Created on January 27, 2025

• You can see that initially the British Pound did pull back a bit against the Japanese Yen during trading on Friday, but then shot much higher after PMI numbers in the United Kingdom came out hotter than anticipated.
• This is good for the British Pound, and we have seen the British Pound outperform most currencies during the trading session as you would expect.

The 195 yen level is an area that’s been a bit of a barrier in the past. So, it’ll be interesting to see how we behave once we get there. If we can break above that level and go looking to the 200 yen level, I expect a major fight. The bank of Japan overnight did raise rates, but they made it sound like they’re pretty neutral at this point. And if that’s going to be the case, that means the interest rate differential and the carry trade will still be a thing. As long as that ends up working out in favor of traders, then I just don’t see how anything other than upward momentum against the yen is seen by most currencies.

I Won’t Be Shorting Very Soon

I have no interest whatsoever in getting too cute with this, but I do recognize that a short-term pullback might be what you’re looking for, for a little bit of a buying opportunity. I also believe that the British pound, although much stronger than the Japanese yen may lose a little bit of momentum. So, we may see more of a grind to the upside than anything else. I do not expect anything other than consolidation between 190 yen on the bottom and 200 yen on the top, at least as far as I can reasonably look to the future. With this, I am neutral and positive more than anything else. Tactical short-term trades are probably the way forward.

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Euro PRICE Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

January 27, 2025 – Written by David Woodsmith

STORY LINK Pound Sterling to Dollar Rate Hits 1.247 as UK Government Talks up Economy

The Pound to Dollar exchange rate (GBP/USD) hit 20-day highs just above 1.2520 before settling just above 1.2500.

The government’s shift in stance to talk up the economy and put renewed focus on the growth outlook had some impact in supporting Pound sentiment, although there are still important reservations over the near-term outlook.

COT data, released by the CFTC also recorded a net short position in speculative Pound positions, the first short position since May 2024.

This suggests the potential for short covering if the UK economic news is more positive.

According to Scotiabank. The GBP/USD outlook is bullish with the third leg of a bullish morning star candle pattern on the weekly chart.

It added; “Solid gains again today so far, at least, support the more positive technical outlook and the prospect of a retracement towards the 1.26/1.27 range.”

In contrast, ING and MUFG both expect GBP/USD gains will stall below 1.2600.

The dollar jumped overnight due to the US-Colombia spat over the return of illegal immigrants.

President Trump threatened to impose 25% tariffs on Colombian exports to the US after the Colombian government refused to allow flights to land.

The dollar lost ground after Colombia backed down and the dollar then lost further ground as US yields dipped lower.

US equities came under pressure after Chinese company DeepSeek stated that it could produce a low-cost, low-power AI system.

There were concerns that this would pose a threat to US tech dominance with the Nasdaq index sliding 3%.

The Pound to Euro exchange rate (GBP/EUR) consolidated just below the 1.1900 level.

Domestically, research firm Incomes Data Research (IDR) found that 69% of employers are likely to slow wage growth, with over half “extremely likely” to do so. One-third may cut jobs, while others will absorb costs through lower profits.

There are very strong expectations that the Bank of England will cut interest rates next week, although the medium-term outlook remains extremely uncertain.

Within Europe, the German IFO index improved to 85.1 for January from 84.7 previously and marginally above consensus forecasts of 84.9.

There was a net improvement in current conditions, but the expectations component declined marginally, limiting Euro support.

Markets expect that the ECB will announce a further 25 basis-point interest rate cut this week, taking to deposit rate to 2.75%.

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TAGS: Pound Dollar Forecasts

Created on January 27, 2025

• The USD/JPY currency pair experienced a significant decline towards the support level of 154.84 at the end of last week, before settling around 155.96.
• The pair was subject to selling pressure following the Bank of Japan’s decision to raise interest rates to their highest level in nearly 20 years.
• The Japanese Yen has made a strong start to 2025, potentially reversing the dramatic slide of the previous year.

Historic Bank of Japan Announcement

The Bank of Japan recently raised interest rates to their highest level since the 2008 global financial crisis and revised inflation forecasts upward. The benchmark interest rate was raised by 25 basis points to 0.5%. This was the first interest rate increase since July. Kazuo Ueda, the Governor of the Bank of Japan, affirmed that monetary authorities will continue to raise rates amid higher-than-expected consumer price and wage inflation pressures. However, Ueda noted that the Bank of Japan is not on a predetermined path. He added, “We don’t have any predetermined idea. We will decide at each policy meeting by considering economic developments, prices and risks

Overall, Japan, the world’s fourth-largest economy, has suffered years of deflation and stagnant growth. With U.S. President Donald Trump’s tariffs likely to cast uncertainty over the global economy, Tokyo and others may have to respond.

