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Frank Davies

STORY LINK Euro to Dollar Forecast: EUR/USD Buyers Pause Ahead of French Government Vote

The Euro to Dollar (EUR/USD) outlook is caught between European politics and US economic weakness this week.

The pair held above 1.1700 on Monday after last week’s weak jobs report, but traders remain cautious ahead of France’s no-confidence vote, which could trigger fresh elections.

While political risk clouds the Euro, the US labour market remains the dominant driver, with Fed rate cuts seen as inevitable and EUR/USD forecast to push higher into year-end.

EUR/USD Forecasts: The Rally Stalls

The French government confidence vote will be an important short-term issue, although the US economy is liable to remain dominant overall dollar moves.

The Euro to Dollar (EUR/USD) exchange rate has held above 1.1700 on Monday, but held below Friday’s 1.1750 peak triggered by another weak labour-market report.

Dollar sentiment remains weak on expectations of Fed rate cuts, but the French confidence vote has injected caution.

ING commented; “More volatility in a 1.1650-1.1750 range looks likely for EUR/USD this week, and we doubt Thursday’s ECB meeting will be a big market mover.”

Credit Agricole sees the risk of EUR/USD losses beyond 1.1650 if there are fresh elections.

MUFG is bearish on the dollar over the medium term; “Policy divergence between the ECB and Fed heading into year-end supports our forecast for EUR/USD to rise back above the 1.2000-level.”

The US labour market remains a key market focus following last week’s labour-market report.

MUFG added; “The Fed had already signalled it was becoming more concerned by downside risks to the US labour. Those concerns will have been heightened by the August employment report revealing that the US economy added only 22k jobs in August. More worrying for the Fed, the US economy lost -13k jobs in June after further downward revisions to prior months.”

Markets are pricing in a 100% chance of a Fed rate cut next week with a 10% chance of a 50 basis-point cut. Traders are also increasingly confident that rates will be cut three times before the end of 2025.

There is the potential for a further negative development on Tuesday with benchmark revisions.

ING noted; “Tomorrow sees the preliminary annual benchmark revision to the 2025 nonfarm payrolls report. A number in the -500 to 800k is expected. The Fed’s Christopher Waller implied a number of around -720k in his speech just over a week ago. A big downward revision to NFP could trigger some limited dollar weakness.”

The French government is facing a no-confidence vote on Monday with strong expectations that it will lose.

President Macron will have to decide between attempting to form another government or calling a general election.

The latest chatter suggests that Macron may attempt to forge a coalition with the socialists, although this would undermine attempts to curb the budget deficit.

ING sees limited scope for Euro-zone contagion; “we are not looking for a eurozone-wide period of stress. Italy and Spain have been enjoying sovereign upgrades recently, and the European Central Bank has its Transmission Protection Instrument (TPI) if things really get out of hand.”

Credit Agricole does see Euro risks; “a new PM could leave the EUR struggling to hold on to its gains.”

MUFG commented; “We are not expecting the pick-up in political uncertainty in France to derail the euro’s current upward trend and/or encourage the ECB to cut rates further at the current juncture.”

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TAGS: Euro Dollar Forecasts

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David Woodsmith

STORY LINK GBP/USD Price Forecast: Dollar Extends Payrolls Weakness, Pound Holds $1.35

The Pound to US Dollar (GBP/USD) exchange rate edged higher at the start of the week, as the fallout from Friday’s weak US payrolls report continued to weigh on the Greenback.

At the time of writing, GBP/USD was trading at around $1.3522, up around 0.2% from Monday’s opening level.

The US Dollar (USD) remained under pressure on Monday as investors continued to absorb Friday’s disappointing non-farm payroll release.

The Bureau of Labor Statistics revealed just 22,000 jobs were added in August, compared to forecasts of 73,000. Adding to the gloom, June’s figure was revised lower to show a loss of 13,000 jobs.

