While the major indices rallied, FX markets were fairly contained in the first half of Friday’s session, with the EUR/USD trading flat around the 1.03 handle. Other euro crosses were all higher as risk appetite improved further with some of the major European indices such as the German DAX and UK’s FTSE 100 hitting new record highs. The improvement in sentiment has been driven this week by a sharp drop in global bond yields, owing to weaker-than-expected inflation data from both the US and UK. We also had some surprisingly strong Chinese data overnight, which helped to reduce fears about China’s economy. What’s more, the ceasefire in Gaza has also helped to soothe investor concerns. But with Trump set to take office on Monday, we could see the return of heightened volatility again. After all, he has promised implementing drastic policies from day one. So, the short-term EUR/USD forecast is subject to increased risks from Trump’s unexpected

Trump inauguration and PBOC rate decision (Monday)

The People’s Bank of China will set the 1- and 5-year Loan Prime Rate (LPR) hours before Donald Trump officially takes office. This is a benchmark lending rate to influence short-term interest rates as part of its monetary policy strategy. After months of sub-par growth, and negative inflation, China has been stuck in a deflationary environment. Throughout last year, the PBOC and China’s government were quite busy unleashing various stimulus measures to revive the economy. Judging by the latest data released overnight, it seems like efforts paid some dividends. GDP grew 5.4% in the final quarter of 2024 compared to a year earlier, exceeding analysts’ expectations and marking the fastest pace of growth in 6 quarters. Industrial production and retail sales also beat. The key takeaway point is that China met its growth objective. But with Trump’s return, we could see Chinese exports suffer amid raised tariffs in the coming months and so volatility could return to markets. However, at this meeting, the PBOC may decide against increasing its stimulus measures, and keep rates on hold. But it may still surprise given the ongoing slump in the stock market, yuan and its bond yields.

Global PMIs could impact EUR/USD forecast

The PMI data will be released on Friday, January 24, from around the world. Perhaps most important to the EUR/USD forecast will be those from the Eurozone. Global growth concerns have been among factors behind the softness in some of the major currencies such as the euro, pound and yuan. The Purchasing Manager’s Indices are leading indicators of economic health. The rationale is that businesses react quickly to market conditions, and their purchasing managers hold some of the most current insights into the company’s view of the economy. Therefore, if we see some improvement, it should at least help to relief some selling pressure on the single currency.

EUR/USD technical analysis

Source: TradingView.com

The near-term technical EUR/USD forecast remains tilted to the downside. The question remains whether the pair will test and possibly break below the parity (1.000) level in the coming weeks. So far, the 1.0200 level has provided decent support.

Meanwhile, in terms of resistance levels to watch, 1.0300-1.0340 now marks a key resistance zone. This area had previously served as support, so we may see some pressure come back into the market from around this zone. The bearish trend line comes in just above this zone, too. While below these levels, the path of least resistance on the EUR/USD remains to the downside. A potential break above here would be a bullish development – we will cross that bridge if and when we get there.

— Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R

The GBPJPY pair continued to form negative trades since yesterday, to notice approaching the target at 189.30 that forms the key to confirm the continuation of the negativity for the upcoming period.

Note that getting continuous negative momentum by the major indicators will ease the mission to break the current obstacle, to keep our bearish overview to target 188.10 level followed by reaching the major support at 186.90, while breaching 191.40 will postpone the decline and form correctional bullish trades on the near-term and medium-term basis.

The expected trading range for today is between 188.10 and 190.70

Trend forecast: Bearish

The EURJPY pair ended yesterday by providing negative close below 160.15 level, to provide new negative signal that allows us to suggest more negative attempts to target 159.10 followed by reaching 157.85 on the medium-term basis.

Also, 160.85 level forms additional barrier, and the major indicators continue to provide the negative momentum, to support the negative overview and wait to touch the previously suggested negative stations.

The expected trading range for today is between 159.10 and 160.70

Trend forecast: Bearish

The EURJPY pair ended yesterday by providing negative close below 160.15 level, to provide new negative signal that allows us to suggest more negative attempts to target 159.10 followed by reaching 157.85 on the medium-term basis.

Also, 160.85 level forms additional barrier, and the major indicators continue to provide the negative momentum, to support the negative overview and wait to touch the previously suggested negative stations.

The expected trading range for today is between 159.10 and 160.70

Trend forecast: Bearish

Gold price shows some slight bearish bias to head towards potential test to 2700.00$ barrier, waiting to get positive motive that push the price to resume the main bullish wave, which its targets begin by surpassing 2730.00$ to confirm opening the way to head towards 2790.00$.

On the other hand, we should note that breaking 2680.00$ will stop the bullish wave and force the price to turn to decline.

The expected trading range for today is between 2700.00$ support and 2740.00$ resistance.

Trend forecast: Bullish

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The EURUSD price continues to fluctuate within tight range, and still around the EMA50, noticing that stochastic loses its positive momentum clearly, waiting to motivate the price to resume the expected bearish trend for the upcoming period, which its targets begin by breaking 1.0220$ to open the way to head towards 1.0100$.

We remind you that breaching 1.0325$ will stop the negative scenario to push the price towards starting bullish correction on the intraday basis.

