– Written by


David Woodsmith

STORY LINK Euro to Dollar Price Forecast: EUR Demand on Dips as USD Strength Faces Challenge

The Euro to Dollar exchange rate (EUR/USD) remained supported above the 1.1400 level as investors continued to buy dips despite conflicting views over the outlook for US interest rates.

While some banks expect stronger US growth and a more hawkish Federal Reserve to support the Dollar, others argue that slowing inflation and a weakening labour market will eventually limit further gains.

EUR/USD Forecasts: Demand on dips

Danske Bank still expects that the Euro to Dollar (EUR/USD) exchange rate will retreat to 1.12 on a 12-month view as yields favour the dollar.

Scotiabank, however, continues to back gains to 1.20 by the end of this year as the dollar loses ground.

EUR/USD was held in relatively tight ranges during the week with support below the 1.14 level.

According to Danske Bank; “We maintain our downward-sloping EUR/USD forecast profile unchanged as we continue to see both tactical and structural downside potential for the cross. We expect US real economic growth to outpace the euro area by a wide margin this year and expect the Fed to tighten its monetary policy more than the ECB.”

It added; “As an energy net exporter, US is better insulated against renewed energy supply shocks than the euro area.”

ING commented; “In the absence of forward guidance, US data is going to have a bigger say in FX. ING’s core call is that the data will not support a Fed hike this year. Unchanged Fed policy, particularly at the September FOMC meeting, can see EUR/USD trading back to 1.17.”

Danske Bank commented on interest rates; “Over the next year, we forecast two rate hikes from the Fed, and one more from the ECB. In contrast, as energy prices rose in July, markets have increased their expectations of ECB hikes relatively more, which has led to a tightening in the relative rate spreads.”

It added; “We do not agree with the latest shift in pricing and instead see relative monetary policy as a negative driver for EUR/USD going forward.”

HSBC noted risks; “With markets leaning towards fewer hikes and inflation pressures moderating, EUR-USD faces headwinds which could strengthen if shipping through the Strait of Hormuz does not normalise.”

ING commented on the potential scenarios; “At this stage, risks are clearly skewed to the upside for both FX volatility and the dollar. The longer oil prices only partially price a new supply shock, the greater the risk of non-linear rallies.”

It added; “But there is also a realistic path towards Middle East de-escalation, lower oil prices and more dovish flexibility at the front end of the USD curve. That would ultimately point to a weaker dollar across the board. This remains our baseline for after the summer, although we acknowledge that the near-term backdrop looks far less supportive for USD bears.”

Importantly, Scotiabank is not backing Fed rate hikes; “Policymakers now face a more difficult balance: inflation remains persistent, while household demand is slowing and the labour market is weakening. In our forecast, this pushes rate cuts later, though we still expect the Fed to move policy back toward a more neutral stance next year.”

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TAGS: Euro Dollar Forecasts

The GBPJPY pair approached in its last trading from the corrective target at 217.90, to begin forming bullish waves, holding within the bullish channel’s levels, to notice its rally towards 218.65 level.

In general, the stability above the support at 216.30 level by the continuation of providing positive momentum by the main indicators, these factors makes us keep the bullish scenario, which might target 219.10 and 219.85 level.

The expected trading range for today is between 218.20 and 219.85

Trend forecast: Bullish

The Japanese Yen has struggled to build on recent gains despite expectations for further Bank of Japan policy tightening, but MUFG believes investors are overlooking a structural shift that could provide significant long-term support for the currency.

The US Dollar to Japanese Yen exchange rate (USD/JPY) traded close to recent cyclical highs on Friday, with the Yen remaining under pressure from higher oil prices and resilient US economic data.

MUFG argues that the Yen’s recent weakness masks an important structural change in Japanese investment behaviour, as the Government Pension Investment Fund (GPIF) and other institutional investors steadily increase allocations to domestic assets.

“We would still argue that it marks a notable turning point from the Abenomics era.”

The bank believes Japan is gradually reversing the policies introduced more than a decade ago, when pension funds were encouraged to reduce domestic bond holdings in favour of overseas and riskier assets.

