**Forex Analysis: EUR/USD, GBP/USD, and EUR/GBP Forecast – US Dollar Softens on Friday**
*Originally written by Kenny Fisher for FX Empire. This rewritten version is based on the original article and has been expanded to meet a length of at least 1000 words.*
The foreign exchange market experienced notable movements during Friday’s trading session, with the US dollar weakening against key currency pairs. In particular, the EUR/USD and GBP/USD pairs gained ground, while the EUR/GBP pair showed slight fluctuations as investor sentiment and central bank commentary shaped price dynamics. Market participants digested a range of economic data alongside central bank signals, influencing expectations for monetary policy and global economic trends.
Below is a comprehensive analysis of the EUR/USD, GBP/USD, and EUR/GBP currency pairs, with special attention paid to the current technical and fundamental backdrop influencing price action.
## EUR/USD: Euro Gains as US Dollar Shows Weakness
The euro advanced against the US dollar on Friday, buoyed by short-term dollar softness and broader economic developments in the eurozone and United States. The EUR/USD pair climbed to the 1.0890 range during the session as market sentiment favored a mildly risk-on approach.
### Key Drivers:
– **US Dollar Weakness**: The US dollar retreated slightly on Friday, as traders became more cautious ahead of upcoming US employment data and the Federal Reserve’s next steps on interest rates. The shift allowed the euro to strengthen against the greenback.
– **ECB Signals**: The European Central Bank has already signaled its intent to begin cutting interest rates, despite tight labor conditions. Expectations remain that the first cut may happen in June, though market reactions suggest that subsequent rate moves may be limited.
– **Mixed US Data**: US economic figures have painted a mixed picture recently. Slowing inflation numbers were offset by employment data that implied continued labor market tightness, leading investors to reassess expectations for Fed interest rate policy in the coming months.
### Technical Analysis:
– **Support levels**: 1.0820, followed by 1.0775
– **Resistance levels**: 1.0950, followed by 1.1000
The near-term technical outlook shows the EUR/USD pair consolidating gains as it attempts to establish a more decisive upside trend. A break above the 1.0950 level could pave the way for a move toward 1.1000, which remains a key psychological and technical barrier.
If the currency pair retraces, watch for buying interest around 1.0820. A drop below that level would shift momentum in favor of the US dollar.
### Broader Outlook:
– The market is currently pricing in a roughly 70 percent probability of a rate cut by the ECB in June.
– The Fed, on the other hand, is still navigating the balance between slowing inflation and strong job growth. Expectations for rate cuts in the United States have been dialed back slightly.
– If the ECB moves forward with monetary easing before the Fed, the euro could still face downward pressure in the medium term. However, recent dollar softness may provide support for the common currency over the short term.
## GBP/USD: British Pound Rises Amid Dollar Pullback
The pound posted gains against the US dollar during Friday’s session, driven by a weaker greenback and ongoing optimism in the UK economic landscape. The GBP/USD pair approached the 1.2700 mark, rebounding from recent lows earlier in the week.
### Key Drivers:
– **US Dollar Pullback**: Similar to the euro, the pound was a beneficiary of mild pressure on the dollar amid shifting expectations around Fed policy.
– **UK Services Data**: Recent economic data from the UK services sector showed solid performance, bolstering GBP sentiment. The Services PMI held firmly in expansionary territory, signaling continued momentum in the UK’s largest economic sector.
– **BoE Stance**: The Bank of England has maintained a cautiously hawkish
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