USD/JPY Hits Two-Month High as U.S.–Japan Tariff Fight Escalates

Economic

Summary:

The U.S. dollar strengthened against the Japanese yen for a third straight session on Tuesday, with USD/JPY climbing back toward the 148.00 level—its highest in nearly two months.

BUY USDJPY

Close Time

CLOSED

148.199

Entry Price

151.000

146.600

155.890 +0.545 +0.35%

44.7

Pips

Profit

146.600

148.646

Exit Price

148.199

Entry Price

151.000

The USD/JPY pair extended its winning streak on Tuesday, pushing higher for a third consecutive session amid a backdrop of resurgent trade tensions and strong technical tailwinds. During European trading hours, the currency pair touched levels near 148.00, marking a new two-month high and reigniting bullish interest in the dollar-yen cross.

This latest rally comes on the heels of renewed strain in U.S.–Japan trade relations. Last week, U.S. President Donald Trump imposed a fresh 25% tariff on a broad range of Japanese imports. The move, which came after Washington and Tokyo failed to finalize a trade agreement during the 90-day grace period, sent ripples through financial markets and reignited fears of a prolonged trade dispute. The tariffs are not sector-specific, marking a broad-based escalation that appears to be more politically charged than strategically targeted. Despite the setback, Tokyo has reiterated its intent to continue negotiations with Washington before the new deadline of August 1, hoping to de-escalate the dispute.

Adding another layer to the geopolitical narrative, Japan's Yomiuri newspaper reported earlier in the day that Prime Minister Shigeru Ishiba is scheduled to meet U.S. Treasury Secretary Scott Bessent on Friday. The meeting is set to take place during Ishiba’s visit to the United States, where he will also attend the U.S. national day at the World Expo 2025. This diplomatic engagement may serve as a critical juncture for re-establishing common ground between the two economic powers. But until then, the uncertainty is fueling yen weakness and dollar strength.

The Japanese yen’s status as a safe-haven currency appears to be overshadowed by structural headwinds, including a persistently dovish Bank of Japan. The central bank’s reluctance to tighten monetary policy—even in the face of global normalization—has kept Japan’s yield profile notably low, making the yen an ideal funding currency in carry trades. In contrast, the Federal Reserve has maintained a firm stance on inflation, with markets still pricing in the potential for interest rates to remain higher for longer. This policy divergence continues to widen the gap between U.S. and Japanese bond yields, adding further pressure on the yen.

Technical Analysis

The bullish tone in USD/JPY is also supported by strong technical structure. The pair has broken through a long-standing resistance trendline, signaling a meaningful shift in sentiment. This breakout suggests the previous consolidation phase has ended, giving way to renewed upward momentum. Price action has sustained itself above former highs, and the structure shows a series of higher lows forming along an inner ascending trendline, a signal of persistent buying interest on dips. Additionally, the pair continues to trade well above the 200-day exponential moving average, now located around 145.14, reinforcing the broader bullish trend.

Momentum indicators lend further credibility to the rally. The Relative Strength Index (RSI) currently reads near 63, indicating strong upward momentum without flashing overbought conditions. This suggests that there may still be ample room for further gains before technical exhaustion sets in.

From a price projection standpoint, traders are now focusing on two key levels. The first is around 149.70, a level derived from the measured move following the recent breakout. This area also coincides with short-term resistance from early April. A more ambitious upside target lies at 151.00, which reflects an extended move based on previous bullish patterns and a historically significant resistance area from 2022.

TRADE RECOMMENDATION

BUY USDJPY

ENTRY PRICE: 148.20

STOP LOSS: 146.60

TAKE PROFIT: 151.00

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

If the pattern repeats, we could see the price attempt to move back toward the next resistance level at 0.6589.

