• EUR/USD trades in a tight range at around 1.0300 in the European morning.
• The cautious market stance doesn’t allow the pair to stage a rebound.
• December employment data from the US could trigger the next big action in the pair.

EUR/USD holds steady near 1.0300 in the early European session on Friday after closing in negative territory for the third consecutive day on Thursday. The pair remains technically bearish in the near term as focus shifts to labor market data from the US.

With US stock markets remaining closed and bond markets closing early in observance of a national day of mourning to honor the death of former President Jimmy Carter, the market action turned subdued on Thursday. Early Friday, US stock index futures lose between 0.1% and 0.4%, reflecting a cautious market stance, which makes it difficult for EUR/USD to stage a rebound.

Later in the day, the US Bureau of Labor Statistics will publish the December employment report. Markets expect Nonfarm Payrolls to rise by 160,000 following November’s 227,000 increase. The Unemployment Rate is forecast to remain unchanged at 4.2%.

An NFP reading above 200,000 could boost the USD heading into the weekend and force EUR/USD to stretch lower. On the other hand, a disappointing print below 150,000 could have the opposite impact on the pair’s action. In case the headline NFP arrives near the market consensus, the change in the Unemployment Rate could drive the USD’s valuation, with an unexpected rise hurting the currency and vice versa.

EUR/USD Technical Analysis

The Relative Strength Index moves sideways below 50 and EUR/USD remains below the 20 and the 50-period Simple Moving Averages (SMA) on the 4-hour chart, highlighting buyers’ hesitancy.

In case EUR/USD confirms 1.0300 (static level, round level) as resistance, 1.0240 (static level, end point of the latest downtrend) could be seen as next support before 1.0200 (static level, round level). If the pair manages to stabilize above 1.0300, 1.0325 (Fibonacci 23.6% retracement of the latest downtrend, 20-period SMA) and 1.0375 (100-period SMA, Fibonacci 38.2% retracement) could be seen as next resistance levels.

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Created on January 09, 2025

• As predicted, with the purchase of the US dollar against the Japanese yen from every downward level, the currency pair is moving steadily near the psychological resistance of 160.00, above which there is increasing talk of imminent Japanese intervention in the forex markets to prevent further collapse of the Japanese yen.
• The bulls had driven the dollar/yen pair towards the resistance level of 158.55, the highest level for the currency pair in more than five months.

Japan’s Plans to Prevent Further Collapse of the Yen

In this regard, the Japanese Finance Minister has recently reiterated his warning against one-sided speculative moves in the forex market, noting the government’s readiness to intervene if excessive volatility persists. According to trades, the Japanese yen has come under pressure amid growing uncertainty about the timing of interest rate hikes by the Bank of Japan. Bank of Japan Governor Kazuo Ueda has confirmed that any policy adjustments will depend on economic, price, and financial conditions, emphasizing the importance of sustainable wage growth. Also, the Bank of Japan has highlighted the need for caution in light of domestic and global uncertainties.

Trading Tips:

The dollar/yen will remain on its upward trajectory until Japanese intervention, considering that Trump is not very fond of market intervention.

Has the US Dollar Reached its Peak Gains?

According to a new analysis from Bank of America, the US dollar is “perfectly priced.” If true, this means the current strength trend is nearing its limits, which could ease pressure on global currencies. Athanasios Vamvakidis, an analyst at Bank of America, says, “Much of the US dollar’s price is in this context. The US dollar has reached a historically extreme valuation.”

Looking at the Bank for International Settlements’ real effective exchange rate index, the US dollar is the strongest it has been in 30 years. Estimates from the International Monetary Fund’s real effective exchange rate equilibrium model lead foreign exchange analysts at Bank of America to a similar conclusion. The analysts there stated, “The US dollar appears to be overvalued by 18.5%, the highest in the past 30 years, except when it was overvalued by 19% during the energy shocks of the war in Ukraine in 2022.”

