Created on April 14, 2025

• The weakness of the US dollar against other major currencies last week increased the bearish momentum for the USD/JPY currency pair.
• It pushed it down with losses extending to the support level of 142.05, the lowest for the pair in six months, before closing the week’s trading around the 143.43 level in desperate attempts for an upward reversal.
• The currency pair will be affected in the coming days by the future policies of central banks, especially the Bank of Japan, and the pace of investor risk appetite or aversion.

Yen Exchange Rate and Impact on Japanese Policies

In this regard, the Chairman of the Policy Committee of the Japanese ruling party said before the start of trading this week that Japan should strengthen the yen, including by helping to enhance the country’s industrial competitiveness, as the currency’s weakness has led to higher household living costs. Itsunori Onodera, chairman of the Liberal Democratic Party’s Policy Research Council, emphasized that Japan should not deliberately sell its holdings of US Treasury bonds in retaliation for the tariffs imposed by President Donald Trump.

He added, “As an ally of the United States, the government should not consider deliberately using its holdings of US Treasury bonds,” rejecting an opposition deputy’s suggestion that Tokyo use its massive holdings of US government debt as a negotiating tool in bilateral trade talks.

Trading Tips:

I still prefer buying USD/JPY from every downward level.

US Stock Markets Attempt to Recover

By the end of last week’s trading and across stock trading company platforms, Wall Street stocks rose, ending a volatile week amid trade hopes. Investor sentiment had risen thanks to hopes for a potential trade agreement between the United States and China. According to performance, the S&P 500 index rose by 1.8%, the Nasdaq by 2%, and the Dow Jones by 618 points. Optimism increased after the White House stated that President Trump is “optimistic” that China will seek an agreement, even as trade tensions escalated with Trump raising tariffs on Chinese goods to 145%, and China responding by imposing 125% tariffs on US imports.

On the economic front, according to the economic calendar data results, a University of Michigan survey showed US consumer confidence falling to its lowest levels since 2022, with inflation expectations reaching a peak not seen since 1981. Meanwhile, the earnings season kicked off with mixed results for banks – Wells Fargo shares fell by 1%, while Morgan Stanley shares rose by 1.4%, and JPMorgan shares rose by 4% after reporting record revenues.

Overall, during last week’s trading, the S&P 500 jumped 5.7%, the Nasdaq climbed 7.3%, and the Dow Jones rose nearly 5%, recording its best weekly performance in more than a year, driven by a historic high in mid-week trading.

USD/JPY Technical analysis and Expectations Today:

By observing the performance on the daily timeframe chart, the overall trend for USD/JPY is strongly bearish, and it appears closest to its peak if bears succeed in moving towards the psychological support level of 140.00. From there and from lower levels, buying USD/JPY is preferred. The support level of 141.60 is currently the most important for anticipating a move towards the psychological support. This level is also sufficient to push technical indicators towards strong oversold levels, as clearly shown by the performance of the Stochastic oscillator, the 14-day RSI, and the MACD. Conversely, on the same timeframe, the first break of the bearish trend will be an initial move towards the resistance level of 147.80, which leads us to the psychological resistance of 150.00.

The USD/JPY pair is not awaiting any significant economic data releases, so investor sentiment regarding risk appetite will be a key factor in determining the pair’s direction.

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The GBPJPY pair provided more negative attempts on Friday’s trading, but the contradiction between the main indicators pushed it to delay the negative attack, by its rebound above 186.50 level that represents a new obstacle against the negative attempts, which pushes it to form a sideways fluctuation by its stability near 187.50.

Reminding you that the bearish scenario remain valid, depending on the stability of the resistance at 189.75, besides 38.2% Fibonacci correction level’s attempt to settle at 188.00 as an extra barrier, therefore, we will keep waiting for gathering the negative momentum again, to ease the mission of renewing the pressure on 186.50, as breaking it will open the way towards reaching the extra negative stations, which might begin at 186.60 and 184.40.

The expected trading range for today is between 186.50 and 188.40

Trend forecast: Bearish

April 13, 2025 – Written by David Woodsmith

STORY LINK Pound to Euro Week Ahead Forecast: Short-Term Buy, 1.19 by Q3 2025

Investment banks have been scrambling to adjust forecasts following another week of turmoil in global markets as tariff developments have dominated. Markets are also adjusting to on-going evidence of major changes surrounding the global economy.