BUY AUDUSD

Close Time

CLOSED

0.65398

Entry Price

0.65900

0.65250

0.66236 -0.00147 -0.22%

26.9

Pips

Profit

0.65250

0.65667

Exit Price

0.65398

Entry Price

0.65900

The Australian labor market data for June, due to be released this Thursday, is expected to take center stage for investors. Employment figures will be particularly important, as they could significantly impact market expectations regarding the Reserve Bank of Australia’s (RBA) monetary policy outlook.

Last week, in a surprising move, the RBA kept its official cash rate (OCR) steady at 3.85%, despite market consensus anticipating a 25 basis point (bps) rate cut. The decision has fueled speculation about the RBA’s next steps and whether further rate cuts are likely in the near term.

On Tuesday, China’s second-quarter GDP data, along with retail sales figures, will be in the spotlight. The Chinese economy is expected to have slowed slightly in Q2, with growth forecast to ease to 5.2% year-over-year, down from 5.4% in Q1, largely due to ongoing trade tensions with the U.S. On a quarterly basis, growth is expected to have moderated to 1.0% from 1.2% in the previous quarter. Should the GDP figures surprise to the upside, it could provide some short-term relief to the Australian dollar (AUD), which often acts as a proxy for Chinese economic activity given the close trading relationship between the two nations.

Meanwhile, President Trump made headlines over the weekend by threatening to impose 30% tariffs on imports from the European Union and Mexico unless a trade agreement is finalized before the August 1 deadline. These new tariffs would add to the existing 20% and 25% levies announced earlier in April, further escalating the trade conflict. This heightened trade uncertainty continues to weigh on the broader market sentiment, with many investors fearing the inflationary impact of these measures.

The financial markets are also awaiting the release of the U.S. Consumer Price Index (CPI) for June. Headline inflation is expected to rise from 2.4% to 2.7% year-over-year, with core CPI projected to increase from 2.8% to 3.0%. If these expectations are met, it could reinforce concerns about persistently high inflation and validate the Federal Reserve’s cautious approach to monetary policy.

Fed officials have also begun to signal their thoughts ahead of the next meeting. Cleveland Fed President Beth Hammack reiterated her hawkish stance, highlighting that inflation remains too high despite the recent moderation. She emphasized the possibility of further tightening if needed to control rising prices. A Strong Bounce From Local Support Could Reignite the Bullish Momentum in AUDUSD_1

A Strong Bounce From Local Support Could Reignite the Bullish Momentum in AUDUSD_1

Technical Analysis

AUDUSD has recently dropped to the 0.6544 level, where a significant local support zone lies. This area has served as a reliable reversal point in the past, leading to bullish bounces from these levels. If the pattern repeats, we could see the price attempt to move back toward the next resistance level at 0.6589.

Additionally, the Relative Strength Index (RSI) has fallen to 35, approaching oversold conditions. This suggests that the currency pair may be primed for a potential bullish reversal if the support zone holds. If the price starts to show signs of recovery from here, it would be consistent with the previous price action.

The 100-period and 200-period moving averages are positioned at 0.6556 and 0.6549, respectively, very close to each other. The price has recently closed below these levels, which could trigger a deeper downward move if the support breaks. However, a sustained hold above these moving averages and a close above the current support zone would confirm that the bullish momentum could continue, potentially driving the price higher.

The focus will be on whether AUDUSD can maintain its support near 0.6544. If the price successfully holds above this level and closes above the moving averages, the chances of a bullish reversal will increase, making the 0.6589 resistance level the next key target.

Trading Recommendations

Trading direction: Buy

Entry price: 0.6540

Target price: 0.6590

Stop loss: 0.6525

Validity: Jul 25, 2025 15:00:00

Risk Warnings and Disclaimers

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Manuel

Central Bank

Economic

Summary:

A pullback toward the 145.80 zone remains plausible if the price begins to retreat from local top levels.