According to forex market trades, the US dollar was the best-performing currency in 2024, topping the leaderboard after rising from October amid signs of a rebound in US economic growth and inflationary pressures. These expectations only accumulated following Donald Trump’s victory in the November elections. This has prompted the Federal Reserve to warn that it is likely to significantly slow the pace of US interest rate cuts. In fact, after strong US data releases on Tuesday, the market does not expect another cut in the first half of the year.

USD/JPY Technical Analysis and Expectations Today:

Dear reader, as previously predicted, the overall trend of the USD/JPY pair will remain bullish. Technically, the bulls may quickly reach the psychological resistance of 160.00 as long as the US dollar is strong and as long as there is no Japanese intervention in the currency markets. Stronger-than-expected US jobs numbers may give the bulls that opportunity. Meanwhile, the currency pair is on track for a new weekly bullish close and may remain so until Trump’s inauguration this month. Volatility indicators, the Relative Strength Index, and the MACD are on their way to overbought levels. To break the upward trend of the USD/JPY pair, bears must first move towards the support level of 155.50. finally, we still prefer buying the USD/JPY from any downward level.

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January 9, 2025 – Written by David Woodsmith

STORY LINK Pound Sterling Slumps vs euro and Dollar on Truss 2.0 Sell-off

The Pound to Euro (GBP/EUR) and Pound to Dollar (GBP/USD) exchange rates posted sharp losses on Wednesday and there was further selling pressure in Asia on Thursday.

The Pound to Dollar rate dipped sharply to 13-month lows at 1.2240 before a recovery to near 1.2300.

MUFG commented; “Overall, the unfavourable market developments have increased downside risks for the pound at the start of this year and increase the likelihood of cable falling back below 1.2000.”

ING sees vulnerability and added; “GBP/USD downside does look vulnerable to positioning and the incoming Trump agenda. 1.2250 is very possible.”

It did, however, add; “1.20 looks a bit of a stretch.”

The Pound to Euro (GBP/EUR) exchange rate also dipped sharply to 2-month lows at 1.1900 before a recovery to 1.1925.

ING expects GBP/EUR will find support on any further sharp dips to 1.1765.

The UK bond market has come under further selling pressure over the past 24 hours. The 10-year yield increased to near 4.90%, the highest level since October 2008 while the 30-year yield increased to the highest level since August 1998 at above 5.40%.

Markets remain very sensitive to any sell-off in the gilt market, especially after the 2022 Truss fiscal event.

ING commented; “Our best understanding of yesterday’s sterling sell-off is that the global bond market sell-off touched a raw nerve in the gilt market and that then the gilt spread widening prompted investors to cut back on overweight sterling positioning.”

The Pound has tended to draw support from hopes that the UK economy would be relatively insulated from the threat of increased tariffs by the incoming Trump Administration.

The Sterling sell-off has tended to puncture these hopes.

ING added; “In a way, today’s sterling sell-off can be seen as a mini-capitulation of the overriding theme of a Trump-inspired strong dollar in 2025.”

Higher yields can offer support to currencies, but this is not always the case, especially if there is a slide in confidence and stagflation fears.

MUFG commented; “Recent price action highlights though that higher yields are not always positive for a currency if they are driven by unease over the public finances and inflation in the UK.”

Higher bond yields will also put significant upward pressure on debt-interest payments while higher mortgage rates will dampen activity in the economy which hurts tax revenue.

In this context, there is the risk that the government will have to tighten fiscal policy which would further undermine growth conditions and have potential implications for monetary policy.

MUFG noted that Treasury sources have reportedly acknowledged that the government could be forced to act as soon as March in response to higher borrowing costs.

Kyle Chapman, FX markets analyst at Ballinger Group was more sanguine over the outlook; “The moves are related to an ongoing concern about UK borrowing levels but I don’t see enough of a reason for such a rapid market move.”

He added; “I think that we are going to see some recovery quite quickly once the market calms.”

