• According to Forex market trading, we observed a decline in the Japanese Yen against other major currencies, ending a three-day upward wave.
• This was driven by news of upcoming US-China trade talks in Switzerland, which eased investor concerns and reduced demand for safe-haven assets.
• Sentiment across Asia was boosted by the People’s Bank of China’s announcement of an interest rate cut aimed at stimulating economic growth.
• The USD/JPY pair gained positive momentum, stabilizing around the resistance level of 144.46 at the time of writing this analysis and before the US event. Through our free trading recommendations page, we recommended buying from the support level of 142.50.

Forex traders also closely monitored the progress in US-Japan trade negotiations, with Tokyo striving to reach a bilateral agreement by June. On the economic front, Japan’s April Services PMI was revised upwards, highlighting the strongest increase in new orders in nearly a year. Meanwhile, the Bank of Japan last week kept its benchmark interest rate at 0.5% and lowered its growth and inflation forecasts, indicating that any future interest rate hikes remain unlikely for the time being.

According to currency market trading, the latest developments between China and the United States represent the latest progress in easing global trade tensions, welcomed by global investors who hope these measures will boost economic growth. The Japanese yen, a safe-haven currency, benefited from the escalation of trade tensions following Donald Trump’s announcement of tariffs on “Liberation Day” on April 2, which proved to be more severe than expected.

Trading Tips:

We still recommend buying the dollar against the Japanese yen at every downward trend without risk and monitoring the factors affecting the currency pair.

The US Federal Reserve Keeps Interest Rates Unchanged

As expected, the US Federal Reserve kept its federal funds rate target range unchanged at 4.25%-4.50% for its third consecutive meeting in May 2025, in line with expectations. Officials are adopting a wait-and-see approach amid concerns that President Trump’s tariffs could lead to higher inflation and slower economic growth. At the same time, policymakers noted increasing uncertainty about the economic outlook and rising risks of higher unemployment and inflation. The US central bank also reported that despite the impact of fluctuations in net exports on the data, recent indicators suggest that economic activity continues to expand at a solid pace. The country’s unemployment rate has stabilized at a low level in recent months, and labor market conditions have remained steady. Inflation remains somewhat elevated.

USD/JPY Technical Analysis and Expectations Today:

According to the performance on the daily timeframe chart, the USD/JPY currency pair is still in the early stages of forming an upward channel and currently lacks sufficient momentum to confirm the upward shift. This could occur if the bulls succeed in breaking towards the resistance levels of 145.60 and 147.00, respectively. The MACD indicator for the 12.26 closing suggests an upward shift but has not yet reached the overbought zone, giving the bulls opportunities for an upward rebound. At the same time, the Relative Strength Index (RSI) remains below the midline, confirming that the bulls need more stimulus before confirming the bullish shift.

On the negative side, the bullish outlook for the USD/JPY will be affected by the bears moving the currency pair towards the support level of 142.30 and lower. So far, we still prefer the strategy of buying the US dollar against the Japanese Yen from every downward level.

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• EUR/USD struggles to stabilize above 1.1300 after closing in the red on Wednesday.
• Technical sellers could take action in case the pair breaks below 1.1270.
• Markets see a diminishing chance of a Fed rate cut in June.

EUR/USD came under bearish pressure in the American session on Wednesday and closed the day deep in negative territory. The pair stays on the back foot early Thursday and trades slightly below 1.1300.

The Federal Reserve (Fed) announced on Wednesday that it left the policy rate, federal funds rate, unchanged at the range of 4.25%-4.5% following the May meeting, as widely anticipated. In the policy statement, the US central bank acknowledged that the uncertainty surrounding the economic outlook has increased further.

While speaking during the post-meeting press conference, Fed Chairman Jerome Powell noted that near-term inflation expectations have moved up because of tariffs and reiterated that they need to wait before adjusting the policy. According to the CME FedWatch Tool, the probability of a 25 basis points (bps) rate cut in June dropped to 20% from about 30% before the Fed event. As a result, the US Dollar (USD) gathered strength against its rivals in the American session, causing EUR/USD to push lower.