SELL USDJPY

Close Time

CLOSED

148.000

Entry Price

145.850

149.500

155.890 +0.545 +0.35%

62.9

Pips

Profit

145.850

147.371

Exit Price

148.000

Entry Price

149.500

President Donald Trump jolted financial markets over the weekend by threatening to impose 30% tariffs on imports from both the European Union and Mexico if a trade agreement is not reached by the August 1 deadline. These proposed levies would come on top of previous tariffs announced on April 2—20% and 25% respectively—and follow earlier moves that targeted Canada with a 35% rate and slapped a 50% duty on key commodities like copper, aluminum, and steel.

While many investors still view Trump’s threats as mere bargaining tools, the unpredictability of his approach continues to inject uncertainty into the markets. Increasing concerns about the inflationary and growth-slowing consequences of these trade measures are beginning to weigh on the U.S. dollar’s recent recovery momentum.

Adding to the pressure, the White House confirmed an additional 50% tariff on U.S. copper imports is scheduled to take effect alongside the other measures on August 1.

Traders are now bracing for the release of the U.S. Consumer Price Index (CPI) report for June. Headline inflation is forecast to climb from 2.4% to 2.7% year-over-year, while core CPI is expected to rise from 2.8% to 3.0%—well above the Federal Reserve’s 2% target. If realized, these figures could validate the Fed’s current cautious monetary stance and reinforce concerns that inflation may prove to be more persistent than previously thought.

Fed officials have already begun weighing in ahead of the next policy meeting. Cleveland Fed President Beth Hammack reiterated her hawkish tone, stating that the economy remains healthy and she is open to supporting tighter policy if necessary. She noted that while inflation is moving toward target, it remains too high, especially with tariffs potentially stoking a renewed wave of price pressures.

Meanwhile, Japanese and European Union officials are reportedly working on a joint statement to deepen their economic partnership, focusing on advanced technology, trade, and supply chain resilience—moves aimed at counterbalancing rising geopolitical tensions. This comes as Japanese core machinery orders and tertiary industry activity data both beat expectations, boosting hopes for a more resilient Japanese economy.

Market participants are also closely monitoring the upcoming visit of U.S. Treasury Secretary Scott Bessent, especially in light of President Trump’s latest remarks targeting the auto sector’s trade imbalance. As the Bank of Japan prepares for its July 31 policy meeting, speculation is mounting over a potential upgrade to the central bank’s inflation forecasts.

Japanese Government Bond (JGB) yields are rising, narrowing yield differentials with global peers, which in turn lends support to the yen. A Second Rejection Could Confirm Double Top and Spark Pullback_1

A Second Rejection Could Confirm Double Top and Spark Pullback_1

Technical Analysis

USDJPY has experienced a strong bullish rally, driving the pair back toward the key resistance zone around 148.00—its local high from June 23. This level has historically served as a significant barrier, and another failure to break above it could set the stage for a bearish correction. A pullback toward the 145.80 zone remains plausible if the price begins to retreat from local top levels.

The 145.80 region is particularly notable, as both the 100-period and 200-period moving averages on the 2-hour chart converge around this level. These moving averages often act as dynamic support targets during corrections, and their alignment here adds weight to the probability of a retracement.

Meanwhile, the RSI currently sits at 61, suggesting bullish momentum is still present but approaching overbought territory. A brief retest of the 148.00 resistance could still occur before a more meaningful rejection sets in. Should the price fail to decisively break and close above that level, selling pressure could build—especially if signs of a double-top formation emerge.

However, if USDJPY manages to breach 148.00 with strong bullish conviction, it would invalidate the bearish setup and signal the potential for continued upward movement. For now, traders are eyeing this critical resistance as a tipping point for the next directional move.

Trading Recommendations

Trading direction: Sell

Entry price: 148.00

Target price: 145.85

Stop loss: 149.50

Validity: Jul 25, 2025 15:00:00

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Economic

Summary:

The New Zealand Dollar remained under pressure on Monday, slipping to three-week lows amid renewed global trade tensions triggered by U.S. tariff threats.

