Created on April 11, 2025

• The British pound has rallied rather significantly during the session on Thursday as we have seen the US dollar take it on the chin.
• Ultimately, the market is looking at the concerns when it comes to tariffs, and the US dollar has been sold off as a result.
• Furthermore, the CPI numbers came out much lower than anticipated during the trading session, so perhaps traders are starting to price in the idea of a recession in the United States.

Technical Analysis

The technical analysis for the GBP/USD pair is all over the place, and it really comes down to what your time frame is. After all, short-term traders have been whipped in both directions over the last couple of days, but longer-term traders have been buyers over the last several months. That being said, the market is likely to continue to see a lot of volatility, see you do have to be cautious with your position sizing. That being said, it is worth noting that the pair is approaching the crucial 1.30 level, which of course is a large, round, psychologically significant figure, and an area where we have seen a lot of business conducted.

I think the next couple of days will be crucial, because it will give us an idea as to what people are going to do for safety. After all, treasuries are selling off, giving higher interest rates in America, which is a bit counterintuitive. As long as that’s the case, then you will see the British pound in other currencies do quite well against the US dollar, but if traders run to treasuries for safety again, that will drive up the US dollar. As things stand right now, it feels a little bit like we are seeing a lot of capital flight from the United States, perhaps due to the tariff wars.

That being said, there’s a lot to take in here, and I do think that we have a situation where we probably try to carve out some type of range using the 1.2750 level is the bottom, and it may be the 1.30 level as the top. We could even extend that to the 1.32 level, due to the massive amounts of volatility that we continue to see an all markets, not just this one.

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EUR/USD trades at its highest level since February 2022 above 1.1400.

The USD selloff intensifies after China raises tariffs on US goods in retaliation.

The near-term technical outlook points to overbought conditions.

EUR/USD gained more than 2% on Thursday and extended its upsurge on Friday to a new multi-year high above 1.1400. Although the pair’s near-term technical outlook points to overbought conditions, investors are like to stay away from the US Dollar (USD) amid a deepening US-China trade conflict.

Growing fears over the US economy tipping into recession caused the US Treasury bonds and the USD to remain under heavy selling pressure on Thursday.

On Friday, China’s Finance Ministry announced that they will raise additional tariffs on US imports from 84% to 125% from April 12, in retaliation to the US’ tariffs on Chinese goods.

This development caused the USD selloff to intensify and triggered another leg higher in EUR/USD in the European session.

The US economic calendar will feature Producer Price Index data for March and the University of Michigan will publish the Consumer Sentiment Index data for April. Investors could ignore these data releases and remain focused on fresh developments surrounding the US -China trade war.

In case US President Donald Trump responds by increasing tariffs on Chinese goods even further, the USD selloff could continue heading into the weekend. On the other hand, the USD could stage a rebound if one of the sides takes a step back to ease tensions.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart climbed above 80, highlighting overbought conditions for the pair.

On the upside, 1.1500 (round level) could be seen as the next resistance level before 1.1535 (static level from November 2021) and 1.1600 (static level, round level). Looking south, supports could be spotted at 1.1300 (static level, round level) and 1.1200 (static level, round level).

Copper price didn’t move anything since yesterday’s trading, delaying the bullish rally by its repeated fluctuation below 38.2%Fibonacci correction level, which represents an intraday obstacle by its stability near $4.4000.

The continuation of stochastic attempts to provide positive momentum and the repeated stability above the critical support at $4.000, these factors make us keep the bullish suggestion, to expect the mentioned obstacle and holding above it, targeting extra positive stations that begin at $4.5600 and $4.6800.

The expected trading range for today is between $4.2300 and $4.5600

Trend forecast: Bullish

The EURJPY pair provided several mixed waves since yesterday, due to the contradiction between the main indicators’ positivity and the overall stability below the bearish channel’s resistance at 163.20, to notice its stability near 161.85 without achieving any of the waited negative targets.