For now, Ueda notes that there is no clear plan from the United States yet. “Various data shows that the U.S. economy is doing well. Meanwhile, Markets have been stabling as the general direction of Trump’s policies becomes clearer. There is very high uncertainty. Once there is more clarity, we will take that into account and reflect it in our policy decision,” Ueda said.

Following the Japanese rate hike, yields on Japanese government bonds rose, the yields on five- and 10-year bonds rose to 0.91% and 1.23%, respectively.

Trading Tips:

The recent gains of the Japanese yen will be on an important US date this week that may determine attempts to change the direction to a downside.

USD/JPY Technical Analysis and Expectations Today:

The USD/JPY currency pair may consolidate in its recent trajectory pending the market’s reaction and investors’ response to the US Federal Reserve’s announcement this week. Especially, after Trump’s indications that he prefers to lower US interest rates. Therefore, investors may compare the Bank of Japan’s announcement with the US Federal Reserve’s announcement this week to determine the direction of the US dollar against the Japanese yen.

Technically, Friday’s decline pushed the USD/JPY currency pair slightly below the 100-hour moving average line. As a result, the currency pair avoided rising to the overbought levels of the 14-hour Relative Strength Index. In the short term, the bears will seek to extend the recent decline towards the support levels of 155.40 and 154.90 respectively. In the same time frame, the bulls will target the resistance levels of 156.20 and 156.80 respectively.

In the long term, according to the performance on the daily chart, the USD/JPY pair is trading within an ascending channel formation. However, the 14-day RSI has recently declined to avoid entering overbought levels. Therefore, the bears will target further movement towards lower levels, the closest of which is currently 154.20 and then the support 151.60 respectively. In the same time frame, the bulls’ most important targets will be the resistance levels of 158.50 and 161.00 respectively. Moreover, these are enough to push the technical indicators towards strong overbought levels. Decisively, the event increases with it the Japanese intervention in the forex markets to prevent further collapse of the Japanese yen exchange rate.

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Created on January 27, 2025

• You can see that the Euro has had a very big day during Friday as Trump has blathered in the news that he wants Chairman Powell to start cutting rates immediately.
• Oddly enough, Trump doesn’t make that decision, and it seems like the markets have forgotten about that, at least in the short term.
• So, at this point in time, I think we’ve got a situation where we have to determine whether or not there is enough momentum to make this market go higher.

I really don’t believe this until we break above 1.06, because that would be a real recovery. Right now, when you look at the overall drop that we have seen, we are still not even to the 38.2% Fibonacci retracement level.

We Will See…

So really with that being the case, I think this is a little bit of an oversold bounce and I will be selling into this unless of course, we break above the 1.06 level, then I’ll have to reassess things. The Euro is going to continue to suffer at the hands of the European economy and bureaucrats. That’s just the reality of the situation and I think ultimately, you’ve got a scenario where eventually people go looking for cheap US dollars again, and they may be finding them in the cluster just above current trading. Again, I’m looking for signs of exhaustion to sell into. I recognize that this is a nice little bounce, but it doesn’t really change the trend, at least not quite yet.

At this juncture, the market is likely to continue to be noisy, but if we can get some type of negativity, then it’s likely that the momentum could come unraveled for the Euro, and then we would see money running right back into the United States, as I expect to be the case of the longer-term anyway.

Ready to trade our EUR/USD daily forecast? Here’s a list of some of the top forex brokers in Europe to check out.

Copper price failed to confirm breaching 4.3300$ barrier to form intraday decline and test the MA55 again by reaching 4.2300$, reminding you that the stability of the price above 4.1500$ support line and stochastic attempt to provide the positive momentum reinforce the chances of renewing the bullish attempts that might target 4.4400$ followed by reaching 4.5300$ on the medium term basis.

On the other hand, facing strong negative pressures and crawling below the mentioned support will confirm surrendering to the domination of the negativity, to expect suffering additional losses by moving towards 4.0900$ and 4.0200$ levels.

The expected trading range for today is between 4.2000$ and 4.4400$

Trend forecast: Bullish

Copper price failed to confirm breaching 4.3300$ barrier to form intraday decline and test the MA55 again by reaching 4.2300$, reminding you that the stability of the price above 4.1500$ support line and stochastic attempt to provide the positive momentum reinforce the chances of renewing the bullish attempts that might target 4.4400$ followed by reaching 4.5300$ on the medium term basis.