SELL NZDUSD

Close Time

CLOSED

0.59750

Entry Price

0.58600

0.60300

0.57754 0.00000 0.00%

34.8

Pips

Profit

0.58600

0.59402

Exit Price

0.59750

Entry Price

0.60300

The New Zealand Dollar (NZD) extended its losing streak on Monday, pressured by a deteriorating global risk backdrop and a stronger U.S. Dollar, as market sentiment soured following the latest tariff threats from Washington. Risk-sensitive assets such as the Kiwi were hit hard by President Donald Trump’s announcement over the weekend of fresh punitive tariffs on major trade partners, heightening fears of renewed trade frictions that could weigh on global growth.

At the time of writing, NZD/USD was trading just under the 0.6000 handle, attempting a modest recovery from the intraday low of 0.5975 touched during the Asian session — its weakest level in three weeks. The pair remains down roughly 0.25% on the day, and the technical backdrop suggests sellers are still in control.

The latest pressure on the Kiwi came after U.S. President Donald Trump announced a sharp escalation in tariffs on imports from both the European Union and Mexico. The new levies — 30% on EU imports and 30% on Mexican goods — represent a significant jump from the 20% and 25% duties unveiled just weeks earlier on April 2, a date Trump proclaimed “Liberation Day” in reference to American trade policy.

Though markets have not yet reacted with panic, the implications of this aggressive trade stance are clearly being felt in FX. The targeted nations have so far avoided immediate retaliation, instead signaling a willingness to engage in talks ahead of the looming August 1 implementation deadline. Nonetheless, investors remain on edge, concerned that the situation could spiral and reignite a full-scale trade war — a scenario that would be especially damaging for export-dependent economies like New Zealand’s.

The uncertainty is fueling demand for safe-haven assets, boosting the U.S. Dollar and weighing on higher-beta currencies such as the Kiwi, Australian Dollar, and emerging-market FX. Volatility, while contained for now, could rise sharply if rhetoric escalates or if global equity markets begin to buckle under the weight of geopolitical and trade uncertainty.

Providing a partial offset to the risk-off mood was a surprisingly strong set of trade data from China, New Zealand’s largest trading partner. Chinese exports surged in May, outpacing market expectations and widening the country’s trade surplus. The data reflects a boost from improved U.S.-China trade relations and suggests that Chinese manufacturing activity may be stabilizing after months of weakness.

For New Zealand, whose economy is tightly linked to Chinese demand — particularly for agricultural exports, dairy, and raw commodities — the upbeat numbers offered a degree of reassurance. With China’s second-quarter GDP figures due out on Tuesday, investors will be watching closely for confirmation that the world’s second-largest economy is regaining momentum. A solid GDP reading could offer the Kiwi some reprieve, especially in the absence of major domestic data this week.

Technical Analysis

From a technical standpoint, NZD/USD continues to exhibit a bearish structure, with price action dominated by a sequence of lower highs and lower lows — a textbook definition of a downtrend. There are no signs of bullish divergence on key indicators, suggesting that bears still have control of the market narrative.

The pair recently retraced to the 0.382 Fibonacci level, a common turning point during corrective moves, only to face rejection near the 0.6000 round number — an area reinforced by the 50-period exponential moving average (EMA50), which is acting as dynamic resistance. Additionally, the Relative Strength Index (RSI) is beginning to tilt lower after briefly reaching overbought territory, hinting at the emergence of negative divergence that could amplify downside pressure.

Moreover, the pair appears to be trading within a well-defined bearish channel — a continuation pattern that typically results in further declines. Should bearish momentum resume, immediate support lies at 0.5970, followed by 0.5925 and the March swing low near 0.5860. On the upside, any recovery would need to clear the 0.6000 threshold decisively to even begin challenging the bearish bias.

