeit a more benign dollar decline on the view that the Federal Reserve would be riding to the rescue after all.”

Deutsche Bank added; “Investors have been reluctant to fully price in a recession because we don’t have enough evidence that one is likely. But if that changes and we start to see contractionary numbers (e.g. a negative payrolls print), that would lead to a fresh reassessment that could open the way for a fresh selloff.”

Firm data would at least postpone the day of reckoning for the currency.

Importantly, Danske considers that there has been important damage to the dollar.

The bank now has a radically different 12-month EUR/USD forecast of 1.22 from 1.00 two month ago.

According to the bank; “Longer term, we believe the evolving structural backdrop — including the seismic shift in US politics, the ongoing trade war, and signs of capital rotation out of US assets — will leave the USD facing the greatest relative downside.”

Danske added; “We estimate EUR/USD fair value over a 1–3-year horizon to be around 1.20. Key factors to watch include potential structural capital rotation out of US assets, the evolving global energy landscape, and euro area fiscal policy — all of which could influence EUR/USD valuation dynamics over time.”

In this context, the Ukraine situation will be watched closely and any ceasefire deal could underpin the Euro.

Credit Agricole expects the ECB will have to be even more dovish; “the ECB may view the sharp EUR NEER appreciation since the start of 2025 as adding to the downside risks to the Eurozone growth and inflation outlook.”

Further Euro gains would also create even more pressure for an ECB pivot.

The bank added; “In all, we continue to think that EUR/USD is looking overbought and overvalued at current levels and believe that the pair should remain sell on rallies in the very near term.”

UBS commented; “As the US announces new trade agreements, we anticipate confidence in the USD to be gradually restored. Accordingly, after the sharp EURUSD rally from 1.02 to 1.14, we think a period of consolidation is more likely than a continued surge.”

It added; “We expect EURUSD to trade in a 1.12–1.16 range in the coming months, with a bias toward the lower end as trade deals are signed.”

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TAGS: Currency Predictions Euro Dollar Forecasts

I wrote on 20^th April that the best trades for the week would be:

1. Long of the EUR/USD currency pair. Unfortunately, it fell by 0.24% over the week.
2. Short of the USD/JPY currency pair. Unfortunately, it rose by 1.00% over the week.
3. Long of Gold following a daily (New York) close above $3,343.10. This set up on Monday but unfortunately the price then fell by 3.06% over the rest of the week.

The overall result was a loss of 4.30%, which was 1.43% per asset.

Last week saw a much calmer market as we seem to have moved beyond any new tariff bombshells. Negotiations will be ongoing until the 90-day period ends in early July.

The major event of last week, which had a very light news agenda, was President Trump’s attempt at a gentle walk back of his comments blasting Jerome Powell of the Federal Reserve for not cutting rates more aggressively, which had led to a sharp fall in stock markets the previous week. Trump’s comments may have aided the recovery we saw in stock markets and in other risky assets last week.

Last week’s other major data points were:

1. Flash Services & Manufacturing PMI UA, Germany, UK, France – mostly worse than expected, suggested slowing economies.
2. Chair of Swiss National Bank Speech
3. Canada Retail Sales – as expected.
4. US Unemployment Claims – as expected.
5. UK Retail Sales – this was much better than expected, showing a 0.4% month-on-month increase, when a decline of 0.3% was anticipated.

The coming week has a busy schedule of important releases, including key US economic data and a policy meeting at the Bank of Japan.

This week’s important data points, in order of likely importance, are:

1. US Core PCE Price Index
2. US Average Hourly Earnings
3. US Non-Farm Employment Change
4. German Preliminary CPI
5. Australian CPI (inflation)
6. US Advance GDP
7. Bank of Japan Policy Rate, Monetary Policy Statement, and Outlook Report
8. Canadian GDP
9. Canadian Federal Election
10. Australian Parliamentary Election
11. US JOLTS Job Openings
12. US ISM Manufacturing PMI
13. US Employment Cost Index
14. US Unemployment Claims
15. US Unemployment Rate
16. Chinese Manufacturing PMI

For the month of April 2025, I made no monthly forecast, as at the start of that month, the Forex market was dull and there were only mixed long-term trends.

As there were no unusually large price movements in Forex currency crosses over the past week, I make no weekly forecast.

The Australian Dollar was the strongest major currencies last week, while the Swiss Franc was the weakest. Volatility decreased slightly last week, with more than 33% of the most important Forex currency pairs and crosses changing in value by more than 1%. Next week will likely see more volatility as there will be a very full data schedule.

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Last week, the US Dollar Index printed a bullish pin bar which closed not far from the high of its range. The price reached a new 4-year low before bouncing strongly off the support level shown in the price chart below, at 97.67. These are bullish signs, but the strong long-term bearish trend is a bearish sign, as is the fact that the price ended the week below the likely resistance level at 99.28.

It is hard to say what will happen to the US Dollar next week after this bullish bounce, but trading in line with the long-term trend will certainly look to be going short of the greenback. Much may depend on average hourly earnings and PCE Price Index data that will be released on Friday, and possibly also GDP data earlier in the week.

The EUR/USD currency pair rose last week to reach a new multi-year high near $1,1500, before reversing strongly to print a bearish pin bar, closing lower near the bottom of its weekly range. This is a bearish sign and suggests we may have seen a major bearish reversal. However, the long-term trend is still bullish, the price has just been trading in blue sky, and this currency pair tends to trend slowly but reliably.

