**Weekly Forex Analysis: EUR/USD, GBP/USD, AUD/USD and More**
*By Haresh Menghani, with additional research and commentary*
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The foreign exchange market continues to experience significant volatility as markets weigh macroeconomic data, central bank policies, and global events. This week, we’re analyzing the performance and outlook for key currency pairs, with a focus on EUR/USD, GBP/USD, AUD/USD, and others.
**Overview of Market Drivers**
Several foundational factors have influenced forex rates recently:
– **Monetary Policy Decisions:** Central bank meetings, particularly from the Federal Reserve, European Central Bank (ECB), and Bank of England (BoE), dominate investor sentiment.
– **Economic Data Releases:** Inflation readings, GDP, employment statistics, and retail figures continue to guide market volatility.
– **Geopolitical Risks:** Ongoing uncertainty regarding trade tensions, global conflicts, and supply chain issues affect risk appetite.
Let’s break down the key developments and technical levels for major currency pairs.
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### EUR/USD: Dollar Strength Sustains Pressure
Over the past week, EUR/USD remained under downward pressure, weighed by the US dollar’s relative strength and mixed sentiment for the eurozone.
**Key Factors Affecting EUR/USD:**
– **US Economic Growth:** Recent US data, including robust employment and inflation reports, reinforce expectations for the Federal Reserve to keep rates higher for longer.
– **ECB Policy Outlook:** Divergence between the Fed’s hawkishness and the ECB’s perceived dovish tilt limits euro gains. Though the ECB signaled data-dependency, the bloc’s ongoing weak economic momentum curtails tightening prospects.
– **German Economic Sentiment:** As Europe’s largest economy, German output and confidence data remain soft, reinforcing caution for the single currency.
**Technical Analysis:**
– The EUR/USD failed to make a sustained recovery above the 1.0800 resistance, retracing towards the 1.0650–1.0700 region.
– Immediate support is seen around 1.0650; a clear break could open the path to 1.0600, while resistance lies at 1.0800 followed by the crucial 1.0850 level.
– Moving averages (50- and 200-day) are converging, suggesting potential for breakout volatility in either direction.
**Next Week’s Focus:**
– Markets await further clarity on US inflation via the PCE Price Index.
– Eurozone inflation and labor statistics will guide expectations for ECB policy.
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### GBP/USD: Sterling Remains Capped by Growth Concerns
The pound struggled to attract buying interest, trading defensively against the dollar.
**Factors Influencing GBP/USD:**
– **BoE Policy Uncertainty:** Although the BoE recently signaled that it might end its tightening cycle, inflation remains above target, keeping markets cautious.
– **UK Economic Data:** UK GDP growth is stagnating, and softening retail sales sharpen concerns about a recession.
– **US-UK Yield Spread
Read more on AUD/USD trading.