The price needs a new negative momentum, to reinforce the efficiency of the bearish track, which might target 160.60 level and 159.60, while the price surrender to the positivity of the main indicators and its rally above the main resistance will confirm its readiness to build a new bullish track, to begin targeting several positive stations by attacking 164.10 level initially, reaching 164.85.

The expected trading range for today is between 160.60 and 162.50

Trend forecast: Bearish

April 10, 2025 – Written by David Woodsmith

STORY LINK Pound to Euro Rate Dragged Lower by EUR/USD Rally to 1.11

A EUR/USD rally past 1.11 on foreign exchange markets has dragged the Pound Sterling lower against the Euro on Thursday.

The Pound Euro (GBP/EUR) exchange rate weakened on Thursday following US President Donald Trump’s U-turn on his global tariffs.

On Thursday, the Euro (EUR) gained strength against most of its trading partners as Donald Trump announced a 90-day pause on global tariffs for all countries, except China, with a temporary 10% tariff.

In response to this shift, the US Dollar (USD) continued its downward trend during Thursday’s European trading session.

Due to the inverse relationship between the Euro and the US Dollar, the Euro capitalised on the USD’s decline, rising against the majority of its counterparts.

On Thursday, the Pound (GBP) managed to hold its ground against most of its rival currencies, even in the absence of significant economic data.

Despite the lack of major British economic indicators, Sterling maintained its strength, partly because of a decrease in expectations for an interest rate cut by the Bank of England (BoE).

With the UK bond markets stabilising, the probability of a BoE interest rate cut next week dropped from almost 100% to 78%, offering support to the Pound.

Looking ahead to Friday, the primary drivers of movement for the Pound Euro exchange rate will likely be the economic releases from both the UK and the Eurozone.

In the UK, the latest GDP figures are set to be released, and if the index reports an expected minor rebound, it could provide a positive boost to GBP exchange rates, helping to end the week on a strong note.

Meanwhile, in the Eurozone, Germany will unveil its latest inflation data.

Should the Consumer Price Index (CPI) report a downturn as expected, it could put downward pressure on the Euro, potentially weakening the single currency as the week draws to a close.

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April 10, 2025 – Written by Ben Hughes

STORY LINK Pound to Dollar LIVE: Soft Inflation Print Sends Sterling Past 1.29

The US Dollar (USD) lost further ground against the Euro (EUR) and Pound Sterling (GBP) following the latest weaker-than-expected US inflation data.

The Pound to Dollar rate jumped to highs just above 1.2950 before settling around 1.2910.

According to Scotiabank; “Fundamentals are shifting in the pound’s favor as markets pare back their expectations for BoE easing, offering support via wider UK -US spreads.”

It added; “the focus is now on the 1.29-1.30 congestion range that had prevailed through much of March and the first couple of trading days in April. Resistance is expected between 1.31 and 1.32 while support is expected below 1.28.”

The Pound to Euro (GBP/EUR) exchange rate continued to lose ground, however, and retreated to 1.1615 from near 1.1650 ahead of the data with overall Pound confidence still fragile.

US consumer prices declined 0.1% for March compared with consensus forecasts of a 0.1% increase with the year-on-year inflation rate declining to 2.4% from 2.8% and below expectations of 2.5%.

Core prices increased 0.1% compared with expectations of another 0.3% increase with the annual rate slowing to 2.8% from 3.1%.

According to the Bureau of Labor Statistics; “Indexes that increased over the month include personal care, medical care, education, apparel, and new vehicles. The indexes for airline fares, motor vehicle insurance, used cars and trucks, and recreation were among the major indexes that decreased in March.”

The data eased inflation fears to some extent and traders were confident in pricing in at least three Fed interest rate cuts this year.

Goldman Sachs’s Kay Haigh commented; “We expect the Fed’s initial reaction to be cautious, but the risks remain that a sharper than expected slowdown in the economy could result in a resumption of the Fed’s easing cycle.”

According to Scotiabank; “Markets surged in response to the pause news but confidence in US policymaking has been severely dented and markets will remain vulnerable to trade-related headlines while the US and China continue to slug it out.”