The expected trading range for today is between 1.0210$ support and 1.0365$ resistance

Trend forecast: Bearish

The USDJPY price provided additional negative trades yesterday to touch 38.2% Fibonacci correction level for the rise measured from 148.64 to 158.87, and the price needs to confirm the continuation of the decline and achieve additional bearish correction that its next target reaches 153.75.

Until now, the bearish trend still suggested for the upcoming period, supported by the negative pressure formed by the EMA50, reminding you that breaching 156.45 will stop the correctional bearish scenario to push the price to return to the main bullish track again.

The expected trading range for today is between 154.50 support and 156.10 resistance

Trend forecast: Bearish

Created on January 16, 2025

• Despite the fact that the day started out rather positively for the euro, the reality is that it simply cannot hang on to gains. The Consumer Price Index had a chance of helping the euro, as it came in at 0.23% instead of 0.3%.
• The market is likely to look at this, at the very least, as a good sign or a potential cooling off of the US dollar. However, we have a keep in mind that the Federal Reserve still has a long way to go before they start loosening monetary policy, while the European Central Bank looks absolutely feckless at this point in time, and there’s almost no chance they would tighten monetary policy.

Technical Analysis

The technical analysis for this market is rather dire, and the candlestick on Wednesday will have done nothing to change that attitude. After all, the US dollar got hammered after the CPI number, but you can see that we have turned right back around to show weakness here. This is mainly due to the fact that the European Union is in a complete state of chaos as far as the economic situation is concerned. In fact, I saw something just yesterday that blew my mind. 16 years ago, the United States and the European Union were roughly the same size economies. Since then, the European Union added Croatia, which in theory is a small economic player, but it should add to the overall size of the economy. As things stand right now, the US economy is 50% bigger than Europe! This is how bad the EU economic decisions over the last several years have been, not the least of which is that they have decided they don’t need energy.

With that being the case, I do believe that the euro goes to parity, and after the price action on Wednesday, I am even more convinced of this. The question is whether or not parity will hold. I certainly think that if we get there it’s likely that we will see a significant bounce, but that is something that I would probably sell into. In fact, any time this pair bounces, it’s time to start selling again.

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Japanese Yen Technical Forecast: USD/JPY Weekly / Daily Trade Levels

• USD/JPY holds technical resistance for a fifth week – falls more than 2.3% off monthly high
• USD/JPY risk for inflection into trend support- Presidential Inauguration / BoJ rate decision on tap
• Resistance 157.89-158.45 (key), 160.40/73, 161.95- Support 155.02, 151.94-152.13 (key), 148.73-149.60

The Japanese Yen rallied more than 0.9% against the U.S. Dollar since the start of the week with USD/JPY pulling back from technical resistance on the heels of yesterday’s CPI print. Support is in view and the focus is on possible price inflection ahead- decision time for the bulls. Battle lines drawn on the USD/JPY weekly technical chart.

Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Yen setup and more. Join live on Monday’s at 8:30am EST.

Japanese Yen Price Chart – USD/JPY Weekly

Chart Prepared by Michael Boutros, Sr. Technical Strategist; USD/JPY on TradingView

Technical Outlook: In last month’s Japanese Yen Technical Forecast we noted that USD/JPY was, “approaching major technical resistance, and the focus is on possible inflection into this threshold. From a trading standpoint, look to reduce portions of long-exposure / raise protective stops on a test of 157.16/89- losses should be limited to 152 IF price is heading higher on this stretch with a close above this pivot zone needed to mark resumption of the September uptrend.”

USD/JPY registered an intraday high at 158.08 the following week with price holding below uptrend resistance for five consecutive weeks. Key resistance now adjusted to the April high-close / January high at 158.45/88– a breach / weekly close above this threshold is needed to mark uptrend resumption towards subsequent resistance objectives at the 1990 high / 2024 high-week close (HWC) at 160.40/74, and the 2024 swing high at 161.95– look for a larger reaction there IF reached.

Initial weekly support is now in view at the November high-close near the 155-handle. Note that basic channel support converges on this level over the next few weeks and a break below this slope is needed to suggest a more significant high was registered last week / a larger reversal is underway. Subsequent support objectives seen at the 2022 /2023 highs & the 52-week moving average at 151.95-152.13 and the 2022 high-close / 2023 HWC at 148.74-149.360– both levels of interest for possible downside exhaustion / price inflection IF reached.  

Bottom line: USD/JPY turned from long-term uptrend resistance this week with the price now approaching initial trend support. From a trading standpoint, losses should be limited to channel support IF price is heading higher on this stretch with a close above 158.88 needed to mark uptrend resumption.

Keep in mind we are heading into an extended holiday weekend with the inauguration of President Trump and the Bank of Japan (BoJ) interest rate decision on tap next week. Stay nimble here into support and watch the weekly closes for guidance. I’ll publish an updated Japanese Yen Short-term Outlook once we get further clarity on the near-term USD/JPY technical trade levels.

USD/JPY Key Economic Data Releases

Economic Calendar – latest economic developments and upcoming event risk.

Active Weekly Technical Charts

— Written by Michael Boutros, Sr Technical Strategist

Follow Michael on X @MBForex