TRADE RECOMMENDATION

SELL NZDUSD

ENTRY PRICE: 0.5975

STOP LOSS: 0.6030

TAKE PROFIT: 0.5860

Risk Warnings and Disclaimers

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Warren Takunda

Traders' Opinions

Economic

Summary:

EUR/USD bounced higher in early European trading Monday, recovering from three-week lows, but the broader bearish trend remains intact amid investor unease following new 30% U.S.

BUY EURUSD

Close Time

CLOSED

1.17036

Entry Price

1.20000

1.16000

1.16397 -0.00029 -0.02%

103.6

Pips

Loss

1.16000

1.15994

Exit Price

1.17036

Entry Price

1.20000

The Euro staged a modest recovery against the U.S. Dollar on Monday, rebounding from a three-week low as European markets opened, but the move was far from a trend reversal. The EUR/USD pair gained ground during the early European session, trading up from 1.1655 to hover just below the 1.1700 handle. Despite the bounce, the broader outlook for the pair remains clouded by renewed trade tensions and a cautious global mood, particularly in light of aggressive new tariffs announced by the United States over the weekend.

U.S. President Donald Trump revealed plans to impose sweeping 30% levies on all European Union imports, escalating transatlantic trade tensions that had simmered since the previous round of negotiations in April. While markets opened with a relatively measured reaction—unlike the sharp moves seen earlier in the year—investor sentiment remained fragile, keeping the Euro on the defensive and weighing on broader risk appetite.

The new round of tariffs, though aggressive, is being interpreted by many traders as part of a high-stakes negotiation tactic rather than a final declaration of policy. This perception has somewhat cushioned the market reaction. The Euro’s downside was also mitigated by the European Union’s restrained response. Rather than retaliate immediately, Brussels opted for diplomacy, with EU Trade Commissioner Maros Sefcovic expressing optimism that a trade agreement with Washington could still be reached before the self-imposed August deadline.

Sefcovic’s remarks were seen as an attempt to de-escalate tensions and maintain the momentum of ongoing negotiations. This has provided a floor beneath the Euro, keeping the currency from sliding deeper despite the fundamentally bearish tilt in the near term. However, with trade rhetoric intensifying and no concrete deal on the table yet, investor caution prevails.

Monday’s economic calendar is light, with little in the way of tier-one data from either side of the Atlantic. Instead, the market's attention is fixed on political developments, including the Eurogroup meeting and a scheduled speech by ECB member Piero Cipollone, which may offer clues on the central bank’s evolving stance in a volatile global environment.

Across the Atlantic, eyes are firmly on Tuesday’s release of U.S. Consumer Price Index (CPI) data for June. With inflation trends playing a pivotal role in shaping the Federal Reserve’s policy path, any upside surprise in CPI could reinforce expectations for a delayed or more gradual easing cycle. That, in turn, would lend additional strength to the U.S. Dollar and challenge the Euro’s recovery attempts. Conversely, a softer inflation print could revive speculation of a dovish pivot, creating a temporary tailwind for EUR/USD.

Technical Analysis

From a technical perspective, EUR/USD is undergoing a healthy retracement after failing to sustain the bullish momentum that had lifted the pair to 1.1830 — a level not seen in nearly four years — earlier this month. Since then, price action has been confined within a well-defined descending channel, with the pair making lower highs and lower lows, a classic bearish pattern.

Monday’s bounce finds the Euro testing the mid-line of the longer-term ascending channel. The 1.16288 – 1.15774 zone, which once served as stiff resistance, now acts as a potential demand area. This support flip is a textbook structural pivot point, and its ability to hold will be key in determining whether the bullish undertone can reassert itself.

A convincing bounce from this zone could reignite upward momentum, setting the stage for a potential move back toward the 1.2000 psychological level over the coming weeks — assuming fundamental catalysts such as a trade resolution or soft U.S. inflation data emerge. However, a decisive break below the lower boundary of the demand zone and channel support would invalidate the bullish thesis and expose the pair to deeper losses, possibly toward 1.1500 and the 200-day EMA.