It added; “Markets can breathe a sigh of relief but there are still major challenges here.”

There are also still reservations surrounding the UK bond market with the 10-year bond yield traded close to 4.70% from intra-day lows around 4.65%.

According to ING; “any greater slowdown in the UK economy, which would hit revenues/raise welfare spending, would only hit gilts harder. Clearly, then, the gilt market is an Achilles heel for sterling.”

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April 10, 2025 – Written by David Woodsmith

STORY LINK Euro to Dollar Forecast RAISED to 1.14 in 12 Months at Danske Bank

Since the US tariff policy was unveiled, the Euro (EUR) has been subjected to very choppy trading against the US Dollar (USD).

EURUSD is currently trading at 6-month highs just below 1.12 handle, quoted at 1.11936 (+2.22%).

A move above 1.1280 would be a 3-year high.

Several Investment Banks Slash Dollar Forecasts, New EUR/USD Targets Published

Many investment banks have maintained a bullish stance on the US dollar over the past few months based, to an important extent, on US exceptionalism.

There was talk of EUR/USD sliding to parity, but several key banks have now shifted their view and further forecast revisions are inevitable in the short term.

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

Goldman Sachs has shifted its view sharply; “We have made a major shift in our Dollar view after seeing the developments of the last few weeks and rethinking the likely implications of these policy changes. We now expect recent Dollar weakness to persist, particularly in DXY terms.”

Goldman has increased its 12-month EUR/USD forecast to 1.20 from 1.02 previously.

Nordea has abandoned its call for a EUR/USD slide to 1.04 and has raised its end-2025 forecast to 1.12 from 1.07.

There has been persistent optimism that the US economy would out-perform Europe with this strength also encouraging further capital flows into US asset markets and maintaining strong dollar demand.

Expectations of Trump Administration tax cuts underpinned US growth hopes while there were also expectations that US trade tariffs would tend to underpin the dollar on defensive grounds.

The dollar index (DXY) hit 2-year highs in early January on a wave of Trump trades, but has since slumped close to 8% to 6-month lows.

Reaction to the aggressive trade policy has been a key element with the dollar weakening rather than strengthening amid the slide on Wall Street.

Scotiabank noted; “An unusual aspect of the recent market volatility is that the USD has fallen in tandem with the sharp decline in US equities. The lack of haven bid for the USD amid the sharp rise in broader market uncertainty and volatility raises a valid question about whether the USD is losing its “traditional” safe-haven status.”

The bond market has also been under sustained pressure.

HSBC delved into the statistics.

It noted; “It is rare to see US 10-year Treasury yields go up, the S&P 500 decline, and the USD struggle.

According to the bank, this has happened less than 7% of times.

HSBC commented that; “it could amplify concerns how a regime shift is unfolding and a bigger USD test is coming via its structural vulnerabilities.”

The bank is less confident in its bullish dollar view; “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.”

Goldman cited three reasons for changing its view; “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.

Danske Bank expects a notable negative economic impact; “Trump’s tariff proposals are set to significantly increase the weighted average tariff on US imports to levels not seen since the 1920s. Taken together, the tariff measures proposed this year would amount to the largest tax hike on the US consumer since World War II. In our view, this materially increases the risk of a US recession in 2025.”

Danske Bank has raised its 12-month EUR/USD forecast to 1.14 from 1.06.

Scotiabank sees an erosion of defensive support; “The USD’s safe haven status is being eroded as market participants grapple with the aggressive shift in US trade strategy, the implications for its trading partners, and the alternative opportunities available to traditional holders of US Treasuries as a result of changing fiscal attitudes in Europe.”

Nordea focussed on a shift in fiscal policy with attempts to curb US Federal spending. It commented; “The opposite is happening in rest of the world. Europe is focused on increasing military expenditures and public spending.”

Germany has launched a EUR500bn infrastructure plan and a new coalition has been agreed.