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TAGS: Pound Sterling Forecasts

Created on January 09, 2025

• The US dollar gained against other major currencies after signals from the minutes of the latest Federal Reserve meeting hinted at the future pace of US interest rate cuts in the new year, along with anticipation of the reaction to Trump’s policies.
• As a result, the GBP/USD pair plummeted rapidly to the support level of 1.2320, near its 8-month low.
• In the same session yesterday, the pound dollar attempted to rebound upwards, but its gains did not exceed the resistance level of 1.2494.

Factors Pressuring the Pound

According to forex market trades and reliable trading platforms, selling pressure on the pound dollar increased as the stronger US dollar overshadowed high borrowing costs in the UK, which are nearing their 27-year high. In addition, concerns about US trade policies added to the pressure, as CNN reported that US President Donald Trump may declare a national economic emergency to justify imposing comprehensive tariffs on allies and adversaries.

Previously, Trump has rejected suggestions of more moderate tariffs and has insisted he will not scale back his trade policy.

On the British side, investors expect the Bank of England to cut interest rates by around 50 basis points this year, despite inflation remaining above its 2% target. Even as UK bond yields have risen, outpacing gains in US Treasury yields, the pound has struggled to find support against a stronger dollar, according to market trading.

Trading Tips:

The US dollar remains stronger and may remain so for a while, so be ready to sell the pound dollar from any upward level without risk.

UK Government Plans Weaken Sentiment Towards the Pound

Financial markets will be awaiting an important speech by the British government’s finance minister in the coming period, and as expected, it may focus on new cuts to public spending instead of tax increases. The minister plans to emphasize its financial rules in order to reassure investors and companies about its dealings with the British economy, in addition to that, it will confirm that the new British government will prioritize stability and will not consider any easing of budget guidelines. In general, Britain was among the most affected by the defeat in global bond markets due to investor concerns about public debt levels. As is known, the sudden rise in government bond yields threatens to absorb the small margin of 9.9 billion pounds ($ 12.2 billion) that Reeves left after announcing her first budget as Chancellor last October.

Technical Analysis for the GBP/USD pair today:

According to recent trades, the GBP/USD pair seems poised to resume its downward trend, as the pair finds resistance at a downward trendline that has connected its highest levels since mid-November of last year. According to the performance, the 100-day simple moving average is below the 200-day simple moving average, confirming that the stronger path is the downward trend or that selling is likely to gain more strength than a reversal. Also, the 100-day simple moving average coincides with the trendline to add more strength as a ceiling.

In this case, the GBP/USD price may decline to the downward targets specified by the Fibonacci correction tool. Meanwhile, the 38.2% level is located at 1.2416, then the 50% level is in line with its recent lows at 1.2370. Stronger selling pressure could drag the pair to the 61.8% level at 1.2323 or the 76.4% level at 1.2266. technically, the full extension is located at 1.2174. Meanwhile, the Stochastic indicator is trending lower to show that there is bearish pressure, and the oscillator has plenty of room to fall before reaching the oversold zone to signal exhaustion. Also, the RSI is trending lower without reaching the overbought zone, suggesting that sellers are keen to take over.

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Created on January 09, 2025

• The US dollar has rallied again during the trading session on Wednesday, as the Japanese yen has finally given away to the ¥158 level and the pressures being brought upon it.
• Because of this, the market is likely to continue to see a lot of upward momentum, but you should also keep in mind that Friday is a Non-Farm Payroll announcement, which obviously has a major influence on the bond market’s reaction to this.

After all, the interest rates in America are one of the biggest things pushing this market, as we have seen a massive amount of money flying into the US dollar as rates in America continue to climb quite drastically. With this, it’s worth noting that the market participants continue to look to America as one of the only places to put money to work, as the US dollar seems like an unstoppable force. Furthermore, it’s probably worth noting that we are in a major uptrend anyway.

Technical Analysis

The most obvious part of technical analysis worth paying attention to is the fact that the ¥158 level has finally been broken, which has been an area of major resistance previously. By breaking above that comment springboard’s this pair to higher levels from what I can see, but with the Non-Farm Payroll announcement coming out on Friday, it’s likely that we will continue to see a little bit of volatility. If those jobs numbers end up being higher than anticipated, we could see the US dollar really fly from here.