“There is though some evidence that flows have already started to shift.”

MUFG highlights a sustained increase in purchases of Japanese government bonds by trust banks since 2021, noting that the GPIF’s domestic bond allocation has already risen from 23.9% at the end of fiscal 2019 to 26.9% today.

If allocations eventually move towards 31%, MUFG estimates that could generate around ¥12 trillion of additional demand for Japanese government bonds, even before allowing for future growth in the pension fund.

Near-Term Japanese Yen Forecast: BoJ Rate Hike Could Accelerate the Trend

MUFG believes the Bank of Japan now has an opportunity to reinforce this shift towards domestic investment.

“The BoJ now needs to show it is not constrained by the government.”

With household inflation expectations at their highest level since 2006, the bank argues that a September interest rate increase would strengthen confidence that policymakers remain committed to normalising monetary policy.

“Hiking in September would be the best way to do that and would go some way to helping turn the yen stronger.”

While geopolitical tensions in the Middle East and higher oil prices continue to support the US Dollar in the near term, MUFG believes Japan’s evolving pension investment strategy represents a significant longer-term positive for the Yen that markets have yet to fully price in.

The EURJPY pair reached 286.00 level in its last bullish rally, forcing it to form some corrective waves, holding near 185.65 level, this rebound will not affect the previously suggested bullish trend, depending on forming main support at 184.35 level, besides forming a new extra support against the bullish attempts at 185.15.

Therefore, we will keep waiting for gathering the required extra positive momentum to form a strong bullish rally, to reinforce the chances of reaching positive stations that are located near 186.25 and 186.60.

The expected trading range for today is between 185.15 and 186.25

Trend forecast: Bullish

The Pound Sterling could extend its recent gains against the US dollar as a shift in UK political sentiment improves confidence in Sterling, according to UniCredit.

The Italian bank says expectations that Andy Burnham will appoint a fiscally conservative Chancellor have created a potential “wind of change” for UK assets, easing concerns over public finances and providing support for the Pound.

GBP/USD was trading around 1.3450 on Friday after rising more than 1.7% in July, recovering from June’s decline and moving back above the 1.35 area earlier in the week.

Why UK Politics Could Support Sterling

UniCredit says Sterling’s recent strength has been driven by expectations surrounding the incoming UK government and, in particular, the choice of Chancellor.

Reports that current Home Secretary Shabana Mahmood is the frontrunner for the role have reduced market concerns that Burnham could pursue a more expansionary fiscal approach.

The bank argues that fiscal credibility has become a crucial factor for investors following recent concerns over rising UK borrowing needs.

A more conservative approach to government finances could reduce pressure on gilt markets and improve confidence in Sterling.

Gilts Are Sending a Positive Signal

UniCredit highlights the reaction in UK government bonds as an important indicator of improving market sentiment.

Following reports on the expected Chancellor appointment, gilts rallied, with the 10-year UK yield falling below 4.92% after reaching close to 5.20% in May.

The bank notes that concerns over UK fiscal policy had previously pushed gilt yields higher and weighed on the Pound.

However, current market conditions are very different from the September 2022 mini-budget crisis, when unfunded tax cuts triggered a sharp sell-off in UK assets and sent GBP/USD to record lows.

Can GBP/USD Continue Higher?

UniCredit believes the recent improvement in sentiment could allow further Sterling gains if expectations around the new government are confirmed.

The bank notes that GBP/USD has already moved above 1.35 for the first time since May, while EUR/GBP has fallen below 0.85 to multi-year lows.

Technical indicators suggest GBP/USD could target 1.37 if positive sentiment continues.

However, UniCredit cautions that it is still too early to determine whether this represents a lasting shift in investor positioning or simply a short-term reaction to political developments.

The Bank of England Could Add Further Support

Another factor supporting Sterling is the possibility that markets continue pricing a Bank of England rate increase later this year.

UniCredit says that if expectations of a November rate hike remain in place, the summer period could prove far less damaging for Sterling than political uncertainty earlier in the year had suggested.