The Pound to Euro (GBP/EUR) exchange rate dived to 16-month lows just below 1.1450 on a Euro surge before a tentative recovery back above 1.15.

Most banks expect at least a short-term recovery from current levels, but longer-term forecasts are in a state of flux.

RBC Capital Markets (RBC) expects a recovery to 1.1900 by the third quarter of this year before renewed losses to 1.11 at the end of next year.

UBS recommends buying GBP/EUR on any dips to 1.1430. It has a March 2026 target of 1.1765.

There had been expectations that a lower rate of US trade tariffs on the UK compared with the EU would help support the Pound against the Euro.

On a short-term view, however, any potential support was more than offset by market turmoil, a collapse in risk appetite and the demand for safe-haven assets.

The US decision to delay reciprocal tariffs for 90 days also means that the UK and EU tariffs are at the same level for the time being.

Acute risk aversion amid a slide in equity markets triggered substantial defensive Euro demand and the Pound always struggles when risk appetite deteriorates.

According to Deutsche Bank; “EUR/GBP is now trading rich to front-end rate differentials, That makes the move more similar to the carry unwind of early August 2024, and also continues to a role for repatriation flows.”

Following very sharp losses, there will be speculation that the Pound is over-sold.

According to Credit Agricole; “the recent FX spot moves have pushed EUR/GBP deep into undervalued territory according to our short-term FX fair value model that is based on FX drivers like the EUR-GBP rate spread as well as measures of risk aversion.”

It added; “We thus believe that the cross is close to peaking.”

Bank of America is still cautious over the scope for Euro gains from current levels; “Sanity checks suggest EUR has outperformed. We do maintain a bearish bias vs. GBP.”

According to the bank net investment capital inflows into the Euro area have been disappointing.

BoA also considers that good news has been priced in; “A measured EU stance in relation to US tariffs would be good for the EUR – and in line with our economists’ baseline – but is likely in the price.”

Credit Agricole considers that the relative outlook is still favourable for the Pound; “The recovery should be broad-based and help ease market fears about the UK economic outlook in the near term. This, coupled with market and BoE expectations that inflation could remain sticky in the coming months could further encourage UK rate investors to pare back their aggressive rate cut expectations. All that could give the undervalued GBP some support.”

Nataxis forecasts a limited recovery to 1.1670 by end 2025.

Nomura is still targeting GBP/EUR losses to 1.1365.

Nomura maintains a bearish stance on the Pound; “the recent spike in bond yields will do more harm to the UK from a fiscal perspective than most other G10 countries.”

Nomura, however, also notes that trade fears could still undermine the Euro if there is a more aggressive stance. It added; “The risk of trade retaliation in Europe should not be ruled out, even if the approach so far has been pragmatic.”

RBC notes mixed influences on the cross. On a short-term view, it noted; “From here, GBP may find some support if headlines turn more negative on Europe, and in particular if we see more signs of the relative European equity outperformance stalling.”

RBC is, however, still wary over the UK outlook; “The concern from the OBR’s perspective is that a growth hit of that size would wipe out the UK’s fiscal buffer. The 2022 Truss episode has done lasting damage in that even under pretty extreme global conditions, gilt investors, and by extension the UK govt, see limited room for the govt to offer much fiscal support.”

For the next few months it noted; “Positioning in long EUR/GBP is at a two year high which is a headwind for further gains. GBP retains its significant yield advantage and is expected to maintain that through this year. That should ultimately cap GBP losses.”

The bank still pointed to longer-term vulnerability; “GBP remains overvalued on a REER basis, particularly based on unit labour cost measures for the real effective exchange rate. We see EUR/GBP drifting higher in 2026.”(Gradual GBP/EUR losses).

UBS points to two-sided risks for the UK economy and Pound.

On the positive side it noted; “The UK’s economy is far less susceptible to the US trade actions, which could translate into a reversal.”

On the downside; “The risk is that the UK lacks the increased structural support from higher fiscal spending seen in the Eurozone or Germany in particular.”

It summarised; “Overall, we see spot risks as slightly skewed to the downside. Further, elevated volatility and skewness further add to our rationale.”