Nordea added; “The shifting fiscal policy and economic outlook is in favor of the euro versus the dollar, which is being reinforced by capital flows in the same direction. The rest of the world is overallocated in the US compared to historical average and a normalization will lead to further net dollar sales.”

ING noted an important element of uncertainty; “second-guessing the President’s next move has been a painful process to many, and ultimately we think he will get his way with a broadly weaker dollar, albeit a story for later this year and into 2026.”

The bank will adjust its forecasts shortly and is likely to downgrade dollar forecasts.

According to SocGen; “The global economy’s best hope is that this trade war is short. The alternative outcome is weaker growth for everybody, and a sharp slowdown in capital flows to the US, which would trigger a significant fall for the dollar.”

UBS has a March 2026 EUR/USD forecast of 1.14.

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April 10, 2025 – Written by James Fuller

STORY LINK EUR/GBP Outlook: Pound Dips vs Euro on Drop in UK gilts, Rise in Yields

Pound Sterling is under pressure as gilts drop. EURGBP rose to 0.866 on Wednesday. The S&P500 closed 9.52% higher on Wednesday as Trump paused tariffs at a 10% rate. China was hit with further tariffs as the trade war escalates.

It’s a challenge to keep up with the news flow and manic moves across global markets. Wednesday was perhaps the wildest session of the recent week, and the 9.52% gain in the S&P500 was the third largest ever and has only been bettered by bear market rallies in 2008.

President Trump announced a 90-day tariff reprieve (excluding China) just two days after calling the same story fake news. The bond markets may have forced his hand – when stocks and bonds fall together there is no safe haven. This is what he posted on Truth Social

“I have authorized a 90 day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10%, also effective immediately.”

Looking ahead, the US still has a major issue with China, and Trump’s poste increased tariffs yet again.

“Based on the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately.”

China has vowed to fight to the end and increased its tariffs to 84%. It seems both sides are prepared to effectively stop trading with eachother.

As well as a huge rally in stocks, other market made significant moves, with gold, copper and oil all surging higher. Higher oil and higher yields are problematic for the US and for Trump who has vowed to lower them. The 10Y yield closed at 4.3%, 12% higher than Friday’s low.

Markets Recover but Remain Edgy

The tariff reprieve has lifted spirits and sparked some huge rallies in risk assets, but risks remain high and the volatility in markets is a sign of underlying problems. As ING note:

“The increased volatility will also remain, preventing a full restoration of risk sentiment. Markets will not easily forget these episodes with wide market swings and thus the demand for safe assets should remain elevated. 10Y Bunds, for one, significantly outperformed swaps during the peak stress episode underscoring their safe haven role, even if they are now trading above the swap curve again.”

Currencies have remained stable but with a “risk off” tone as safe havens like the yen and Swiss Franc are outperforming, as is the euro due to its liquidity and stability. A flee from US assets may be underway and the US dollar remains under pressure near the 2025 lows. Notably, this is against a backdrop of higher yields.

The Pound Plunges Against the Euro

Market volatility has been weighing on the pound which is not seen as a safe haven. EURGBP broke above 0.85 on Monday and already reached 0.866 on Wednesday.

Sterling weakness stems from the drop in UK gilts and rise in yields which has been exacerbated by tariffs and global market stress. We know from earlier occurrences this not a positive for the pound and reflects tight finances. As ING explain:

“That UK gilts even underperformed US Treasuries is quite remarkable and probably very unnerving for the UK’s Debt Management Office. One view here is that the DMO is already pushing the limits with £300bn of new issuance this year and that any greater slowdown in the UK economy, which would hit revenues/raise welfare spending, would only hit gilts harder. Clearly, then, the gilt market is an Achilles heel for sterling.”

Three cuts are now expected from the BoE who are coming under more pressure to support the economy, even though inflation concerns persist.

