The euro continues to show strength as market sentiment leans towards a softer stance from the Federal Reserve, supporting its upward trajectory. The pound remains firm, benefiting from expectations that UK interest rates will stay elevated longer, with traders eyeing upcoming GDP data for further direction. The yen gains ground as concerns over a potential U.S. slowdown drive demand for safe-haven assets, while Japan’s economic outlook remains uncertain. Gold remains in focus, supported by a weaker dollar and growing safe-haven demand amid heightened economic uncertainty and geopolitical risks.
EUR/USD
Current Market Conditions
The euro has maintained stability around the $1.08 level, its strongest since early November. The currency gained significant momentum following Germany’s decision to reform its debt system and create a 500 billion-euro infrastructure fund, boosting economic growth. Additionally, increased European defense spending has contributed to the euro’s resilience.
On the monetary policy front, the European Central Bank recently cut rates by 25 basis points, signaling a possible pause in further cuts. Traders anticipate one or two more 25 basis point reductions this year.
Key Levels:
- Support Levels: 1.0820, 1.0677, 1.0602, 1.0561, 1.0466
- Resistance Levels: 1.0884, 1.0952
Forecast: If the price remains above 1.0820 and buyers react positively, an upward continuation toward 1.0884 and potentially 1.0952 is likely. However, a consolidation below 1.0820 could trigger a deeper correction, increasing the probability of a decline toward 1.0677. A break below 1.0389 could confirm a return to a bearish trend.
GBP/USD
Current Market Conditions
The British pound is trading near $1.29, hovering around four-month highs due to a weaker dollar and market concerns regarding the U.S. economy. Market participants have lowered expectations of a Bank of England rate cut, currently pricing in a 52-basis point reduction for 2025.
Investors are closely monitoring the upcoming UK monthly GDP data, which will provide insight into the country’s economic performance in January.
Key Levels:
- Support Levels: 1.2866, 1.2811, 1.2768, 1.2704, 1.2645
- Resistance Levels: 1.2932, 1.3008
Forecast: A bullish trend remains intact as long as the price stays above 1.2866. If buyers successfully defend this level, the pound could test 1.2932 and eventually climb to 1.3008. Conversely, a failure to hold above 1.2866 may lead to a correction toward 1.2811. A break below 1.2582 would signal a potential resumption of the downtrend.
USD/JPY
Current Market Conditions
The Japanese yen has strengthened to 147 per dollar, marking a five-month high due to concerns about a U.S. economic slowdown and increased safe-haven demand. Additionally, Japan’s revised fourth-quarter GDP data showed weaker private consumption, reducing the annualized growth rate to 2.2% from 2.8%.
While the Bank of Japan is expected to keep rates unchanged at its next meeting, further rate hikes may occur later this year as part of policy normalization.
Key Levels:
- Support Levels: 146.00
- Resistance Levels: 147.32, 148.40, 149.24, 150.16, 151.29, 152.32
Forecast: USD/JPY is exhibiting a bearish medium-term trend, forming a wedge pattern indicative of liquidity contraction and potential momentum buildup. A price consolidation above 147.32 could trigger an increase toward 148.40. However, a failure to hold above 147.32 may lead to further yen strength, pushing the pair toward 146.00. A breakout above 151.29 would confirm a continuation of the broader uptrend.
XAU/USD
Current Market Conditions
Gold is trading near $2,180 per ounce, benefiting from a weaker U.S. dollar and increased safe-haven demand amid economic uncertainty. Market participants are also awaiting U.S. inflation data, which could influence Federal Reserve policy decisions.
During the previous session, gold tested $2,160 before rebounding sharply. If the price sustains above $2,180, it may continue its upward trajectory toward $2,200 and potentially $2,230.
Key Levels:
- Support Levels: 2,140, 2,120
- Resistance Levels: 2,180, 2,200, 2,230
Forecast: Gold remains in a bullish trend as long as it consolidates above $2,180. A sustained move above this level may trigger a rally toward $2,200. If gold breaks above $2,230, a move toward the psychological level of $2,300 becomes increasingly probable. Conversely, a failure to hold above $2,180 may lead to further downside pressure, potentially pushing the metal toward $2,140.
Conclusion
- EUR/USD: Bullish above 1.0820, next resistance at 1.0884 and 1.0952.
- GBP/USD: Bullish trend intact above 1.2866, targeting 1.2932 and 1.3008.
- USD/JPY: Bearish below 147.32, with downside potential to 146.00.
- Gold: Key resistance at $2,180, bullish breakout above $2,230 may lead to $2,300.
