**EUR/USD, GBP/USD, and EUR/GBP Forecasts: Dollar Soft in Early Friday Trading**
*Original article by Richard Perry, FX Empire*
The US dollar showed signs of weakness in early Friday trading, as traders and investors responded to macroeconomic data releases and shifting market sentiment. Major currency pairs like EUR/USD, GBP/USD, and EUR/GBP experienced movements reflecting the broader dynamics influencing the forex market. This article dives into the latest technical and fundamental factors affecting these pairs, highlights key support and resistance levels, and provides an outlook driven by the current context.
—
## Overview: Market Sentiment and Dollar Dynamics
As of Friday morning trading, the dollar index had softened, giving the euro and the British pound some breathing room to recover earlier losses. The move comes after a series of data releases and ahead of important events that could set the tone for the coming week.
Key influences on early Friday trading included:
– Recent US macroeconomic data, including Consumer Price Index (CPI) and jobless claims.
– Divergent trajectories of growth and inflation across the US and Eurozone.
– Market positioning ahead of central bank policy signals.
– A pause in the upward surge of the US dollar, often seen as a safe-haven currency.
The latest moves underscored the market’s sensitivity to inflation data, expectations for central bank actions, and overall risk appetite.
—
## EUR/USD: Euro Capitalizes on USD Pullback
Having faced significant headwinds from the stronger US dollar earlier in the week, EUR/USD mounted a modest recovery as the dollar’s rally paused. The currency pair, which had dropped below key support levels, is now attempting to re-establish bullish footing.
### Key Fundamental Drivers
– **Inflation Data:** Earlier in the week, strong US inflation readings pushed US Treasury yields higher, driving demand for dollars. However, softer-than-expected economic data and the dollar’s overbought technical condition contributed to Friday’s pullback.
– **ECB Guidance:** The European Central Bank’s relatively dovish stance compared to the US Federal Reserve has kept upside moves in EUR/USD in check.
– **Risk Appetite:** Renewed risk sentiment in European markets helped the euro claw back some ground.
### Technical Overview
Richard Perry’s analysis highlighted key levels and indicators:
– **Support:** The 1.0850/1.0860 zone has emerged as an area of buying interest. A sustained move above this region could provide a foundation for further gains.
– **Resistance:** The price action is capped around 1.0910, near the 21-day moving average and previous highs.
– **Momentum:** The Relative Strength Index (RSI) rebounded from moderately oversold levels but has yet to break decisively into bullish territory.
#### EUR/USD Chart Observations
– The pair remains within a medium-term trading range, with traders watching for a sustained breakout.
– A failure to hold above 1.0850 could see the pair retesting earlier support near 1.0800.
– If risk sentiment stabilizes and the dollar correction persists, the euro could test resistance at 1.0910 and potentially target the psychological 1.1000 level.
### Outlook
– For bulls, a break and close above 1.0910/1.0930 opens the door to further upside.
– Bears will look for a failure to hold above 1.0850 as a signal that the broader downtrend may resume.
– Macro developments, including US data and ECB commentary, will likely dictate direction over the coming sessions.
—
## GBP/USD: Sterling Finds Support on Dollar Weakness
The British pound followed the euro’s lead in Friday trading, with GBP/USD bouncing from recent lows as the greenback lost momentum.
### Key Fundamental Factors
– **Bank of England Stance:** The BoE’s cautious tone regarding rate cuts has provided some support for sterling. However, uncertainty about the UK growth outlook continues to temper gains.
– **US Data
Read more on GBP/USD trading.