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April 10, 2025 – Written by Frank Davies

STORY LINK GBP/USD Prediction: Pound Sterling Outlook Flips “Neutral-Bullish” say Scotiabank

Examining the short-term outlook, the Pound Sterling (GBP) is tipped to extend its recent recovery against the US Dollar (USD), according to the latest technical analysis by FX strategists at Scotiabank.

“GBPUSD’s sharp recovery is notable” says Shaun Osborne, Chief FX Strategist at Scotiabank.

“The RSI’s dip into bearish territory (below 50) has proven to be short-lived, and the focus is now on the 1.29-1.30 congestion range that had prevailed through much of March and the first couple of trading days in April.

“Resistance is expected between 1.31 and 1.32 while support is expected below 1.28.”

The Pound US Dollar exchange rate advanced on Thursday following news that US President Donald Trump would implement a 90-day delay on most tariffs, sparking renewed market optimism.

The Pound (GBP) benefited from improved risk appetite on Thursday. The UK currency—which tends to perform well in risk-on environments—found support amid broad-based market optimism.

Investors reacted positively to Trump’s decision to shelve a sweeping series of new tariffs for 90 days, opting instead to impose a flat 10% levy on all countries aside from China.

The move triggered a rally in global stock markets and, by extension, helped lift the Pound.

Additionally, the decision prompted traders to reassess their interest rate expectations for the Bank of England (BoE). Earlier in the week, a 25-basis-point cut in May was seen as a near certainty, with some even pricing in a larger 50bps move. However, following the tariff news, the probability of a 25bps cut dropped to 78%.

The US Dollar (USD) weakened on Thursday as demand for safe-haven assets declined amid the improving market mood.

Compounding the pressure on USD were lingering doubts about Trump’s economic strategy.

The initial introduction of tariffs had already been criticised for its lack of economic modelling and potential fallout for the US economy.

Now, the abrupt reversal may have dealt another blow to confidence in the White House’s policy direction, further undermining the Dollar.

Looking to Friday, the Pound could climb higher if the UK’s GDP data meets forecasts. Economists expect February to show a modest 0.1% rebound in growth, following a 0.1% decline in January.

Meanwhile, the latest producer price index could affect the US Dollar. While rising PPI figures could support USD by dampening interest rate cut expectations, they could just as quickly stoke recession fears, thereby weighing on the currency.

Furthermore, the latest University of Michigan consumer sentiment index may also influence USD. Analysts anticipate another drop in confidence, which could intensify concerns over the US economic outlook and apply further pressure to the Dollar.

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TAGS: Pound Dollar Forecasts

Created on April 10, 2025

• The US dollar plunged early during the trading session on Wednesday, breaking well below the crucial ¥145 level.
• That being said, it looks like the buyers are coming into at least trying to support the US dollar against the Japanese yen, so it’ll be interesting to see how this plays out.
• The interest rate differential still favors the US dollar, and the way the bond market has been behaving, that’s only going to get more aggressive.

Nonetheless, the Japanese and the Americans are much more likely to come to some type of an agreement then the Chinese and Americans, so do keep that in mind. In other words, it’s very likely that the trade situation in the United States and Japan will probably normalize before it’s all said and done. However, the Japanese yen is also considered to be a major safety currency, and I think that’s part of what you are seeing here. That being said, I think we remain in a downtrend more than anything else, so you probably need to pay close attention to that.

Technical Analysis Still Looks Rough

Technical analysis in this market still looks very rough, so keep that in mind. Ultimately, this is a market that given enough time, will have to come to some type of resolution, and if we break down below the bottom of the range for the Wednesday session, we could then see the US dollar trading down to the ¥142 level. However, I also recognize that this is a longer-term “carry trade pair” for those who are willing to step in and take advantage of it. At this point though, it’s obvious that things are way too dangerous for people to think about at the moment, so with that being said, most traders I know are simply sitting on their hands.

The Japanese yen probably continues to do fairly well against most currencies in this environment, and the US dollar itself is going to be a bit of a mixed bag, because there is money leaving the United States, but at the same time, the bonds continue to show higher yields. That interest rate differential is only getting bigger.

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