The data has reinforced fears that the US labour market is rapidly losing momentum and fuelled speculation that the Federal Reserve will have to accelerate its easing cycle.

Markets are now pricing in rate cuts totalling at least 75 basis points, while odds of a 50bps move this month have climbed to around 10%.

Sterling was largely stable at the start of the week, with investors showing little reaction to Prime Minister Keir Starmer’s cabinet reshuffle following the departure of Deputy Prime Minister Angela Rayner.

Concerns over fiscal stability were eased somewhat by the decision to retain Rachel Reeves as Chancellor, which may also have helped limit volatility in the bond market after last week’s turbulence.

Meanwhile, lingering expectations that the Bank of England (BoE) will maintain a cautious stance on interest rate cuts helped underpin the Pound.

GBP/USD Forecast: Payroll Revisions to Drive Fresh Dollar Losses?

Looking forward, the release of the annual revision to non-farm payrolls on Tuesday could put the US Dollar back under heavy pressure.

Early estimates suggest payrolls for 2025 may be revised down by as much as 800,000, which would deal another blow to confidence in the strength of the US jobs market. Such a result could prompt traders to ramp up bets on a larger Fed rate cut this month.

That said, the Dollar may find some support as investors turn their attention towards this week’s US inflation report.

With no significant UK data scheduled over the next couple of days, Sterling’s movements are likely to remain largely dictated by global sentiment and shifts in Dollar demand.

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TAGS: Pound Dollar Forecasts

GBP/USD Forecast: Pound Sterling clings to bullish stance to start week

GBP/USD stays in a consolidation phase above 1.3500 after rising more than 0.5% on Friday. The pair remains technically bullish in the short term.

Growing expectations for multiple Federal Reserve (Fed) rate cuts following the disappointing August labor market data weighed heavily on the US Dollar (USD) heading into the weekend. Read more…

GBP/USD Weekly Forecast: Focus remains on stagflation and the BoE

In quite turbulent past few days for the Pound Sterling, GBP/USD eventually managed to close the week with decent gains above the key 1.3500 figure, reversing at the same time two weekly retracements in a row.

While the cautious stance from the Bank of England (BoE) continues to lend some cushion to the currency, speculation that a potential stagflationary scenario could be brewing raised extra concerns among market participants and seems to keep occasional bullish attempts contained. Read more…

• The EUR/USD forecast indicates continued weakness in the dollar after poor US jobs data.
• Market focus is now shifting to the US CPI report that will continue shaping the outlook for rate cuts.
• The European Central Bank will meet on Thursday.

The EUR/USD forecast indicates continued weakness in the dollar after a downbeat monthly employment report on Friday. Meanwhile, market participants are slowly shifting their focus to the ECB policy meeting, where policymakers could keep interest rates unchanged.

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Data on Friday revealed that the US economy added a dismal 22,000 jobs in August. Meanwhile, economists had expected an additional 75,000 jobs. At the same time, the unemployment rate increased from 4.2% to 4.3% as expected. The poor figures solidified bets for a September rate cut and increased the likelihood of a more dovish Fed in the future.

Market focus is now shifting to the US CPI report that will continue shaping the outlook for rate cuts. Soft figures will support the current outlook. On the other hand, hot figures could renew worries about the impact of tariffs on price pressures.

Meanwhile, the European Central Bank will meet on Thursday. Traders expect policymakers to keep rates unchanged. This will contrast sharply with the Fed, which will likely be more dovish this month. The divergence in policy and economic outlooks between the US and the Eurozone could send the euro higher in the coming months.

EUR/USD key events today

Market participants do not expect any key economic releases today. Therefore, the pair might extend the previous session’s move.

EUR/USD technical forecast: Bulls puncture the range resistance

On the technical side, the EUR/USD price is attempting to break out of its long-term range. Bulls are challenging the range resistance at the 1.1720 level. At the same time, the price trades above the 30-SMA, with the RSI near the overbought region, suggesting bulls are in the lead.