Unicredit is forecasting GBP/EUR losses to 1.1235 by December 2025.

Rabobank has cut is end-2025 GBP/EUR forecast to 1.1765 from 1.2050.

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TAGS: Currency Predictions Pound Euro Forecasts

Created on April 14, 2025

• The last trading week was the strongest for the GBP/USD currency pair, as it moved towards the resistance level of 1.3145, the highest for the pair in six months, before closing the week’s trading around the 1.3082 level.
• Bulls still have the strongest control over the pair’s direction.
• According to Forex market trading, the GBP/USD exchange rate saw a sharp rise, but the GBP/EUR pair fell sharply as the Euro rose amid a continued decline in US stock markets.
• This may reflect a reassessment among investors of the astronomical valuations, which may now be unjustified, that have long prevailed worldwide.

Recently, the decline in the value of the US dollar to its lowest in 3 years coincided with a sharp deterioration in US stock markets, in a clear response to the White House’s trade policy, which aims to bring consumer goods production back domestically. This is expected to erode the earnings and margins of US companies in the short to medium term. This makes the astronomical, if not scandalous, valuations that have prevailed across the Pacific since at least the beginning of the first administration led by Donald Trump, if not longer, indefensible.

According to reliable trading company platforms, the stock market decline is providing a strong boost to the Euro, Swiss Franc, and Japanese Yen, which in turn exacerbates the ongoing declines in both the US Dollar (trade-weighted) and the Chinese Renminbi (trade-weighted), which has fallen significantly below the minimum level set by Beijing for the currency (CHF/CNY, JPY/CNY, and EUR/CNY).

Trading Tips:

The Pound will remain the strongest even with a rebound in the US Dollar price, and therefore, the strategy to buy GBP/USD remains in place.

Bond Selling Affects Market Stability

Amid significant activity in the global bond market, analysts are asking, “If the US government causes stock prices to fall and reduces the profitability of US companies, we must ask ourselves: does the rest of the world still want to invest all its money in US bonds or in stocks?” and “Cash flows have become much larger than trading flows.”

Recently, the UK 10-year bond yield has been trading around 4.75%, maintaining a sense of unease about financial stability in Britain.

According to financial market experts, while bond market instability is driving outflows of US dollars from the United States, markets are anticipating instability in the UK bond market. The sell-off in British government bonds, as we have seen previously following UK financial events, coincided with temporary periods of weakness in the British pound and will increase the risk of a decline in growth in the UK if high yields persist.

Technical Analysis for the GBP/USD pair today:

Looking at the daily chart above, you will notice that the overall trend for GBP/USD remains bullish and may continue as long as it remains stable above the psychological resistance of 1.3000. As mentioned before, this encourages technical buying for the GBP/USD pair. With the recent gains, the 14-day RSI has turned upwards and still has more room before reaching the overbought barrier. At the same time, the Stochastic oscillator is closest to breaking this barrier. The MACD indicator is also in a bullish turn. The nearest resistance levels for GBP/USD are currently 1.3140, 1.3220, and 1.3300 respectively. From the last level, technical indicators will move towards strong overbought levels.

Conversely, over the same timeframe, the 1.2880 support level will remain an important barrier to a downward trend. The currency pair is not awaiting significant performance-influencing data during today’s trading. Therefore, investor sentiment regarding risk appetite and the performance of global financial markets will continue to influence today’s trading.

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Created on April 14, 2025

• During the trading session on Friday, the US dollar initially plunged against the Japanese yen, but we have seen a nice bounce, from the crucial ¥142 level.
• This is an area that’s been important multiple times in the past, so it would not surprise me at all to see the beginning of something along the lines of a turnaround in this area.
• Ultimately, the candlestick for the day looks like it’s going to be a bit of a hammer, although not a perfect one as the “head of the hammer” might be a little bigger than most people would like.

Technical Analysis

The technical analysis for this USD/JPY pair is extraordinarily negative, and I do recognize that although the interest rate differential continues to favor the US dollar, especially as bonds in America selloff, sometimes higher interest rates can be a bad thing. I think we are in one of those times right now, but if we do get some type of stability in the markets, that will probably turn this market right back around, sending the US dollar much higher against the Japanese yen.