The US economic calendar will feature the weekly Initial Jobless Claims data on Thursday. Additionally, the Bureau of Labor Statistics will publish preliminary Unit Labor Costs data for the first quarter. In case there is a noticeable decline in the number of first-time applications for unemployment benefits, with a reading near 200,000, the USD could continue to outperform its rivals. On the other hand, a print above 250,000 could have the opposite impact on the currency’s valuation. Nevertheless, investors could refrain from betting on a significant weakening of the USD following the hawkish Fed event.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays below 50 and EUR/USD closed the last four 4-hour candles below the 100-period, 50-period and 20-period Simple Moving Averages (SMA), highlighting a bearish tilt in the near-term outlook.

On the downside, 1.1270 (Fibonacci 38.2% retracement of the latest uptrend) aligns as immediate support before 1.1175 (Fibonacci 50% retracement) and 1.1080 (Fibonacci 61.8% retracement). Looking north, resistances could be spotted at 1.1380 (100-period SMA, Fibonacci 23.6% retracement, 1.1430 (static level) and 1.1500 (static level, round level).

The GBPJPY pair announced delaying the bearish trading by its stability above the support of the sideways range at 190.75 level, recording some gains by its stability near 191.70, facing the moving average 55.

We expect providing mixed trading, noting that 192.45 level represents an extra barrier that might assist in renewing the negative attempts, to ease the mission of breaking the current support and begin targeting the negative stations that are located near 189.90 and 189.20.

The expected trading range for today is between 191.00 and 192.40

Trend forecast: Sideways

The EURJPY pair didn’t move anything since yesterday, fluctuating again below the barrier at 163.25, confirming the stability of the suggested negative scenario, gathering the negative momentum is important to ease the mission of pressing on the moving average 55, as its stability near 161.45 represents an obstacle against the negative attack.

Reminding you that the price success to reach below the moving average 55 and holding below it will ease the mission of targeting the negative stations, which might begin at 160.85 and 160.20.

The expected trading range for today is between 161.45 and 163.00

Trend forecast: Bearish

GBP/USD pauses rally as traders eye Fed, BoE’s decisions

The Pound Sterling (GBP) retreated after posting back-to-back days of gains versus the US Dollar (USD). Still, positive news related to a possible de-escalation of the China-US tensions lent a lifeline to the Greenback, which remains firm in early trading. At the time of writing, GBP/USD trades at 1.3360, virtually unchanged.Read More…

May 7, 2025 – Written by Frank Davies

STORY LINK Pound to Euro Forecast: Sterling Losses to 1.15 on Bearish Technicals

The Pound to Euro (GBP/EUR) exchange rate spiked to 1-month highs at 1.1815 after the initial failure before a retreat to just below 1.1750 as markets also focus on the Bank of England policy decision.

German CDU leader Merz failed to be elected as Chancellor in the first Bundestag vote on Tuesday, but did secure a win in the second ballot.

According to ING; “We think EUR/GBP may stabilise around 0.850 for now (1.1765 for GBP/EUR) as a well-telegraphed BoE cut should not trigger major moves.”

CitiGroup, however, expects GBP/EUR losses; “Current levels offer good risk/reward for EURGBP longs, where technicals look bullish and the pair has lagged relative ECB-BoE pricing.”

It sees scope for GBP/EUR losses towards 1.1500.

The German coalition was able to amend procedures and Merz was confirmed in a second ballot with 325 votes, above the threshold of 316.

The vote provided initial Euro relief, but there are concerns that the initial rejection is an indicator of wider difficulties

According to ING, events; “are a painful reminder that it will be hard for the incoming government to fulfil the high expectations regarding investments and reforms. It seems that not everyone in the coalition parties has fully understood the sense of urgency towards the necessity of a functioning government.

It added; “Friedrich Merz and his government now face the monumental challenge of restoring economic strength while keeping everyone in their own parties aligned.”

Commerzbank also expressed concerns; “scepticism is appropriate with regard to the large fiscal package that the new government is planning and therefore also with regard to the euro.”