Even if we break down below the ¥158 level, it’s very likely that we could see the ¥157 level offer significant support. This is a market that has been very noisy as of late, but most certainly has an upward slant to it, and I think that continues to be the way you have to look at it, more of a grinding uptrend than anything else. In fact, I don’t have any interest in shorting this pair, at least not until we break down below the ¥154 level, something that isn’t going to happen anytime soon.

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• GBP/USD dropped to its weakest level since November 2023 below 1.2250 on Thursday.
• The 10-year UK gilt yield rose to its highest level in over 16 years.
• The pair remains vulnerable despite turning technically oversold in the near term.

After losing nearly 1% on Wednesday, GBP/USD extended its slide and touched its lowest level since November 2023 below 1.2250 in the early European session on Thursday. The pair remains deep in negative territory below 1.2300 despite recovering slightly in the last hour.

The broad-based US Dollar (USD) strength and a bout of selloff in British government bonds triggered a sharp decline in GBP/USD. The yield on the 10-year UK gilt climbed to its highest level in over 16 years and the yield on the 30-year reached its strongest level since 1998 early Thursday. 

Assessing the latest developments in the UK gilt market, “this is a global move but it’s being led by the UK,” said RBC Capital Markets’ fixed income strategist Megum Muhic.

“Potentially, a reason why is the technical break is more significant versus other jurisdictions. The UK is at highs of this cycle whereas in Europe and the US this isn’t the case. We’re in new uncharted territory,” Muhic added, per Reuters.

On the other hand, the US Dollar (USD) benefited from the risk-averse market atmosphere and put additional weight on GBP/USD’s shoulders. Citing four sources familiar with the matter, CNN reported on Wednesday that Trump is considering declaring a national economic emergency to allow for a new tariff program, reviving concerns over an aggressive tariff policy stoking inflation.

Stock markets in the US will remain closed and bond markets will close early on Thursday, in observance of a national day of mourning to honor the death of former President Jimmy Carter. 

Later in the day, several Federal Reserve (Fed) officials are scheduled to deliver speeches. In case policymakers underline the need for a slowdown in the pace of rate cuts amid the uncertainty surrounding the inflation outlook, the USD is likely to preserve its strength. On Friday, the US Bureau of Labor Statistics will release the December jobs report, which will include Nonfarm Payrolls and Unemployment Rate figures.

GBP/USD Technical Analysis

GBP/USD recovered after dipping below the lower limit of the descending regression channel coming from December 9. Meanwhile, the Relative Strength Index (RSI) indicator on the 4-hour chart rose slightly above 30, suggesting that the pair’s bearish bias remains intact after staging a technical correction from oversold levels.

On the downside, static support seems to have formed at 1.2250 ahead of 1.2200 (static level, round level) and 1.2140 (static level from November 2023). Looking north, first resistance could be spotted at 1.2350 (former support, static level) before 1.2400 (round level, mid-point of the descending channel).

• EUR/USD trades in negative territory slightly below 1.0300 on Thursday.
• The US Dollar continues to benefit from the risk-averse market atmosphere.
• The near-term technical outlook suggests that the bearish stance remains unchanged.

EUR/USD stays on the back foot and trades slightly below 1.0300 in the European morning on Thursday after closing the second consecutive day in negative territory on Wednesday. The risk-averse market atmosphere makes it difficult for the pair to stage a rebound, while the technical outlook suggests that the bearish bias remains intact.

The US Dollar (USD) capitalized on safe-haven flows amid growing concerns over US President-elect Donald Trump introducing an aggressive tariff policy. Citing four sources familiar with the matter, CNN reported on Wednesday that Trump is considering declaring a national economic emergency to allow for a new tariff program.

Stock markets in the US will remain closed and bond markets will close early on Thursday, in observance of a national day of mourning to honor the death of former President Jimmy Carter. 

