The euro advanced after the US delayed tariffs on EU goods, despite earlier trade tensions weighing on the currency. The pound rose as upbeat UK economic data supported optimism, though uncertainty still clouds the outlook. The yen held firm, benefiting from both a softer dollar and speculation around potential rate hikes in Japan. Meanwhile, gold saw renewed buying interest, driven by lingering trade concerns and safe-haven demand, although its momentum slowed following the US tariff delay.
🇪🇺/🇺🇸 EUR/USD Outlook – Euro vs U.S. Dollar
Euro Faces Headwinds from US Trade Pressure, Support from USD Weakness
Overview:
The EUR/USD pair is caught between two competing forces: rising trade tension between the EU and the US on one hand, and broad-based US dollar weakness on the other. After comments by President Trump describing EU trade negotiations as “going nowhere,” markets were rattled by the announcement of 50% tariffs on EU goods, initially scheduled for June 1 but now delayed to July 9. This brief reprieve triggered a softening in the US dollar and allowed EUR/USD to briefly touch 1.14, before retreating slightly.
Key Drivers:
- US-EU Trade Conflict: The threatened tariffs would impact over $600 billion in EU exports, targeting critical sectors such as autos and agriculture. The EU’s exposure to US markets (21% of exports) raises concern about medium-term economic fallout.
- USD Weakness: Risk-off sentiment stemming from Trump’s tariff threats has paradoxically weakened the dollar, particularly as investors reduce exposure to US assets amid trade uncertainty.
- ECB Outlook: President Lagarde’s speech later today could influence euro sentiment. The ECB remains cautious in its rate hike path despite some signs of economic stabilization.
Support Levels: 1.1379, 1.1315, 1.1269, 1.1220, 1.1170, 1.1135
Resistance Levels: 1.1413, 1.1456
Forecast:
As long as the US dollar remains under pressure from global trade anxieties, EUR/USD could attempt to retest resistance near 1.1413 and even push toward 1.1456. However, escalation in trade rhetoric or signs of ECB dovishness could reverse gains. A break below 1.1269 would mark a shift to a more bearish outlook.
🇬🇧/🇺🇸 GBP/USD Outlook – British Pound vs U.S. Dollar
Pound Advances on Economic Optimism, Eyes Consolidation
Overview:
The British pound has rebounded strongly, rising nearly 1% on Friday as retail sales unexpectedly jumped 1.2% and consumer sentiment improved, challenging expectations of a slowdown. The UK economy, while still vulnerable to global trade headwinds, is showing resilience. The reduced demand for the US dollar further supports GBP/USD upside.
Key Drivers:
- Positive UK Data: Retail strength and rising consumer confidence have provided a floor for the pound, suggesting short-term stabilization.
- Lack of Domestic Political Headwinds: With minimal domestic political drama and Brexit largely settled, the pound is trading more on macroeconomic fundamentals than geopolitical shocks.
- USD Weakness: Similar to the euro, the pound has benefited from risk aversion related to Trump’s tariff threats.
Support Levels: 1.3542, 1.3474, 1.3434, 1.3382, 1.3333, 1.3291, 1.3121
Resistance Level: 1.3713
Forecast:
The technical trend remains bullish in the near term, with strong momentum likely to push GBP/USD toward 1.3713 resistance. However, limited volatility due to today’s bank holiday may keep the pair within a narrow range. A breakdown below 1.3390 would suggest a reversal toward lower support zones. Otherwise, the pair remains poised for moderate gains.
🇺🇸/🇯🇵 USD/JPY Outlook – U.S. Dollar vs Japanese Yen
Yen Gains on Inflation Surprise and Dollar Fragility
Overview:
The Japanese yen has strengthened significantly over the past week, with USD/JPY dropping nearly 1% to 142.56, supported by renewed demand for safe-haven assets and growing speculation that the Bank of Japan may tighten further. The move coincides with broad dollar weakness amid global risk-off sentiment triggered by Trump’s trade moves.
Key Drivers:
- Domestic Inflation: Japan’s core inflation unexpectedly rose to 3.5%, the highest level in two years, leading investors to anticipate further tightening from the BoJ.
- BoJ Policy Expectations: While cautious, the central bank has begun shifting from its ultra-loose stance. Any hawkish surprise would accelerate yen strength.
- US Trade Risk: The yen often benefits during times of global uncertainty, and Trump’s trade aggression has revived that trend.
Support Levels: 142.19, 141.52
Resistance Levels: 143.03, 144.10, 144.80, 145.46, 146.36, 148.28, 150.47
Forecast:
USD/JPY could oscillate around the 142.19–143.03 range in the near term, with bias tilted toward further yen strength unless the pair breaks above 145.46, signaling a reversal. Should Japanese inflation data continue to surprise to the upside, the yen may target 140.00 in the medium term.
🌕 Gold (XAU/USD) Outlook – Gold vs U.S. Dollar
Trade Uncertainty and Dollar Decline Drive Bullion to Multi-Week High
Overview:
Gold continues to serve as a critical hedge against global policy risk and currency volatility, rallying nearly 5% last week and opening the new week near $3360/oz. Trump’s delay in tariffs until July 9 temporarily cooled market anxiety, but broader concerns over US-China-EU trade tensions, combined with USD weakness, continue to lift gold.
Key Drivers:
- Safe-Haven Demand: The threat of a trade war with the EU, and additional warnings toward Apple and other global firms, have revived risk aversion.
- Weakening USD: A softer greenback makes gold cheaper for non-dollar investors and has been a strong tailwind for prices.
- Inflation and Real Yields: Inflation trends globally remain elevated, and with central banks struggling to get ahead, real yields remain suppressed—benefiting gold.
Support Levels: 3320, 3285, 3250, 3204, 3151, 3103, 3049
Resistance Levels: 3363, 3414
Forecast:
With momentum still strong and the macro backdrop favorable, XAU/USD is likely to test 3363 and may challenge 3414 if trade tensions persist or escalate. A pullback to the 3320–3285 range could present new buying opportunities. A break below 3204 would suggest a deeper corrective phase.
📊 Summary Table: As of May 27, 2025
| Asset | Trend Bias | Key Drivers | Support Levels | Resistance Levels | Forecast Summary |
|---|---|---|---|---|---|
| EUR/USD | Bullish Bias | EU-US trade tensions, USD weakness, ECB tone | 1.1379, 1.1315, 1.1269, 1.1220 | 1.1413, 1.1456 | Likely to test 1.1413–1.1456 if USD remains weak |
| GBP/USD | Bullish | Positive UK data, improving sentiment, soft USD | 1.3542, 1.3474, 1.3434, 1.3382 | 1.3713 | Momentum intact; likely to test 1.3713 resistance |
| USD/JPY | Bearish Bias | BoJ rate hike potential, rising Japanese inflation | 142.19, 141.52 | 143.03, 144.10, 145.46 | Bearish bias persists; potential to test 141.00 and below |
| XAU/USD | Bullish | Safe-haven demand, USD weakness, low real yields | 3320, 3285, 3250, 3204 | 3363, 3414 | Strong upside; possible breakout above 3363 toward 3414 |