As far as the UK is concerned, trade remains a key influence.

ING noted that a UK-India trade deal was announced on Tuesday and there is speculation that a US-UK deal could be reached this week.

According to the bank; “It’s unclear whether London will be able to negotiate away the 10% baseline US tariffs, but it might be able to secure reductions in the 25% tariff rate on the car and steel sectors.”

ING also notes the importance of UK-EU relations; “Additionally, we’re still focusing on the 19 May UK-EU summit – the first since Brexit. Warming relations with the EU typically sees sterling rally.”

The Pound has been hampered by expectations of a dovish Bank of England (BoE) policy statement on Thursday.

A 25 basis-point rate cut has been fully priced in, but there is the potential for dovish elements with the US tariffs a key factor for the BoE.

Commerzbank commented; “The BoE may lower its growth and inflation forecasts, while at the same time, as in February, there might be two dissenting votes for a larger move.”

BoE forecasts and guidance will be a key element.

Commerzbank added; “If the BoE does indeed remove the reference to gradual rate cuts from its statement, this would increase the scope for faster (and larger) rate cuts than previously expected – taking away one of the pound’s few remaining supporting arguments.”

According to Citi; “GBP remains vulnerable to a pullback in equities, UK fiscal developments, spillovers from US term-premium concerns, and a dovish pivot from the BoE. While this week’s meeting is unlikely to offer that pivot, Citi Economics maintains the BoE will have to accelerate the pace of cuts in 2H25.”

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May 7, 2025 – Written by Ben Hughes

STORY LINK GBP/USD Forecast: Pound to Trade “Back to 1.3445 High” Over Next Few Days

The Pound to dollar exchange rate (GBP/USD) has again found support below 1.3300 and advanced to 1.3365 in early US trading on Wednesday.

The dollar index (DXY) traded around 99.45.

ING expects the dollar will continue to struggle while it expects that markets are too aggressive over near-term Bank of England rate-cut prospects.

It added; “We therefore have a bias that GBP/USD trades back to the 1.3445 high over the next couple of days.”

UoB sees a 1.3240 – 1.3450 range in the short term.

The Federal Reserve will announce its policy decision after Wednesday’s close.

There are very strong expectations that rates will be held at 4.50% as the central bank remains in wait and see mode.

Deutsche Bank commented; “We expect the Fed to keep rates steady and avoid explicit forward guidance about the policy path ahead. The overall tone of the meeting is likely to echo comments from Chair Powell and his colleagues in recent weeks. In particular, the administration’s policies are likely to push the economy away from the Fed’s dual mandate objectives for a period of time but that monetary policy is “well positioned” to respond to the evolving outlook.”

According to Barclays; “We expect Powell to signal the FOMC is in no rush to cut rates. Our baseline call has two 25bp cuts this year, in July and September.

Dollar sentiment remains fragile. According to IG analyst Tony Sycamore; “I don’t think the theme of U.S. dollar weakness is going to change. There’s also a lot of uncertainty from offshore investors as to whether they want to be overexposed or overweight U.S. equities.”

According to ING; “DXY stalled last week exactly where it should have if we are seeing a weak bear market correction.”

Scotiabank notes the number of rate cuts priced in; “Markets are still pricing several cuts into year-end and could be vulnerable to adjustment if Chair Powell leaned toward a brighter outlook.”

ING admitted the risk of stop-loss dollar buying, but added; “Price action has been poor and a drift back to 99.25 in quiet markets will confirm that the dollar is struggling to shake the risk premium associated with uncertain US policymaking.”

Credit Agricole is more positive on the dollar; “The latest divergence between the USD and US rates therefore signals to us that the currency is looking very cheap and should recover, especially if the Fed fails to live up to the still dovish market expectations on Wednesday.”

The Bank of England (BoE) will announce its latest policy decision on Thursday. There are very strong expectations that there will be a 25 basis-point cut to 4.25%.

According to SocGen; “Key data undershooting expectations and tariff risks tilting towards lower growth and inflation make it an easy decision for the MPC.”