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EUR/USD has remained in consolidation for a long time, with the price moving sideways and chopping through the 30-SMA. However, before, the range, bulls were in the lead. Therefore, there is a high chance they will break out of this range to continue rallying.

A break above the range resistance would allow the price to retest the 1.1801 resistance level. On the other hand, if bulls fail to break above this level, the price will likely remain in consolidation.

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• GBP/USD trades in a tight range above 1.3500.
• The pair’s near-term technical outlook suggests that the bullish bias remains intact.
• The US Dollar (USD) could struggle to attract buyers after August jobs data.

GBP/USD stays in a consolidation phase above 1.3500 after rising more than 0.5% on Friday. The pair remains technically bullish in the short term.

Growing expectations for multiple Federal Reserve (Fed) rate cuts following the disappointing August labor market data weighed heavily on the US Dollar (USD) heading into the weekend.

The Bureau of Labor Statistics reported that Nonfarm Payrolls (NFP) rose by only 22,000 in August. This reading missed the market expectation for an increase of 75,000 by a wide margin. In this period, the Unemployment Rate edged higher to 4.3% from 4.2% in July, as anticipated. On another concerning note, the BLS’ press release showed that June’s NFP increase was revised down by -27,000, from 14,000 to -13,000.

According to the CME FedWatch Tool, markets are currently pricing in about a 75% probability that the Fed will lower the policy rate by a total of 75 basis-points (bps) this year, up from about 40% early last week.

The US economic calendar will not feature any high-impact data releases on Monday. Hence, investors could react to changes in risk perception.

In the European session, US stock index futures gain between 0.2% and 0.35%. A bullish opening in Wall Street could put additional weight on the USD’s shoulders and allow GBP/USD to continue to stretch higher in the second half of the day.

GBP/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays near 60 and GBP/USD continues to trade above the 20-day, 50-day and 100-day Simple Moving Averages (SMAs), suggesting that the bullish bias remains intact.

On the upside, 1.3540 (Fibonacci 61.8% retracement of the latest downtrend) aligns as the next resistance level before 1.3600 (static level, round level) and 1.3640 (Fibonacci 78.6% retracement). Looking south, support levels could be spotted at 1.3470-1.3460 (50-day MA, 100-day SMA), 1.3440 (200-period SMA) and 1.3390-1.3400 (Fibonacci 38.2% retracement, round level).

• EUR/USD holds above 1.1700 to start the new week.
• The US Dollar struggles to find demand following the disappointing employment report.
• French Prime Minister François Bayrou is widely expected to lose the confidence vote.

EUR/USD closed the previous week marginally higher, thanks to a late rally on Friday. The pair holds its ground and trades comfortably above 1.1700 in the European session on Monday.

The US Dollar (USD) came under heavy selling pressure in the American session on Friday after the Bureau of Labor Statistics announced that Nonfarm Payrolls (NFP) rose by only 22,000 in August. This reading missed the market expectation for an increase of 75,000 by a wide margin. Additionally, June’s NFP increase got revised down by -27,000, from 14,000 to -13,000. With this data reminding markets of worsening conditions in the US labor market, the USD weakened against its rivals.

According to the CME FedWatch Tool, the probability of the Federal Reserve (Fed) cutting the policy rate in September and October rose above 70% from below-50% ahead of the release of the employment report.

Later in the day, markets will be paying close attention to the outcome of the confidence vote in French Prime Minister Francois Bayrou, who called the vote himself after failing to pass the budget for 2026 that would require austerity measures, worth about €44 billion.

Bayrou is widely expected to lose the vote and such a result shouldn’t be surprising. However, it’s unclear whether President Emmanuel Macron will call a snap election. “After the fall of a conservative and a centrist as prime minister, most observers expect Macron to next look for a candidate from the ranks of the centre-left Socialists (PS),” Reuters said reporting on the issue.