So, it may still be worth being involved on the long side here, but I’d want to see a new significant bullish breakout first.

If the price can get established above $1.1517 that will probably be a good long trade entry signal, as there are no key resistance levels above that area for a few hundred pips.

The USD/JPY currency pair fell early in the week to make another new multi-month low just below the big round number at ¥140 before making a strong bullish bounce and closing the week notably higher. The long-term trend is certainly bearish, but we may well have seen a significant bullish reversal here, with the pair advancing in tandem with stock markets, which mostly saw recoveries over the past week as the US tariffs issue seems to have been largely defused by now, at least until the July deadline starts to get very close.

This major currency pair tends to trend with some reliability, so I like to be short here, but only after we see a strong bearish reversal leading to a new multi-month daily (New York) low close below ¥140.75.

Gold rose firmly last week to reach yet another new record high just a fraction below the round number at $3,500 before falling strongly enough to shake out most trend followers from their long positions by the end of the week. The weekly close ended up forming a candlestick which was more or less a bearish pin bar, although not a very well-formed one.

Gold can advance during periods of crisis like the one we are in now and this is what seems to have happened, and this may be why we are seeing quite a strong bearish reversal as risk appetite improves as the US tariffs issue seems to have been kicked away into touch until the summer arrives.

It is worth considering Gold as having standalone merit, as a look at the weekly price chart below shows a very strong long-term bullish trend having been underway for almost 1.5 years. Since the start of 2024, the price of Gold against the USD has increased by more than 55%, which is an impressive amount for any asset, and especially so for a precious metal.

I think it is wisest to be out of Gold right now unless we see a new high daily (New York) closing price above $3,425.

The S&P 500 Index advanced last week on improved risk sentiment. The bullish technical development is the weekly close above the pivotal point and round number at 5500.

Despite that bullish sign, it is worth noting that the price might still just be sitting below the end of the pivotal zone – one more higher close would probably be a more decisive bullish break.

On the bearish side, the price remains well below the 200-day moving average which is shown within the price chart below. The price is traded well within correction territory, having previously fallen into bear market territory.

Shorting US equity indices is very risky and probably not advisable to anyone except a very experienced trader. This is especially true as we are now seeing some signs of resilience which might see a continuing recovery until US tariffs come back into focus in June a few weeks from now.

I believe there is going to be more turbulence in the stock market over the coming months as we approach the 90-day tariff deadline in early July, so I am happy to be out of stocks for now.

The USD/MXN currency pair has been falling for several days, even as the USD started to recover very firmly over the past week. The price ended the week at a 6-month low closing price – both this and the recent price action are bearish. There is a strongly bearish trend here over both the long and short term, which will attract traders on the short side.

Another bearish technical development is the way the price has become well and comfortably established below the big round number at 20.00.

The fundamental driver behind the strong Mexican Peso is the way the trade war between the USA and Mexico has been defused, at least for the next few weeks. Absent any sign of worse US intentions, the price is likely to continue trending lower over the coming week.

I see the best trades this week as:

1. Long of the EUR/USD currency pair following a daily (New York) close above $1.1517.
2. Short of the USD/JPY currency pair (New York) close below ¥140.75.
3. Long of Gold following a daily (New York) close above $3,425.
4. Short of the USD/MXN currency pair.

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• The USD/JPY weekly forecast indicates improving risk appetite.

• The US said it was ready to lower tariffs on China to 50% and start negotiations.

• Market participants will focus on the Bank of Japan policy meeting.

The USD/JPY weekly forecast is bullish as improving risk appetite weighs on the safe-haven yen, pushing the pair higher.

Ups and downs of USD/JPY

The USD/JPY pair had a bullish week as the dollar rebounded and the yen lost its safe-haven appeal. The greenback recovered as calm returned to most US markets. Trump halted his earlier attacks on the Fed, restoring faith in the central bank’s independence. 

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At the same time, trade tensions between China and the US eased. The US said it was ready to lower tariffs on China to 50% and start negotiations. Meanwhile, China was prepared to exempt some US goods from tariffs. As a result, recession concerns eased, boosting the dollar. At the same time, risk appetite improved, hurting the safe-haven yen.

Next week’s key events for USD/JPY

Next week, the US will release crucial figures on economic growth, business activity, and employment. Moreover, market participants will focus on the Bank of Japan policy meeting.

Traders will focus on the US monthly employment report for signs of deterioration in the US economy. Experts believe Trump’s tariffs have hurt the US economy. Meanwhile, Fed policymakers are waiting for evidence of this. Therefore, a downbeat report will increase Fed rate cut expectations, pushing USD/JPY lower. 

Meanwhile, economists expect the Bank of Japan to keep interest rates unchanged on Thursday.

USD/JPY weekly technical forecast: Bulls approach the 30-SMA resistance

On the technical side, the USD/JPY price has rebounded after reaching the 140.01 support level. However, it still trades below the 22-SMA, indicating that bears remain in the lead. At the same time, the RSI is under 50, suggesting solid bearish momentum. 

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Bears have maintained the downward trajectory since they took charge near the 158.05 key level. The price has mostly traded below the 22-SMA and the RSI below 50. Moreover, USD/JPY has consistently made lower highs and lows. If this trend continues, the price will respect the SMA as resistance and bounce lower. 

Even if it punctures the SMA, it will not go beyond the bearish trendline. A break below the 140.01 support will strengthen the bearish bias and continue the downtrend. Meanwhile, the trend can only change if the price breaks above the SMA and the resistance trendline.

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