In the second half of the day, several Federal Reserve (Fed) policymakers will be delivering speeches. In case officials reiterate the need for a slowdown in policy easing amid the uncertainty surrounding the impact of tariffs on the inflation outlook, the USD is likely to preserve its strength. On Friday, the US Bureau of Labor Statistics will release the December jobs report, which will include Nonfarm Payrolls and Unemployment Rate figures.

In the meantime, Pound Sterling (GBP) remains under heavy selling pressure as the UK gilt selloff continues. EUR/GBP cross is up more than 0.5% on the day after rising 0.7% on Wednesday, suggesting that the Euro is able to capture some of the capital outflows out of the GBP. In case EUR/GBP continues to push higher, EUR/USD’s downside could remain limited.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart declined below 40, reflecting a buildup in bearish momentum. In the downside, 1.0240 (end-point of the latest downtrend) aligns as next support before 1.0200 (round level, static level).

In case EUR/USD manages to stabilize above 1.0320 (Fibonacci 23.6% retracement of the latest downtrend), 1.0350 (20-period Simple Moving Average (SMA), 50-period SMA) and 1.0375 (Fibonacci 38.2% retracement) could be seen as next resistance levels.

• GBP/USD has retreated into the descending channel pattern, signaling a dominant bearish bias.

• The pair could test the nine-month low at 1.2321, recorded on Wednesday.

• The immediate resistance appears at the descending channel’s upper boundary, near the nine-day EMA at 1.2447.

The GBP/USD pair remains under pressure for the third consecutive session, hovering near 1.2360 during Thursday’s Asian trading hours. Technical analysis of the daily chart highlights a prevailing bearish bias, with the pair falling back to the descending channel pattern.

The 14-day Relative Strength Index (RSI) approaches the 30 mark, signaling intensified bearish momentum. Additionally, the GBP/USD pair trades below the nine- and 14-day Exponential Moving Averages (EMAs), reflecting weak short-term price dynamics.

On the downside, the GBP/USD pair could test the nine-month low of 1.2321, recorded on January 8, followed by the next support level at 1.2299, the lowest since November 2023, last observed on April 22. A break below this level could strengthen bearish sentiment, potentially driving the pair toward the lower boundary of the descending channel near 1.2050.

On the upside, the GBP/USD pair may encounter immediate resistance at the descending channel’s upper boundary, near the nine-day EMA at 1.2447, followed by the 14-day EMA at 1.2481. A decisive breakout above this critical resistance zone could enhance short-term price momentum, paving the way for a potential move toward the two-month high of 1.2811, reached on December 6.

GBP/USD: Daily Chart

Created on January 08, 2025

• I’m taking a look at the British pound against the Japanese yen. You can see that the Tuesday session was positive right off the bat.
• It looks like we are slamming into a bit of trouble near the 198.5 yen level or so that I do think extends all the way to the 200 yen level.
• It is worth noting that I still believe that the US dollar is the strongest currency out there overall.

The British pound is essentially second place, so this is a market that should continue to favor the upside, given enough time, but that 200 barrier is extraordinarily resistant. The question is, possibly is somebody interfering here? Bank of Japan, for example.

Bank of Japan, Is That You?

They have been known to do this, so we’ll have to wait and see, but it does look like we are giving back a little bit of those gains, and now I think it is probably a dip waiting to happen. The 50-day EMA finds itself near the 195 yen level and rising. I think that is a short-term floor in the market. As long as we can stay above there, I think we’re probably still buying on the dip overall.

If we can get above the crucial 200 yen level, then it’s likely that this market goes screaming toward the 207 yen level given enough time. I’m not a huge fan of throwing a ton of money into this until we break above the 200 yen level, but I do recognize you get paid at the end of every day and that generally will drive the yen related pairs as the carry trade comes and goes, but ultimately everybody loves it. If we were to turn around and break down below the 195 yen level, then we have to start thinking about the 200-day EMA as the next support level. Anything underneath there, then we’re probably going to open up the trap door and fall towards the 190 yen level.

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