In case Macron calls for a snap election, the Euro could come under selling pressure with the initial reaction. Even if Macron appoints a new Prime Minister, the Euro could still have a hard time gathering strength unless markets see a clear fiscal path forward.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays slightly above 60 and EUR/USD continues to trade well above the 20-period, 50-period, 100-period and 200-period Simple Moving Averages, reflecting a bullish stance in the short term.

On the upside, 1.1760 (static level) aligns as the first resistance level before 1.1800 (static level, round level) and 1.1830 (July 1 high). Looking south, support levels could be spotted at 1.1700 (static level, round level), 1.1670 (20-day SMA, 50-day SMA, 100-period SMA) and 1.1640 (200-period SMA).

Created on September 08, 2025

• The British Pound has been all over the place during the trading session on Friday as risk appetite, is going to be all over the place as well.
• When facing against the Japanese Yen, this is a risk on or risk off question.
• I find it easy to simplify this pair, but really what I’m looking at is that the 200 Yen level has been very important.

Risk On/Risk Off

It’s easy to simplify this pair in the sense that people believe that if assets are going higher, the British pound should go higher. And if they’re falling, the Japanese yen should be falling. That being said, it is one of these situations where you are looking at a market that is just going to do what it’s going to do. It doesn’t do what it’s supposed to do.

I think a lot of traders are going to get into trouble with that. If we can break above the 201 yen level, then I think you get a bit of a short squeeze to the upside, and we could get really moving at that point. If we break down below the 198 yen level, then the 196 yen level could be a bit of a target for the downside. Keep in mind the 200 day EMA is at 195.22 yen and rising.

So that could offer a little bit of support as well. But ultimately, this is a market that I think is looking to perhaps In the short term, to at least go sideways. And then once we get a feel for how the global economy is, maybe make a move. For what it’s worth, though, we have been very resilient in our attempt to break above 200 yen. With this, I’m slightly positive, but I also recognize we need some type of event to get the markets moving like that.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

GBP/USD Rises on Weak U.S. Jobs Data

The GBP/USD pair reclaimed ground above 1.35 after U.S. labor market numbers showed only 22,000 new jobs in August, far below expectations of 75,000. The unemployment rate rose to 4.3%, its highest since 2021, while wage growth held at 0.3% month-on-month. Treasury yields fell sharply, the dollar weakened, and traders shifted almost fully toward pricing in a Federal Reserve rate cut on September 17. Some are now betting on as many as three cuts before year-end, contingent on softer inflation data. The CPI release on September 11 and PPI a day earlier will be pivotal, alongside UoM sentiment on September 12, as they set the backdrop for the Fed’s decision.

UK Data Provides Sterling with Tailwind

Recent UK figures gave the pound resilience. July retail sales rose 0.6% month-on-month, beating forecasts of 0.3%. Net lending to individuals jumped £6.1 billion compared with £4.9 billion expected, while final services PMI hit 54.2, above the preliminary 53.6. These numbers reinforced the case for a consumer-driven rebound, though traders remain cautious amid fiscal uncertainty. Political reshuffling under Prime Minister Starmer and questions over fiscal discipline continue to hang over sentiment, with Deputy PM Raynor’s resignation raising expectations of Treasury changes.

Technical Outlook for GBP/USD Levels

The GBP/USD chart shows a bullish structure, with price advancing to 1.3506 and reclaiming both the 50-day SMA at 1.3446 and the 200-day SMA at 1.3464. Resistance is clustered between 1.3540 and 1.3588, followed by a major test at 1.3595–1.3600. A breakout above these thresholds could open the door to 1.3660. Support sits in the 1.3435–1.3460 zone, with a failure there exposing 1.3417 and possibly 1.3300. Momentum indicators, however, are flashing caution. RSI is at 64.9, approaching overbought territory, while candlesticks near 1.3550 show long upper wicks, a potential reversal sign. A bearish divergence is forming between price and RSI, suggesting risks of a pullback.

