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Daria Efanova

Daria Efanova Head of Research

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EUR / USD - Cautious Optimism

EUR/USD rebounded, driven by better-than-expected Euro Area Composite PMI data, helping the euro rally above the 1.0500 level. This positive momentum is supported by a technical breakout from a falling wedge pattern, indicating the potential for further gains if the key resistance at 1.05 is surpassed. Additionally, the US Dollar Index is under pressure, with a bearish pattern suggesting potential weakness, which could benefit the euro.

In the longer term, the euro continues to face challenges, and any failure to maintain momentum could lead to a pullback. The increasing gap between US and European economic growth is likely to impact the EUR/USD exchange rate in the coming months. There is a sense of cautious optimism surrounding the perceived resilience of the European economy compared to the current conditions in the US. We anticipate that technical analysis will play a crucial role in decision-making related to EUR/USD.

In the meantime, the EUR/USD outlook remains cautiously optimistic, with traders watching for sustained moves above resistance levels to confirm a bullish trend. 

USD / JPY - US Trade Narrative is Adding Uncertainty for the Pair

USD/JPY weakened on Friday, influenced by the BOJ's decision to raise interest rates to 0.5%, the highest level since 2008. This move has strengthened the yen; however, not enough to break the robust support level at 155.0 as the move was largely priced in by the market.

Despite the yen's initial gains, the USD/JPY pair remains near critical support levels, with the potential for further declines if these levels are breached. Indeed, the dollar softened due to a softer stance on Chinese tariffs and calls for lower interest rates, adding uncertainty to the overall pair dynamics.

In the meantime, we expect USDJPY to fluctuate within a narrow range. 

GBP / USD - Waning UK Pessimism

GBP/USD rebounded, driven by positive UK economic data, particularly in the manufacturing and services sectors. The pair tested key resistance levels around 1.2485 to 1.2500, with a successful breach potentially leading to further gains towards 1.2600. However, the relative strength index (RSI) indicates overbought conditions, suggesting a risk of a pullback.

GBP/USD is influenced by broader market trends and US economic indicators. There is cautious optimism that suggests markets are easing their expectations for a decline in the UK economy.

We expect to see moderate volatility in the pair's performance in the near term, with key resistance and support levels being closely watched by markets.

Economic Calendar

27012025

Contents

Disclaimer

This is a marketing communication. The information in this report is provided solely for informational purposes and should not be regarded as a recommendation to buy, sell or otherwise deal in any particular investment. Please be aware that, where any views have been expressed in this report, the author of this report may have had many, varied views over the past 12 months, including contrary views.

This report was prepared with the assistance of artificial intelligence.

A large number of views are being generated at all times and these may change quickly. Any valuations or underlying assumptions made are solely based upon the author’s market knowledge and experience.

Please contact the author should you require a copy of any previous reports for comparative purposes. Furthermore, the information in this report has not been prepared in accordance with legal requirements designed to promote the independence of investment research. All information in this report is obtained from sources believed to be reliable and we make no representation as to its completeness or accuracy.

This report is not subject to any prohibition on dealing ahead of the dissemination of investment research. Accordingly, the information may have been acted upon by us for our own purposes and has not been procured for the exclusive benefit of customers. Sucden Financial believes that the information contained within this report is already in the public domain. Private customers should not invest in these products unless they are satisfied that the products are suitable for them and they have sought professional advice. Please read our full risk warnings and disclaimers.

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