TRADE RECEOMMENDATION

BUY EURUSD

ENTRY PRICE: 1.1700

STOP LOSS: 1.1600

TAKE PROFIT :1.2000

Risk Warnings and Disclaimers

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Eva Chen

Forex

Economic

Summary:

EURGBP extended its advance for a second straight session, trading near 0.8670 in Monday's European morning. Growing conviction that the Bank of England (BoE) will accelerate rate cuts—coupled with chatter of tax hikes to plug the fiscal deficit—has left sterling on the back foot and driven the cross to a three-month low against the euro.

BUY EURGBP

Close Time

CLOSED

0.86718

Entry Price

0.87960

0.84900

0.87343 +0.00027 +0.03%

68.8

Pips

Profit

0.84900

0.87406

Exit Price

0.86718

Entry Price

0.87960

Fundamentals

Market anxiety over the UK's macro policy mix is intensifying. Expectations of an earlier and steeper BoE easing cycle, alongside speculation of revenue-raising tax measures, continue to weigh on GBP. GBPEUR slid to 0.8670 Monday, matching the weakest print since early April.

BoE Governor Andrew Bailey said last week that a "material softening" in labour-market conditions could prompt the Monetary Policy Committee to adopt a more aggressive easing stance. Thursday's employment report is therefore pivotal: a downside surprise would cement market pricing for an August cut.

Compounding the gloom, May GDP printed below consensus and the fiscal shortfall is widening, fuelling bets that the Treasury will unveil tax increases in the Autumn Statement. If this week's data—employment on Tuesday and CPI on Wednesday—confirm a loss of momentum, EURGBP could clear 0.8670 and march toward the April peak at 0.8738.

Technical Set-Up Signals Rally Has Legs—Bulls Eye Three-Month Highs_1

Technical Analysis

After a multi-week base, EURGBP has rallied for two consecutive weeks, underpinned by a textbook inverse head-and-shoulders formation. Momentum indicators are aligned: RSI has broken above 60 and the MACD has flashed a bullish crossover, reinforcing the constructive outlook.

Over the near term, the pair retains a mildly bullish bias. A decisive break of the 0.8670 resistance would open room toward 0.8737. Initial support lies at 0.8573. If this level flips from resistance to support, it would solidify the upward trajectory.

Trading Recommendations

Trading Direction: Buy

Entry Price: 0.8640

Target Price: 0.8796

Stop Loss: 0.8490

Deadline: July 29, 2025, 23:55:00

Support: 0.8632/0.8596/0.8552

Resistance: 0.8694/0.8737/0.8767

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The Euro advanced against the Pound on Monday as soft UK GDP data and dovish rhetoric from Bank of England Governor Andrew Bailey weighed on Sterling.

BUY EURGBP

Close Time

CLOSED

0.86649

Entry Price

0.88000

0.86000

0.87343 +0.00027 +0.03%

9.8

Pips

Profit

0.86000

0.86747

Exit Price

0.86649

Entry Price

0.88000

The Euro (EUR) edged higher against the British Pound (GBP) on Monday, with the EUR/GBP currency pair climbing to fresh two-week highs around 0.8710 as investors reacted to a deteriorating economic outlook for the UK and growing speculation that the Bank of England (BoE) is preparing to ease policy more aggressively in the months ahead. The move reflects a broad reassessment of interest rate expectations, compounded by disappointing macro data and mounting signs of labor market softness in the UK economy.

The upward trajectory in EUR/GBP marks a continuation of the pair’s recent bullish bias, driven by renewed Sterling weakness rather than Euro strength per se. At the core of this week’s bearish sentiment on the Pound is the latest batch of UK economic indicators, which signal that Britain may be slipping into a period of stagnation — if not outright contraction — just as fiscal pressures and labor market frictions deepen.