A combination of improved fiscal confidence, stronger gilt performance and supportive rate expectations could therefore provide further support for the Pound.

What’s the Forecast for the Pound versus the US Dollar?

UniCredit sees scope for GBP/USD to extend its recovery if the improving political backdrop is sustained.

The bank highlights 1.37 as the next potential target for the pair, while acknowledging that further gains depend on continued investor confidence in the new UK government’s fiscal approach.

With GBP/USD currently near 1.3450, Sterling has already recovered significantly from its June lows, but UniCredit believes the recent political shift could provide further upside momentum.

GBP/USD Forecast FAQ

Why is UniCredit positive on the Pound?

UniCredit believes expectations of a fiscally conservative UK Chancellor could improve investor confidence, support gilts and reduce concerns over government borrowing.

What is UniCredit’s GBP/USD target?

The bank highlights 1.37 as a potential next target for GBP/USD if positive market sentiment continues.

Why are UK gilts important for Sterling?

Gilt yields and demand from investors are closely linked to confidence in UK fiscal policy. Stronger gilt performance can support the Pound by reducing concerns over government finances.

Could political uncertainty still hurt GBP/USD?

Yes. UniCredit says it is too early to confirm whether the recent move represents a lasting change in sentiment, meaning Sterling remains sensitive to developments surrounding the new government.

2026.07.17 2026.07.17
USD/JPY: Elliott Wave Analysis and Forecast for 17.07.26–24.07.26

Alex Geutahttps://www.litefinance.org/blog/authors/alex-geuta/

Major Takeaways

• Main scenario: Consider long positions from corrections above 161.55 with a target of 166.50–170.00. A buy signal: the price holds above 161.55. Stop Loss: below 161.00, Take Profit: 166.50–170.00.
• Alternative scenario: Breakout and consolidation below 161.55 will allow the pair to continue declining to the levels of 159.86–158.90. A sell signal: the level of 161.55 is broken to the downside. Stop Loss: above 162.10, Take Profit: 159.86–158.90.

Main Scenario

Consider long positions from corrections above 161.55 with a target of 166.50–170.00.

Alternative Scenario

Breakout and consolidation below 161.55 will allow the pair to continue declining to the levels of 159.86–158.90.

Analysis

On the weekly time frame, an ascending third wave of larger degree 3 has formed, a downward correction has been completed as the fourth wave 4, and the fifth wave 5 is developing. On the daily chart, the third wave of smaller degree (3) of 5 appears to be developing, with wave 3 of (3) forming as its part. On the H4 time frame, wave i of 3 has formed, a local correction has been completed as wave ii of 3, and wave iii of 3 is developing. If the presumption is correct, USD/JPY will continue to rise to 166.50–170.00. The level of 161.55 is critical in this scenario as a breakout below it will enable the pair to continue declining to the levels of 159.86–158.90.

This forecast is based on the Elliott Wave Theory. When developing trading strategies, it is essential to consider fundamental factors, as the market situation can change at any time.

Price chart of USDJPY in real time mode

The GBPJPY pair lost the bullish momentum yesterday after recording 219.25 level, which forces it to activate the attempts of gathering gains, forming some negative corrective trading by reaching 218.45.

The price keeps forming corrective trading, attempting to test 217.90 level reaching the bullish channel’s support at 217.65, it will not affect the main bullish scenario, depending on forming main support at 216.30 level against the bullish trading.

The expected trading range for today is between 217.90 and 219.20

Trend forecast: Fluctuating within the bullish trend.

The Euro has been very choppy against the Japanese yen on Thursday, continuing the overall sideways action that we have seen for weeks. The interest rate differential continues to be an issue that moves the market as well.

EUR/JPY

The Euro has been very quiet against the Japanese Yen during trading here on Thursday as we are reaching the top of the overall consolidation area that we’ve been in for basically 6 weeks. That being said, we now have a situation where traders are trying to sort out whether or not we can finally break above the 186.50 Yen level. If we can break above there, then I think that is a very good sign, and it could have this market streaming towards the 188 Yen level given enough time.

