**EUR/USD, GBP/USD, and EUR/GBP Forecast: US Dollar Slightly Higher**
*Adapted from an article by Franco Shao, FX Empire*
## Overview
As the foreign exchange markets navigate the rippling effects of recent data prints, the US Dollar has shown a mild uptick against both the Euro and the British Pound. A cautious market ahead of the Federal Reserve’s next interest rate decision combined with a modicum of risk aversion is fostering a slightly firmer greenback profile. Meanwhile, both the Euro and the Pound face unique fundamental and technical challenges that could shape their trajectory in the sessions ahead.
This article provides a detailed analysis of the major pairs: EUR/USD, GBP/USD, and EUR/GBP. We dive into the influences moving these pairs, highlight key levels, and discuss the market sentiment, integrating technical and fundamental perspectives to aid trader decisions.
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## Fundamental Landscape
### US Dollar
The US Dollar Index (DXY) has been on a modest recovery path, propelled by a rebound in risk-off sentiment and robust US macroeconomic data. Key drivers include:
– **Solid US Jobs Data:** Nonfarm Payrolls and jobless claims have generally surpassed expectations, suggesting ongoing labor market strength.
– **Sticky Inflation:** Consumer inflation remains a concern, keeping Federal Reserve officials cautious about any near-term dovish pivot.
– **Yield Support:** US Treasury yields have remained elevated, further buttressing the greenback as the favored reserve currency.
– **Cautious Fed Communication:** FOMC members have signaled a preference for a longer period of restrictive policy, dashing hopes for immediate rate cuts.
### Euro and British Pound
#### Euro
The Euro has struggled to hold onto recent gains as the European Central Bank (ECB) appears increasingly inclined towards easing:
– **Dovish ECB Rhetoric:** ECB policymakers have hinted at potential rate cuts, possibly as soon as their upcoming meeting, given lackluster growth and subdued inflation forecasts.
– **Mixed Eurozone Data:** Industrial production and retail sales data have pointed to an uneven Eurozone recovery with persistent pockets of weakness.
– **German Economic Worries:** Germany’s economy, the region’s main engine, continues to show signs of strain.
#### British Pound
The Pound faces its own set of headwinds:
– **Dovish Bank of England (BoE):** BoE policymakers have begun to discuss the possibility of rate reductions if inflation continues its downward trajectory.
– **Political and Economic Uncertainty:** The UK faces ongoing post-Brexit economic adjustments, a fragile consumer outlook, and heightened political risk given the approaching general elections.
– **Growth Divergence:** UK macroeconomic indicators suggest the economy is lagging behind its US and eurozone counterparts.
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## Technical Analysis
### EUR/USD
The EUR/USD pair remains in a downtrend, pressed lower by the dollar’s strength and the euro’s lack of momentum.
#### Key Technical Highlights
– The pair trades below the 50-day and 200-day moving averages, reinforcing the bearish framework.
– Near-term support is situated at 1.0670, with a breach potentially exposing the March low around 1.0600.
– Resistance is evident at 1.0800 followed by 1.0850, which has historically capped attempted rallies.
– Momentum indicators like RSI and MACD are in neutral to bearish territory, suggesting limited buying interest.
**Short-term Outlook:**
Market sentiment suggests further weakness ahead for the EUR/USD, particularly if US yields continue to rise and ECB signaling remains dovish.
#### Price Action Scenarios
– **Bearish Case:** A daily close beneath 1.0670 would likely open the path to retest 1.0600 and possibly 1.0550.
– **Bullish Reversal:** A sustained break above 1.0800 could embolden buyers for a retest of 1.0850 and, eventually, the psychological 1.0900
Read more on GBP/USD trading.