Weekly Forex Analysis: EUR/USD, GBP/USD, USD/CAD
By Haresh Menghani (source: FXStreet.com)
In this comprehensive Forex analysis, we take an in-depth look at the weekly performance and outlook of key currency pairs: EUR/USD, GBP/USD, and USD/CAD. Published originally by Haresh Menghani at FXStreet.com, this breakdown covers technical developments, fundamental drivers, and expectations moving into the next trading sessions. In a week defined by fluctuating market sentiment, central bank commentary, economic data releases, and geopolitical noise, these major currency pairs have shown pivotal behaviors influencing market trends.
EUR/USD Weekly Overview
The EUR/USD pair remained choppy but within a well-defined technical boundary during the past trading week. Market participants closely analyzed Eurozone macroeconomic data against a backdrop of firm U.S. economic figures, keeping the pair mostly range-bound. Here’s a breakdown of the key developments:
Fundamental Drivers:
– The Eurozone’s economic performance continues to reflect stagnation, with softer PMIs indicating slowing activity across member states.
– The European Central Bank (ECB) remains cautious, with market bets on potential rate cuts toward the second half of the year.
– In contrast, strong U.S. economic data, particularly from the labor and services sectors, continue to reinforce a narrative of divergence in economic trajectory.
– Federal Reserve officials have stuck to a hawkish tone, asserting that interest rates are likely to remain elevated until inflation convincingly trends lower.
Technical Patterns:
– The EUR/USD pair trades within a descending channel on the daily chart, with sellers dominating at rallies toward the 1.0900 area.
– Solid support appears around the 1.0670 level, with a break below this potentially opening the door to 1.0630 and 1.0600.
– Resistance is capped near the 1.0900 mark, with further hurdles at 1.0950 and the psychological barrier at 1.1000.
– Momentum indicators, particularly RSI and MACD, suggest ongoing bearish pressure, though the absence of a strong directional breakout implies range-bound behavior for now.
Outlook:
– Traders may continue to watch for U.S. inflation data and speeches from ECB President Christine Lagarde for directional cues.
– With the ECB remaining cautious and the Federal Reserve showing no urgent signs of policy easing, downside pressure on the euro could persist.
GBP/USD Weekly Overview
The British pound rallied modestly during the week but encountered technical and fundamental headwinds, limiting its upward movement. Confidence in the Bank of England’s hawkish rhetoric is being tested as economic realities come into sharper focus.
Macro Themes:
– The UK economy saw mixed data, including stagnation in GDP and higher-than-expected CPI inflation.
– Bank of England (BoE) policymakers acknowledged sticky inflation but also noted an overall cooling in consumption, suggesting future hikes are less likely.
– Comments from BoE members such as Catherine Mann and Huw Pill remain cautious, indicating the Bank will remain data-dependent.
Technical Landscape:
– GBP/USD found modest support near the 1.2620 area, with short-term bias leaning mildly bullish unless this support level is decisively breached.
– Resistance is established around the 1.2800 and 1.2830 levels. Strong daily closing above these zones is necessary for further upside.
– A sustained push above 1.2900 remains elusive at this point, with repeated failures signaling overbought conditions.
– RSI on the daily timeframe hovers near the neutral level, indicating no strong momentum in either direction.
– MACD suggests flattening momentum, confirming the lack of trending price behavior.
Potential Catalysts:
– Continuing fluctuations in energy prices and concerns about UK productivity growth may influence investors’ sentiment.
– U.S. data releases will also indirectly affect GBP/USD due to their impact on overall dollar strength.
– The pair remains sensitive to geopolitical factors, particularly any EU-UK tensions over trade policies.
Projection:
– GBP/USD is
Read more on EUR/USD trading.