On the other hand, facing strong negative pressures and crawling below the mentioned support will confirm surrendering to the domination of the negativity, to expect suffering additional losses by moving towards 4.0900$ and 4.0200$ levels.

The expected trading range for today is between 4.2000$ and 4.4400$

Trend forecast: Bullish

The GBPUSD price continued to rise to breach 1.2415$ and settle above it, which represents 23.6% Fibonacci correction level for the decline from 1.3434$ to 1.2100$, which opens the way to achieve more bullish correction and head to visit 1.2609$ areas on the near-term basis.

Therefore, the bullish bias will be suggested for the upcoming sessions, taking into consideration that breaking 1.2415$ will stop the bullish wave and push the price back to the main bearish channel again.

The expected trading range for today is between 1.2375$ support and 1.2530$ resistance

Trend forecast: Bullish

The GBPUSD price continued to rise to breach 1.2415$ and settle above it, which represents 23.6% Fibonacci correction level for the decline from 1.3434$ to 1.2100$, which opens the way to achieve more bullish correction and head to visit 1.2609$ areas on the near-term basis.

Therefore, the bullish bias will be suggested for the upcoming sessions, taking into consideration that breaking 1.2415$ will stop the bullish wave and push the price back to the main bearish channel again.

The expected trading range for today is between 1.2375$ support and 1.2530$ resistance

Trend forecast: Bullish

January 26, 2025 – Written by David Woodsmith

STORY LINK Pound to Euro Week Ahead Forecast: GBP/EUR Turns Corner

The Pound Sterling (GBP) overall secured a tentative recovery against the Euro (EUR) during the week amid relief that the bond market stabilised.

From 4-week lows near 1.1800, the Pound to Euro exchange rate (GBP/EUR) advanced to around 1.1860.

Bank of America (BoA) is still forecasting that GBP/EUR will strengthen to 1.25 at the end of 2025.

BNPP has greater reservations over the Pound but forecasts GBP/EUR at 1.2050 at the end of 2025.

According to BoA , Pound selling has been overdone; “Price action at the start of the year has in some sense solidified our sense that a lot of negativity is now priced in.”

It added, “The UK is set once again to outpace European growth, with a healthier policy mix to offset the worst excesses of tariffs.”

The bank also expects yields to be positive for the pound throughout the year.

The latest UK business confidence data indicated a slight improvement from December, but the underlying components were weak, with business confidence at 2-year lows.

There was evidence of increased inflation pressures within the economy while consumer confidence dipped for the month.

The data overall increased concerns over the potential stagflation threat with difficulties for the Bank of England.

BNPP is more concerned over the Pound outlook; “Now, however, we no longer think higher UK yields are beneficial for the GBP, and we do not think the GBP is pricing in sufficient risk premium to reflect a range of potential negative scenarios.”

BNPP noted two potential threats; “On the first channel, the recent rise in UK yields has increased debt servicing costs to the extent that the government no longer has sufficient headroom against its debt rule. We think this raises the prospect of a change in fiscal policy – tax rises or spending cuts – that would be negative for growth.”

Markets remain confident that the BoE will cut in February, but the long-term outlook is opaque.

BNPP added; “Our base case is for four 25bp rate cuts this year and, as this is not sufficiently priced in by front-end UK rates, we see this undermining the GBP.”

HSBC noted the risk of growth downgrades; “the Office for Budget Responsibility (OBR) was forecasting 2.0% growth in 2025. If it revises that down in March, fiscal headroom could be eroded, meaning some tightening measures are needed. That tightening in turn might reduce growth prospects further – and increase the case for rate cuts.”

MUFG noted the potential significance of US trade policy; “Market participants are less concerned over the immediate risk of higher tariffs being put in place by the US against the EU, while the unease over rising Gilt yields temporarily undermined the attractiveness of the yield pick-up in the UK that encouraged EUR/GBP to trend lower throughout last year.”

There are strong expectations that the ECB will cut interest rates by a further 25 basis points at the January policy meeting, which would take the deposit rate down to 2.75%.

Nordea commented, “Inflation is converging towards the target, the economic outlook remains challenging, and rates clearly remain in restrictive territory, calling for more gradual rate cuts.”

Credit Agricole noted that market expectations surrounding ECB rates may be too low and added, “Any such confirmation could help the EUR to turn the corner from mid-2025.”

Euro-Zone business confidence data was slightly stronger than expected for January and there could be scope for a Euro-Zone rebound.

BNPP notes the potential for increased government spending and the possibility that the Ukraine war could end; “A resolution could benefit the EUR through both the sentiment and growth channel.”

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TAGS: Currency Predictions Pound Euro Forecasts