If we were to break down below the ¥142 level, then I think it opens up the possibility of a move down to the 140 in level, which is a large, round, psychologically significant figure, and an area that historically speaking, has been important. On the other hand, if we can recapture the ¥145 level to the upside, then I think the US dollar starts to rally toward the crucial ¥148 level, an area that had been a massive barrier multiple times in the recent past. Regardless, I do think that we will see a fairly big move, and it might also be worth noting that the Friday session was when we saw a bit of a bounce, perhaps traders are a bit concerned about trying to hang onto a short trade heading into the weekend.

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• EUR/USD stays in positive territory near 1.1400 on Monday.
• The near-term technical outlook points to overbought conditions for the pair.
• The US Dollar struggles to rebound despite easing trade tensions.

EUR/USD gained more than 3.5% in the previous week and touched its highest level in over three years above 1.1470 on Friday. Following a technical correction heading into the weekend, the pair started the week slightly lower but didn’t have a difficult time regaining its traction. At the time of press, EUR/USD was trading in positive territory at around 1.1400.

Although easing tensions surrounding the US-China trade conflict seems to be helping the market mood improve at the beginning of the week, the US Dollar (USD) finds it difficult to attract buyers.

US President Donald Trump’s administration granted some technology imports, including smartphones, computers, laptops and disc drives, exemptions from the steep 125% additional tariffs imposed on China. These products will reportedly still be subject to the 20% existing tariffs, which were imposed initially because of the fentanyl crisis in the US.

Over the weekend, US Commerce Secretary Howard Lutnick said that technology imports, alongside semiconductors, will face separate new levies within the next two months.

Reflecting the positive shift in risk sentiment, US stock index futures rise between 0.9% and 1.8% in the European morning.

The economic calendar will not feature any high-tier data releases on Monday. Later in the American session, several Federal Reserve (Fed) policymakers will be delivering speeches. The CME FedWatch Tool shows that markets are currently pricing in about a 20% probability of a 25 basis points Fed rate cut at the May policy meeting. In case Fed officials reiterate the need to remain patient regarding policy-easing, the USD could stay resilient against its peers and limit EUR/USD’s upside.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart holds above 70, suggesting that EUR/USD remains technically overbought.

In case EUR/USD stabilizes above 1.1400 (psychological level, static level), 1.1470 (static level) could be seen as next resistance before 1.1500 (round level). Looking south, first support could be spotted at 1.1340 (static level) ahead of 1.1300 (static level, round level) and 1.1250 (static level).

Created on April 14, 2025

• The British pound initially fell against the Japanese yen during trading on Friday, only to turn around and show signs of life, as the market has seen quite a bit of volatility.
• At this point in time, the GBP/JPY pair continues to look at the ¥187 level.
• With that being said, the market is likely to continue to be very noisy, but I do think that the ¥185 level will be important, as it has been important multiple times in the past, and I think that will be the way forward at this juncture. As long as we can stay above there, then I think the British pound has a chance to turn things around and show signs of life.

Technical Analysis

This is a market that I think given enough time we will have to sort out what was to do next, but in the meantime, I think we should probably look at this as being in the middle of a consolidation pattern, with the ¥185 level on the bottom in the ¥190 level on the top. As we are basically hanging around the ¥187.50 level, we are essentially in the middle of this range, and therefore you can make an argument that we are basically at “fair value.”

If we were to break above the ¥190 level, then I think we have a real shot at this pair going much higher, perhaps to the ¥195 level, and also I think you could see the Japanese yen get hammered against most currencies, not just this one. On the other hand, if this pair were to break down below the ¥185 level, then there’s a real shot that the Japanese yen strengthens against almost everything else as well. At this point, it seems like it’s all about the Japanese yen and the safety trade, which of course the Japanese yen is considered to be a “safety currency.” Until things settle down, it’s probably somewhat sluggish to the upside.

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April 13, 2025 – Written by Frank Davies

STORY LINK Pound to Dollar Forecast: Banks Radically Hike 12-month Predictions to 1.30-1.39

The Pound-to-Dollar exchange rate (GBP/USD) posted sharp losses to near 1.2700 early in the week before a surge to highs near 1.3150 as the dollar slumped amid very high volatility.

According to ING; “The question of a potential dollar confidence crisis has now been definitively answered – we are experiencing one in full force.”

