The euro’s recent rally has stalled as investors await further clarity on ECB policy amid geopolitical concerns, while the pound remains steady, benefiting from expectations of prolonged high UK interest rates. The yen is gaining strength against the dollar due to market anticipation of potential rate hikes by the Bank of Japan, alongside a weaker U.S. currency. Meanwhile, gold holds firm above key levels despite selling pressure, supported by ongoing economic uncertainties and expectations of further Federal Reserve rate cuts, maintaining its status as a safe-haven asset.
EUR/USD
Current Market Conditions
The EUR/USD has experienced a notable uptrend, driven by a mix of fundamental and technical factors. The European Central Bank (ECB) has maintained a dovish outlook, leading to expectations of continued rate cuts, which have largely been priced in by the market. However, the euro’s advance has stalled ahead of the ECB’s monetary policy decision, as investors seek clearer guidance on the central bank’s future actions.
Key Factors Influencing EUR/USD:
- The ECB is expected to cut rates further, which could weigh on the euro in the medium term.
- The U.S. labor market data, including jobless claims and labor productivity reports, may introduce short-term volatility.
- Market sentiment is cautious, as geopolitical risks and economic uncertainty persist.
Support and Resistance Levels:
- Support: 1.0677, 1.0602, 1.0561, 1.0466
- Resistance: 1.0825, 1.0900
The short-term trend remains bullish, with the euro holding above key support levels. A break below 1.0677 could signal renewed downward pressure, while sustained movement above 1.0900 may pave the way for further gains.
GBP/USD
Current Market Conditions
The British pound has strengthened, reaching levels above 1.28 due to a weaker U.S. dollar and expectations that the Bank of England (BoE) will maintain higher interest rates for an extended period. Sterling remains supported by a resilient domestic economy and reduced exposure to U.S. tariffs.
Key Factors Influencing GBP/USD:
- The BoE is expected to keep rates elevated, limiting downside risks for GBP.
- Macroeconomic data, including labor market reports, will play a crucial role in shaping short-term trends.
- A potential trade deal with the U.S. could provide additional support for the pound.
Support and Resistance Levels:
- Support: 1.2811, 1.2768, 1.2704, 1.2645
- Resistance: 1.2932, 1.3000
The medium-term trend is bullish, but a technical correction could occur. A move below 1.2811 may trigger a deeper pullback, while a break above 1.3000 could extend the rally further.
USD/JPY
Current Market Conditions
The USD/JPY pair has declined amid a broadly weaker dollar and increased demand for the yen as a safe-haven asset. The Bank of Japan (BoJ) has hinted at a gradual exit from its ultra-loose monetary policy, providing additional support for the yen.
Key Factors Influencing USD/JPY:
- The BoJ’s evolving stance on interest rates.
- U.S. monetary policy expectations and economic data releases.
- General risk sentiment in global markets.
Support and Resistance Levels:
- Support: 148.09, 147.32, 146.50
- Resistance: 149.24, 150.16, 151.29, 152.32
The trend remains bearish in the medium term, with a potential test of liquidity below 148.09. A break above 151.29 could indicate renewed bullish momentum.
USD/CAD
Current Market Conditions
The Canadian dollar has shown resilience, supported by expectations that the Bank of Canada (BoC) may pause its rate-cutting cycle. Additionally, oil price recovery and a temporary suspension of U.S. auto tariffs have provided a boost to CAD.
Key Factors Influencing USD/CAD:
- BoC’s policy stance and its impact on CAD strength.
- U.S. trade policy and its effect on North American economies.
- Employment reports from both the U.S. and Canada.
Support and Resistance Levels:
- Support: 1.4300, 1.4260, 1.4200
- Resistance: 1.4400, 1.4470, 1.4550
A break below 1.4300 could push USD/CAD lower, while resistance at 1.4550 remains a key hurdle for further upside movement.
XAU/USD
Current Market Conditions
Gold prices have held above the critical $2,900 level despite selling pressure. Risk-on sentiment following U.S. trade policy adjustments has led to capital outflows from gold, but ongoing global uncertainties continue to support the metal.
Key Factors Influencing Gold:
- U.S. monetary policy expectations and potential rate cuts in 2025.
- Inflation concerns and geopolitical risks.
- Risk appetite among investors shifting towards equities and other assets.
Support and Resistance Levels:
- Support: $2,880, $2,855, $2,820
- Resistance: $2,934, $2,956, $2,980
A break above $2,934 could lead to a retest of the all-time high at $2,980. Conversely, a drop below $2,880 may signal a deeper correction.
