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Daily FX Report

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Daria Efanova

Daria Efanova Head of Research

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EUR / USD - Resistance at 1.05 Remains Key

EURUSD weakened due to a strengthening U.S. dollar, bolstered by strong consumer confidence data and potential tariff threats. The pair is testing critical support levels between 1.0420 and 1.0435, with a risk of further decline if these levels are breached. Political risks and anticipated rate cuts by the ECB add to the euro's challenges as large currency speculators increased their net short positions, indicating a bearish sentiment.

The support around 1.04225 could reignite buying interest at this level. Technical indicators such as the 20-day and 50-day moving averages act as minor resistance, while the 200-day moving average indicates a bearish longer-term trend.

The upcoming central bank meetings are pivotal, with the ECB expected to cut rates due to sluggish economic growth and inflation slightly above target. In contrast, the Fed is expected to hold steady. These moves are now priced in, and we expect to see only moderate downside pressure, with limited volatility. 

USD / JPY - US Dollar Resilience 

USD/JPY rebounded yesterday, primarily driven by rising U.S. Treasury yields, which have increased the attractiveness of the dollar. Despite the BOJ's recent rate hike, the interest rate differential between the U.S. and Japan continues to favour the dollar, suggesting potential for further gains in the USD/JPY pair. The pair has recently moved above the 155.50 level, and if it surpasses the resistance at 156.00 – 156.50, it could target the next resistance range of 158.00 – 158.50.

The recent tariff threats from President Trump have further bolstered the U.S. dollar. Meanwhile, further hawkish narrative from the BOJ's policymakers is needed to bolster the appetite for JPY. Market participants are closely watching the upcoming Federal Reserve meeting, where no change in interest rates is expected, which should help solidify USD's relative strength. 

GBP / USD - Economic Concerns Weigh on Pound Prospects

GBPUSD stabilised yesterday, trading within a narrow range that suggests a consolidation phase despite the strengthening U.S. dollar. This stabilisation is supported by technical indicators showing the pair holding within an upward channel, though it faces resistance near the 1.2500 level. The BOE's introduction of the Contingent Non-Bank Financial Institution Repo facility could positively influence the British pound.

However, the pair remains under pressure due to concerns over the UK's economic outlook and global trade tensions. Overall, GBP/USD remains stable for now and is expected to stay range-bound unless significant economic events shift market sentiment. 

Economic Calendar

29012025

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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