Bank of America commented; “Lower inflation and growth forecasts can open the door for faster cuts in the second half of the year. Still, we think the BoE will retain its careful, gradual and meeting-by-meeting guidance while reiterating the need for policy to remain restrictive, in the midst of uncertainty.

It added; “Having said that risks of a dovish pivot in May cannot be ruled out, especially if inflation forecast downgrades are bigger than we expect, opening the door for faster cuts already.

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EUR/USD Analysis Summary Today

• Overall Trend: Neutral stance with an upward bias.
• Today’s Euro/Dollar Support Levels: 1.1300 – 1.1240 – 1.1150.
• Today’s Euro/Dollar Resistance Levels: 1.1385 – 1.1430 -1.1500.

EUR/USD Trading Signals:

• Buy EUR/USD from the support level of 1.1255 with a target of 1.1400 and a stop-loss at 1.1160.
• Sell EUR/USD from the resistance level of 1.1440 with a target of 1.1200 and a stop-loss at 1.1520.

EUR/USD Technical Analysis Today:

Since the beginning of the week’s trading, the EUR/USD exchange rate has been stable and receiving support for stability around the 1.1300 level, ahead of today’s US central bank announcement, the most important for the markets this week, with the announcement at 9:00 PM Egypt time. This will be followed half an hour later by important statements from US central bank governor Jerome Powell. The EUR/USD price is currently stable around the 1.1367 level, and it has been recently observed that rallies have been met with selling interest. A reason for the euro’s recent failure to rise was the failure of Merz, the leader of the German Christian Democratic Union, to win a vote in the Bundestag that would have approved him as chancellor. Another vote may be held in the short term.

According to reliable trading company platforms, the EUR/USD pair is still trading above levels justified by interest rates alone, and the main question is whether the dollar discount is justified. In general, US data, tariff developments, and Asian currency market dynamics will remain crucial in the short term.

Recently, prominent US data has not indicated any significant deterioration in the economy at this stage, but the data is still lagging, and indicators such as freight transport suggest the potential for significant pressures on the horizon. Technically, the 1.130 level will remain the pivot point for the EUR/USD pair – and a decisive break below it could lead to a break of the 1.120 support level soon.

According to some Forex market experts, the EUR/USD pair continues to trade within its medium range of 1.12/upper 1.15 since early April. They are looking for near-term support below 1.13 and resistance above 1.14.

Trading Tips:

The EUR/USD will remain in a narrow range, and you will not find strong movement except after investors and markets react to today’s US central bank announcement.

According to the performance on the daily timeframe chart, the movement of technical indicators is in a neutral position awaiting further developments. The 14-day Relative Strength Index (RSI) is in the middle, between the overbought zone and the midline, indicating that bulls and bears are in a waiting position until factors supporting one of the directions emerge, although an upward movement is more likely. The 1.1400 resistance will remain an important catalyst for the bulls. At the same time, the MACD indicator is slightly leaning downwards.

EUR/USD trading will remain within its current range until the markets react to the US central bank’s announcement and Governor Jerome Powell’s statements, especially after Trump’s recent intervention in the bank’s policy directions and the threat to dismiss the governor, followed by a recent reversal of that stance. In addition to this, any developments on the ground regarding the US tariff war against global economies, including the Eurozone, will have the strongest impact on financial markets in general and on the performance of the EUR/USD currency pair in particular.

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May 7, 2025 – Written by Frank Davies

STORY LINK Euro to Pound Forecast: EURGBP Dips to 0.85 as BoE Cut Priced in

The Pound to Euro exchange rate has stabilised and has already priced in a likely rate cut from the Bank of England.

UK-EU negotiations on trade and other issues is seen as a positive.

The euro may be overvalued as it made strong gains even when the ECB were cutting rates aggressively.

Sterling has managed to make slight gains against the euro in recent weeks as the EUR/GBP exchange rate has faded from above 0.87 in mid-April, back to 0.85 support. This move was partially unwinding the strong gains the euro made in early April when market volatility spiked and it acted as a safe haven. However, there have been other factors driving the move, with positives for the pound and negatives for the euro both playing a part.

