Forex market outlook

EUR/USD continues to build constructive momentum above key medium-term support levels as divergence in central bank trajectories favors the shared currency. A sustained break above initial resistance could trigger a fresh leg higher over the coming weeks, though momentum may slow near major psychological barriers. Traders should watch for potential consolidation before the next directional expansion.

Technicals: The pair maintains a bullish swing structure above the 1.1480 support zone, targeting key resistance at 1.1650 followed by 1.1720. A daily close below 1.1420 would invalidate the immediate positive outlook.

Macro: Expectations of upcoming Fed rate cuts contrast with a relatively hawkish European Central Bank cautious on service inflation. This yield differential dynamic continues to provide underlying support for the euro.

The British Pound maintains a constructive posture against the US Dollar as diverging central bank trajectories favor sterling over the medium term. Sustained resilience in UK inflation data continues to push back Bank of England rate-cut expectations, providing a solid yield floor for the currency. Meanwhile, softer US economic momentum keeps consistent pressure on the Greenback across major pairs.

Technicals: GBP/USD remains well-supported above the 1.3450 pivot zone with its 50-day moving average trending higher. A clean daily close above major resistance at 1.3600 opens the door for a extended rally toward 1.3720.

Macro: Monetary policy divergence remains the primary macro driver as the Federal Reserve approaches rate cuts more aggressively than the BoE. Key upcoming UK CPI data and US retail sales will act as the immediate catalysts for swing traders.

USD/JPY is hovering near the critical psychological barrier of 160.00, raising market anxiety around potential FX intervention by Japanese authorities. While US yield resilience provides underlying support, upside momentum is showing clear signs of exhaustion at these elevated levels. We expect a period of consolidation with a downward tilt over the coming weeks as traders de-risk near multi-decade highs.

Technicals: Strong technical resistance sits firm at 160.00, while immediate support is identified at 157.50. A decisive breach below 155.80 would confirm a deeper corrective move down toward the 153.00 handle.

Macro: Rising intervention threats from the Japanese Ministry of Finance are capping upside potential in the near term. Additionally, market expectations for Bank of Japan rate hikes coupled with eventual Fed easing should gradually compress US-Japan yield differentials.

USD/CHF remains under pressure as diverging central bank expectations favor the Swiss Franc over the US Dollar. Persistent capital flows into safe-haven assets continue to cap any meaningful USD rebound. While intervention risk from the Swiss National Bank lingers near multi-year lows, the broader medium-term momentum stays tilted to the downside.

Technicals: The pair continues its downward trajectory, with immediate support situated around 0.8050 and secondary support at the critical 0.8000 psychological mark. Near-term upside rallies are expected to encounter strong selling interest near the 0.8250 resistance level.

Macro: Dovish expectations surrounding Federal Reserve rate cuts continue to undermine the Greenback relative to European currencies. Meanwhile, market participants remain vigilant for potential SNB jawboning or foreign exchange market intervention if Swiss Franc strength accelerates further.

AUD/USD maintains a positive trajectory as it consolidates near multi-month highs near the 0.7100 handle. Sustained demand for Australian export commodities and a softer US dollar provide a solid backdrop for further gains over the coming weeks. A decisive breakout above immediate resistance could unlock additional upside toward key mid-term targets.

Technicals: The pair is trading above its 50-day moving average with key support firmly established at 0.7000 and 0.6950. A daily close above 0.7150 would confirm a continuation pattern targeting 0.7250.

Macro: Diverging central bank policies favor the Aussie, with the RBA maintaining a hawkish tone against a Federal Reserve expected to ease policy further. Broader risk-on sentiment across global commodity markets continues to act as a tailwind for the currency.

USD/CAD maintains a constructive tilt over the swing horizon as broad US dollar resilience overlaps with Canadian dollar headwinds. Softening oil prices and subdued domestic growth in Canada continue to limit CAD recovery attempts. Expect the pair to trend gradually higher toward key upper threshold levels in the coming weeks.

Technicals: Holding near 1.3873, the pair remains in a clear uptrend above key support at 1.3780. A decisive breakout above 1.3920 would target the major psychological resistance level at 1.4000.

Macro: Divergent monetary policy expectations remain a dominant driver, with the Bank of Canada leaning dovish relative to a data-dependent Federal Reserve. Volatility in energy markets further weakens structural support for the Loonie.

The NZD/USD pair remains under persistent selling pressure near multi-month lows as strong US dollar momentum continues to weigh on the Kiwi dollar. While short-term oversold conditions could trigger brief consolidation, the broader swing horizon favors further downside risk. Traders should monitor global risk appetite and commodity prices for additional directional cues.

Technicals: The pair is entrenched in a downtrend below its key moving averages, with initial resistance observed at 0.5950 and a cap near 0.6000. Immediate support lies at 0.5850, where a decisive breakout would open the doors toward the 0.5800 level.

Macro: Expectations of aggressive easing by the Reserve Bank of New Zealand contrast with a relatively resilient Federal Reserve stance, keeping yield differentials unfavorable for the Kiwi. Furthermore, sluggish economic recovery in China continues to act as a primary macro drag on commodity-linked currencies.

EUR/GBP is showing signs of stabilizing near a critical multi-month support region around the 0.8500 handle. A potential shift in relative monetary policy expectations between the Bank of England and the European Central Bank favors a modest upside recovery. We anticipate a swing rebound toward the mid-0.8600s over the next several weeks as sterling's recent rally peters out.

Technicals: The pair is holding above key support at 0.8520-0.8500, with daily RSI indicators showing emerging bullish divergence. A daily close above the immediate resistance at 0.8570 would open the door for a retest of 0.8620 and 0.8650.

Macro: Cooling UK economic data is heightening market expectations for Bank of England rate cuts ahead of ECB action. Meanwhile, sticky euro area services inflation keeps European Central Bank policy relatively sticky, supporting the euro against the pound.