**EUR/USD, GBP/USD, and EUR/GBP Forecast: US Dollar Remains Slightly Strong in Early Trading**
*Original article by Christopher Lewis, sourced from FXEmpire*
In the early hours of trading on Monday, the US dollar has shown slight strength against major currency counterparts, affecting pairs such as the EUR/USD, GBP/USD, and EUR/GBP. This movement reflects ongoing investor sentiment surrounding inflation, interest rates, and economic outlooks in both the United States and Europe.
The mix of economic indicators, central bank policy speculation, and broader macroeconomic conditions continues to influence price action in the foreign exchange market. Below, we analyze the performance of the EUR/USD, GBP/USD, and EUR/GBP currency pairs and assess the key technical and fundamental factors shaping trading behavior.
—
### EUR/USD Analysis
The EUR/USD pair has begun the week with modest losses, showing vulnerability to further declines if sentiment favors the US dollar. As of the latest trading session, the pair is hovering just below the 1.0850 level after failing to maintain earlier momentum.
**Key Factors Affecting EUR/USD:**
– **Monetary Policy Divergence:** The US Federal Reserve maintains a cautious stance on interest rate cuts, while the European Central Bank (ECB) has already started reducing rates. This divergence puts pressure on the euro as yield differentials favor the USD over time.
– **US Inflation Outlook:** Inflationary data in the US has proven more resilient than expected, prompting speculation that the Fed may delay any easing cycle. This supports the dollar, keeping EUR/USD in check.
– **German Economic Weakness:** Recent economic indicators from Germany, the eurozone’s largest economy, show continued weakness. Soft performance in industrial production and subdued business sentiment weigh on the euro.
**Technical Outlook:**
– EUR/USD is currently trading below the 50-day moving average, signaling potential continuation to the downside.
– Strong support lies near the 1.0800 level, followed by 1.0750 in case of a deeper retracement.
– Resistance is marked around the 1.0900 to 1.0930 zone, where bulls must gain control to resume the uptrend.
If bearish momentum persists and the pair breaks and closes below 1.0800, further downside could be expected over the upcoming sessions. Short-term rallies may be selling opportunities unless supported by a shift in fundamentals.
—
### GBP/USD Analysis
The British pound has also given up some recent gains against the US dollar, with the GBP/USD pair retreating after failing to break key resistance levels. The pair’s movement continues to reflect a mixture of dollar strength and mixed signals from UK economic data.
**Key Drivers Influencing GBP/USD:**
– **BoE Policy Ambiguity:** The Bank of England remains non-committal regarding the timeline of rate cuts. This lack of clarity keeps the pound directionless, especially against a slightly stronger dollar.
– **UK Economic Uncertainty:** While inflation in the UK has cooled, growth remains patchy. Wage growth persists, but consumer spending and investment show slower trends.
– **Political Developments:** With upcoming general elections in the UK, political risk may begin to creep into sterling pricing, adding uncertainty for foreign exchange investors.
**Technical Perspective:**
– GBP/USD lost momentum after testing the 1.2800 resistance region.
– The pair is trading near the 50-day EMA, with short-term support seen around the 1.2650 and 1.2600 figures.
– A break above 1.2800 would be needed to reestablish bullish structure, targeting 1.2900 and beyond.
Traders may look to the 1.2650 support level to gauge the strength of bearish pressure. As long as the dollar maintains its footing and no major policy shift occurs in the UK, the pound could stay under slight pressure.
—
### EUR/GBP Analysis
The EUR/GBP cross remains caught in a relatively tight range,
Read more on EUR/USD trading.