Technical Breakout Potentials and Yen Weakness

Short-term pullbacks, I think, continue to look at the 50-day EMA and the 185 Yen level. Both offer quite a bit of support. Ultimately, this is a market that I don’t have any interest in shorting because, quite frankly, the interest rate differential favors the Euro over the Japanese Yen. And of course, the Japanese Yen simply cannot seem to get a break in general. This seems to be a situation that the Bank of Japan cannot ignore.

While we are at the top of a range and I fully recognize that it is possible traders will look at this as a potential barrier, if we do break out, then I think we get a bigger move again to the 188 Yen level, possibly the 190 Yen level. I like the idea of buying short-term dips, and I recognize that the Japanese Yen in general is in trouble against multiple currencies, not just this one. So, I think this is more of an indictment of the Yen itself.

Begin trading our daily forecasts and analysis. Here is a list of Forex brokers in Japan to work with.

Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire

– Written by


James Fuller

STORY LINK Pound to Dollar Forecast: GBP Tests 1.34 as Mixed US Economic Data Clouds Fed Outlook

The Pound to Dollar exchange rate (GBP/USD) rebounded towards the 1.3400 level after a mixed batch of US economic data failed to extend the US Dollar’s recent gains.

Headline US retail sales rose 0.2% in June, matching expectations, while the closely watched control group increased a stronger-than-expected 0.5%, pointing to resilient underlying consumer demand. However, core retail sales excluding autos unexpectedly fell 0.2%, tempering enthusiasm for the Dollar despite a further decline in weekly jobless claims that reinforced the strength of the US labour market.

Investors continue to weigh evidence of resilient US economic activity against signs that consumer spending is becoming more selective, while expectations for Federal Reserve policy and developments in the Middle East remain key drivers of Dollar sentiment.

GBP/USD Forecasts: Unable to Make Headway

The Pound to Dollar (GBP/USD) exchange rate has continued to trade around 1.3400 and is currently trading just below this level with no attempt to break key resistance.

Scotiabank noted; “the GBP’s recovery from its June 24 low (~1.3150) looks to have stalled over the past week or so, with apparent resistance above 1.3400.”

It added; “We see dense resistance ahead of 1.3500, and we look to a near-term range bound between 1.3350 and 1.3450.”

ING has a 3-month GBP/USD target of 1.31 as the dollar makes headway.

Following today’s retail sales report, markets remain divided over whether resilient consumer demand will be enough to keep the Federal Reserve on a hawkish path, particularly after softer CPI and PPI inflation data earlier this week.

ING commented; “While soft US CPI data has taken the sting out of the dollar’s upside, it is probably too early to look for a much lower dollar just yet.”

According to MUFG; “Despite the muted FX reaction, the scale of weakness in the CPI report certainly helps weaken the key pillar of support for the dollar – the prospect of a near-term hike. That can open up scope for further dollar depreciation. However, it is difficult to trade with conviction given the re-escalation in the conflict in the Middle East and the 13% surge in crude oil prices this week.”

In testimony to the House Financial Services Committee on Tuesday, new Fed Chair Warsh maintained a generally hawkish stance.

He stated that the central bank has “no tolerance” for persistently elevated inflation, and vowed to “do my job” if challenged by U.S. President Donald Trump.

He also stated that he is committed to the dual mandate of 2% inflation and maximum employment.

MUFG commented; “The testimony from Fed Chair Warsh looks to have curtailed the move weaker for the dollar. Just like following his first FOMC meeting, Warsh spoke with conviction in relation to the Fed achieving its 2% inflation goal. The CPI print was not “mission accomplished” and he wasn’t going to “cherry pick” data.

The bank added; “We don’t really view this as “hawkish” given he is merely promising to focus on what is the legal mandate of the Federal Reserve. However, he again is emphasising his inflation fighting credentials.”

According to Scotiabank; “We remain of the view that Fed tightening risks this year are mispriced and soft CPI data this morning (plus the soft NFP report for June) may act to curb some of the market’s enthusiasm for rate hikes.”

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TAGS: Pound Dollar Forecasts