A Positive Background for Sterling

The BoE are very likely to cut this week, but this would only take rates in the UK down from 4.5% to 4.25%, considerably higher than the 2.4% offered by the ECB. Importantly, this cut is a measured step towards normalization of rates and is not driven by fears over unemployment or economic weakness. More cuts are likely to follow, but there is no expectation of aggressive cuts in the near-term.

“…Thursday should see the Bank of England cutting rates by 25bp. This is widely expected by consensus and fully priced into the Sonia curve. As discussed in our economist’s preview, we expect an 8-1 vote split (one vote for a 50bp cut) and no changes in forward guidance (future cuts to be “gradual and careful”),” noted ING on Tuesday.

This is a healthy backdrop for the pound, and quite different to the situation in the EU where the ECB is in a hurry to get to neutral rates below 2%.

While there have been concerns abouts cuts to government spending and a slowing economy, the UK has managed to sidestep most of the proposed tariffs from the US and is likely to strike a deal on 10% tariffs, the lowest possible under Trump’s current recommendations. Meanwhile, the UK and EU are negotiating a reset of their post-Brexit relationship, with a key summit scheduled for May 19, 2025. The talks will aim to reduce trade barriers, boost economic growth, and enhance cooperation on security, defence, and other areas, while navigating geopolitical challenges like U.S. tariffs under President Trump. A draft agreement emphasizes a “new strategic partnership” based on “free and open trade” and global economic stability.

This could be positive for the UK economy, but there are a number of potential hurdles. UK Prime Minister Keir Starmer has already set red lines: no return to the single market, customs union, or freedom of movement. However, the EU demands concessions, particularly on fishing and youth mobility, which some EU states like Poland see as non-negotiable. The talks are complicated by simultaneous UK efforts to secure a U.S. trade deal, with concerns that closer EU alignment could provoke U.S. tariffs.

Euro Could be Overvalued

The Euro-Dollar conversion rallied from a 2025 low of 1.01 to a high of 1.15 in a short space of time while EURGBP rallied from 0.82 to above 0.87. Considering this came during an aggressive rate cutting cycle from the ECB, the risk is that the euro has gone too far too fast and is relatively overvalued based on rate differentials.

It’s not as if the backdrop is rosy for the euro – tariffs are likely to weigh on an already fragile and stagnant economy. Indeed, the euro’s rally was not due to improving data and came in the wake of the German election and subsequent spending plans, both from Germany and other member states vowing to boost military spending. This should offer a bump to the economy, but the optimism may have been overdone. EURGBP at 0.85 looks around fair value for now.

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GBP/USD Forecast: Pound Sterling under bearish pressure ahead of Fed

After posting gains to start the week, GBP/USD edges lower and trades in negative territory below 1.3350 in the European session on Wednesday as investors gear up for the Federal Reserve’s (Fed) monetary policy announcements.

The US Dollar (USD) stays resilient against its peers midweek on improving risk mood. Washington confirmed that United States (US) Treasury Secretary Scott Bessent and chief trade negotiator Jamieson Greer will meet China’s economic tsar He Lifeng in Geneva this Saturday, to kick off official talks with China. Read more…

GBP/USD expected to be between 1.3300 and 1.3400 – UOB Group

Pound Sterling (GBP) is likely to trade in a range vs US Dollar (USD), expected to be between 1.3300 and 1.3400. In the longer run, the current price movements are part of a 1.3240/1.3450 range-trading phase, UOB Group’s FX analysts Quek Ser Leang and Peter Chia note. 

24-HOUR VIEW: “Our view for GBP to trade with a downward bias yesterday was incorrect, as after dipping to a low of 1.3260, GBP soared, reaching a high of 1.3402. The subsequent pullback from the high amid overbought conditions suggests GBP is likely to trade in a range today, expected to be between 1.3300 and 1.3400.” Read more…

GBP/USD – Strategic sell idea [Video]

Fake breakout of the consolidation and rejection of the Pitchfork Median Trend line. Read more…