Goldman Sachs has radically changed its view and is now forecasting dollar losses. The 12-month GBP/USD forecast has been revised to 1.39 from 1.24 previously.

Investment banks have generally downgraded dollar forecasts which has increased GBP/USD projections even though banks are far from convinced over the UK outlook.

According to Scotiabank, on a near-term view, gains above 1.32 would lead to gains to 1.34.

Nordea now expects GBP/USD will trade at 1.30 at the end of 2025 compared with the 1.23 forecast previously.

According to Nordea; “We have made a complete reversal in our dollar outlook and now expect the dollar to weaken rather than strengthen.”

UK GDP data was stronger than expected, but global developments dominated.

Although a slide in risk appetite undermined the Pound on the crosses, dollar losses triggered the GBP/USD rebound.

RBC pointed to huge elements of uncertainty; “The question for FX though is how the US shock will compare to the rest of the world? How much if anything will be in place a month from now, or six months from now?”

It added; “All we can say at the moment is that whether or not tariffs are implemented, the uncertainty is going to have a negative growth impact, not just on the US.”

RBC also commented; “Trump’s desire to break with the post-WW2 world order has investors questioning whether USD can retain its status as the world’s primary reserve currency.”

It added; “Summing it up leaves us with a bias for USD to drift lower over the next 12-18 months but mindful that sudden policy changes could shift that view materially in either direction.”

RBC expects GBP/USD to be capped around 1.30 over the next 12 months.

Goldman Sachs explained its change of stance; “First, the combination of an unnecessary trade war and other uncertainty-raising policies is severely eroding consumer and business confidence. Second, negative trends in US governance and institutions are eroding the appeal of US assets for foreign investors. Third, rudimentary calculations and a constant back-and-forth makes it difficult for investors to price outcomes other than high uncertainty.”

President Trump’s imposition of reciprocal tariffs had triggered an element of defensive dollar buying, but buyers were quickly overwhelmed by sellers.

Support collapsed amid fear over the US economy as the US-China trade war intensified.

After warning against retaliation, Trump increased tariffs on imports from China to 145% while China refused to back down and increased tariffs on US imports to 125%.

If these tariffs are sustained for any significant period, there will be major dislocation to trade and economic damage.

Other reciprocal tariffs were delayed by 90 days as the Administration was forced to blink amid market chaos, but uncertainty remained intense.

Unusually, US equities, bonds and the dollar all weakened at the same time which suggested a notable loss of confidence in US assets.

UBS commented; “As a result of this tariff chaos, Treasury markets saw fluctuations during the week, which reminded some investors of the “Truss-moment” from the gilt market in 2022.

UBS added; “In our view, much damage has been done, which is not easily reversible.

It forecasts GBP/USD gains to 1.34 by March 2026.

Danske Bank now forecasts GBP/USD gains to 1.41 on a 12-month view from 1.31 previously.

Scotiabank’s Chief FX Strategist Shaun Osborne also referenced UK parallels; “Financial markets can have a disciplining effect, as former UK PM Truss discovered in 2022 when the pound, Gilts and UK equities were falling in unison. That has been happening in the US this week and it is a clear signal that markets anticipate negative consequences from the US’ pursuit of aggressive tariffs on its trade partners and are dumping US assets as a result.”

He added; “The 90-day reprieve won’t help. It just prolongs the uncertainty and increases the risk of a negative economic outcome. A tariff off-ramp must be found quickly or the USD will continue to fall.”

According to ANZ group chief economist Richard Yetsenga; “Regardless of how the next 90 days evolve, the U.S.’s international reputation has been eroded.”

Comments from Nomura strategist Naka Matsuzawa were unusually forthright; “I’m deeply concerned about a lack of confidence among investors in the U.S. now. It’s a no confidence vote from not just the equity market but also Treasury market participants in the Trump administration and its policies.”

Latest US inflation data was weaker than expected and markets expect three Fed rate cuts this year despite fears that tariffs will put upward pressure on inflation.

US Congress pushed ahead with tax cuts in the budget resolution with the budget expected to increase long-term deficits.

ING added; “We also cannot exclude that the budget resolution passed by the House yesterday, which poses significant funding questions for tax cut extensions, is adding another layer of risk premium to risk assets and Treasuries.”