According to figures published by the Office for National Statistics (ONS) on Friday, the UK economy shrank by 0.1% in May — following a sharper-than-expected 0.3% contraction in April. The downturn was broad-based, with declines in manufacturing output, industrial production, and construction activity all weighing heavily on headline GDP. Only the services sector posted a modest uptick, and even that was tepid.

The back-to-back monthly contractions have sparked fresh concerns that the UK may be entering a technical recession, defined as two consecutive quarters of negative growth. While the BoE has remained cautious in its economic assessments, the data is now forcing policymakers and markets alike to confront the risk of a deeper slowdown — one that might warrant faster or larger interest rate cuts.

Compounding Sterling’s woes was a candid interview from Bank of England Governor Andrew Bailey, who on Monday reiterated the central bank's intention to shift toward an easing cycle. Speaking with The Times, Bailey acknowledged the emergence of “slack” in the economy, partly due to increased employer national insurance contributions, which are starting to weigh on business confidence and hiring.

“I really do believe the path is downward,” Bailey said, referring to interest rates. He emphasized that any rate cuts would be delivered in a “gradual and careful” fashion — but also added that if economic slack materializes faster than expected, the BoE would not hesitate to act more decisively.

His remarks come at a pivotal moment for UK monetary policy. Recent surveys suggest the labor market — long considered a bulwark of resilience — is now beginning to cool rapidly. A KPMG-REC report released last week showed that permanent job placements fell at the sharpest rate in over two years, while staff availability rose at its fastest pace since 2020. Official data also revealed that unemployment ticked up to 4.6% in the three months to April, marking the highest level since the pandemic era.

With growth slipping and employment faltering, markets have become increasingly confident that the BoE will initiate its rate-cutting cycle as soon as the August meeting. As of Monday, swaps pricing implies a 90% probability of a 25 basis point cut next month, with markets anticipating a total of 75 basis points in easing over the next 12 months.

On the European side of the equation, the single currency has remained remarkably steady, even as the European Union faces simmering trade tensions with the United States. While no immediate trade measures have been enacted, the threat of retaliatory tariffs from the US remains on the radar, particularly as Washington reevaluates its industrial policy vis-à-vis Europe.

Despite this, the European Central Bank (ECB) has maintained a measured stance. ECB officials, including Governor François Villeroy de Galhau and Chief Economist Philip Lane, have repeatedly signaled that while further rate cuts are possible, they will proceed with caution given persistent inflation risks. Eurozone inflation, although moderating, remains sticky enough to warrant vigilance, and policymakers are wary of moving too quickly.

This divergence in central bank outlooks — with the BoE preparing to accelerate rate cuts while the ECB takes a more patient approach — continues to provide structural support for the Euro, especially against currencies like the Pound that are facing more acute domestic pressures.

Technical Analysis

From a technical standpoint, EUR/GBP remains in a well-defined uptrend, having broken above a key consolidation zone. The pair is currently testing immediate resistance near 0.8700 and appears set to challenge the psychologically significant 0.8715 level — a horizontal structure that has acted as both support and resistance in the past.

The broader technical landscape shows continued bullish momentum, with dips toward 0.8620 — the previous consolidation base — likely to be viewed as buying opportunities. A successful rebound from this support level would reinforce the bullish bias and could drive the pair toward the next upside target at 0.8740, where longer-term resistance comes into play.

Should the pair breach that level, a potential move toward 0.8780–0.8800 could materialize, especially if incoming UK data continues to disappoint or if dovish BoE rhetoric intensifies. Conversely, a failure to hold above 0.8620 would weaken the short-term bullish structure and open the door for a corrective pullback toward the 50-day moving average around 0.8550.

TRADE RECOMMENDATION

BUY EURGBP

ENTRY PRICE: 0.8665

STOP LOSS: 0.8600

TAKE PROFIT: 0.8800

Risk Warnings and Disclaimers

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