Macro Catalysts That Could Drive GBP/USD

The pound’s near-term path will depend on U.S. macro data. September’s CPI is expected at 0.3% month-on-month and 2.9% year-on-year. If inflation undershoots, Fed cuts are likely to accelerate, lifting GBP/USD toward 1.36 and beyond. Conversely, stronger prints would re-energize the dollar, pressuring the pair back toward 1.34. Political risk in the UK also cannot be ignored. Analysts at Capital Economics warned that fiscal missteps could trigger bond market stress, noting that historical fiscal crises in Britain often came from changes in perceptions or leadership rather than immediate data.

Positioning and Market Sentiment

CFTC data shows speculative net short positions on GBP widened slightly to –33,100 from –31,400 the prior week, indicating traders still doubt the sustainability of sterling gains. Yet the pair’s ability to close above 1.35 despite negative positioning highlights demand from real money accounts and hedging flows. Options markets are also pricing higher implied volatility into September, reflecting the binary risk of Fed cuts and UK fiscal headlines.

Verdict on GBP/USD

The balance of risks favors further upside in GBP/USD if U.S. inflation data supports the Fed’s dovish tilt. A sustained daily close above 1.3545 would strengthen the bullish case, while a rejection at resistance paired with strong U.S. data could quickly drag the pair back toward 1.3417. At 1.3506, the setup argues for a short-term buy bias with tight stops, but traders must be ready for sharp swings around U.S. data and UK political announcements.

That’s TradingNEWS

USD/JPY Struggles Near 147 as U.S. Labor Market Weakens

The USD/JPY pair closed the week at 147.34 after swinging between 146.78 and 149.13. Softer U.S. labor market data pushed the dollar lower on Friday, with nonfarm payrolls and unemployment revisions reinforcing bets on Federal Reserve rate cuts. A break under 146.81 briefly pressured the pair, though buyers defended support into the close. The pair now sits above the 50-day EMA but capped below the 200-day EMA, leaving traders watching whether the next move is toward the 145.00 handle or back to 150.00.

Japanese GDP and Producer Prices Set Tone for Yen Strength

Finalized second-quarter GDP showed 0.3% quarter-on-quarter growth, helped by a 0.8% rebound in external demand despite U.S. tariffs. Private consumption rose 0.2%, signaling steady domestic momentum. Japan’s record minimum wage hike of 6.3% to ¥1,121 boosts inflation expectations, intensifying speculation that the Bank of Japan may tighten policy as early as October. Producer price data due September 11 is forecast at 2.7% year-on-year, up from July’s 2.6%. A stronger print could cement expectations of a rate hike and drive USD/JPY closer to 145.

Fed Policy Outlook Hinges on CPI and Jobless Claims

Markets are pricing in a 99% chance of a 25-basis-point cut in September, with U.S. inflation projected at 2.9% for August versus 2.7% in July. Initial jobless claims are expected to tick up to 240k from 237k, signaling labor market cooling. Softer CPI and higher claims could accelerate rate cut expectations, weakening the dollar. In contrast, hotter inflation data could ease selling pressure and hold USD/JPY above 147.

Trade and Tariff Developments Add New Volatility Layer

President Trump’s tariff cut on Japanese autos from 27.5% to 15% gave yen traders another factor to weigh. Auto exports had fallen 27% year-on-year in July, raising recession fears. The tariff reduction should support exports and improve Japan’s trade terms, but if U.S. consumption weakens, the benefit may be limited. The policy shift nevertheless adds a bullish undertone for the yen as trade tensions ease slightly.

Technical Levels Define Risk Zones for USD/JPY

Immediate resistance for USD/JPY sits at the 200-day EMA near 149.35, with a breakout exposing the August high at 150.91. On the downside, support rests at 146.21, followed by the psychological 145.00 level. RSI momentum has flattened, suggesting indecision as markets await fresh catalysts. A decisive daily close below 146.20 could invite stronger yen buying, while holding above 147.50 would encourage a retest of 150.

That’s TradingNEWS