Long-time dollar bull HSBC is wavering; “We have pushed back against such concerns over the years given resilient US growth supporting high yields and solid foreign demand for US assets. Yet, we cannot easily brush aside the USD’s structural weaknesses, especially given the current climate.”

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TAGS: Currency Predictions Pound Dollar Forecasts

April 12, 2025 – Written by Ben Hughes

STORY LINK Euro to Dollar Forecast: Three-Year Best, EUR/USD at 1.20 Possible

The Euro to Dollar exchange rate (EUR/USD) surged to 3-year highs at 1.1470 on Friday before a corrective retreat to near 1.13.

MUFG is another investment bank to have changed its stance and that, with a risk that dollar confidence is eroded further, 1.20 in EUR/USD is now reachable.

According to MUFG; “There are numerous factors that have created these financial market conditions and until some of these are addressed it is difficult to see a turnaround in current market direction.”

Higher US yields have not helped the dollar.

MUFG added; “If we are possibly entering a crisis of confidence period, then there tends to be a breakdown in the normal financial market variables that drive FX. This is happening to some degree now with short-term rate spread moves not aligned to the scale of dollar sell-off.”

The latest data triggered further stagflation fears in the US economy.

The University of Michigan consumer confidence index declined sharply to 50.8 for April from 57.0 the previous month and below consumer forecasts of 54.0. This was the lowest reading since November 2022.

Both the current conditions and expectations components posted sharp declines on the month.

Surveys of Consumers Director Joanne Hsu commented; “Consumer sentiment fell for the fourth straight month, plunging 11% from March.”

She added; “Consumers report multiple warning signs that raise the risk of recession: expectations for business conditions, personal finances, incomes, inflation, and labor markets all continued to deteriorate this month.”

The 1-year inflation expectations index jumped again to 6.7% from 5.0%. This was the fourth successive jump and the highest reading since 1981.

The combination of recession fears and higher inflation would not be favourable for the dollar.

MUFG considers that bond-market vulnerability is another key element.

According to the bank; “We believe it’s no coincidence that the turmoil has unfolded in the same week that we have had developments in regard to Trump’s proposed tax cut plans.

The House has agreed a budget that extends the 2027 tax cuts. According to the Congressional Budget Office, fiscal measures overall would increase the US debt by at least $5trn over 10 years

According to MUFG; “The US fiscal deficit is simply out of control and there appears little appetite in Congress amongst Republicans to tackle the issue.”

In this context, a US-China trade war poses significant risks to the Treasury market and the dollar.

China holds around $700bn in Treasuries and any selling would risk another jump in yields.

According to MUFG; “it remains unclear to what extent UST bond holdings have been reduced. Still, all it would take in current market conditions would be for China to hint at action to likely trigger another wave of volatility and selling.”

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TAGS: Euro Dollar Forecasts

April 9, 2025 – Written by Tim Boyer

STORY LINK Euro to Pound Forecasts RAISED to 0.86 in Six Months at Rabobank

Foreign exchange analysts at Rabobank have raised their exchange rate forecasts for the Euro versus the Pound Sterling.

Recent US tariff concerns have driven investors towards currencies backed by current account surpluses, benefiting the Euro (EUR).

“The Eurozone’s current account surplus appears to be a source of support for the EUR currently.”

The Euro’s resilience as a temporary safe haven reflects investors’ preference to hold cash amid market uncertainty.

“Investors appear to be sitting on cash in CHF, JPY and EURs while waiting for current fog of uncertainty to clear.”

The Pound Sterling (GBP) remains vulnerable due to the UK’s persistent current account deficit, especially when domestic fundamentals weaken.

“The UK’s current account deficit can leave GBP exposed when UK fundamentals turn sour and international investors look for the exits.”

Germany’s shift towards increased public spending, notably in defence and technology, further boosts the Euro’s attractiveness.

“Investors had already been looking for fresh opportunities in Europe, so sitting on cash in EURs may seem like a reasonable position.”

Consequently, Rabobank has raised its EUR/GBP forecast to 0.85 for the six-month horizon.

“We have adjusted our EUR/GBP forecasts higher and now see the currency pair at 0.85 on a 6 month vs. compared with a previous forecast of 0.83.”

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TAGS: Currency Predictions Euro Pound Forecasts