**EUR/USD, GBP/USD, and EUR/GBP Forecasts: British Pound Stronger Than Others**
*Based on the analysis by Alexander Kuptsikevich, FXEmpire*
The foreign exchange market this week has been marked by notable moves within major currency pairs, particularly the EUR/USD, GBP/USD, and EUR/GBP. As market sentiment pivots on macroeconomic releases as well as policy cues from central banks, traders are recalibrating their outlooks for the euro, dollar, and British pound. In the current landscape, the British pound displays relative strength compared to its peers, and its positioning against the euro and dollar underscores interesting structural differences in Europe’s economic recovery and monetary policy direction.
## EUR/USD Analysis: Testing Key Supports
The EUR/USD pair has recently experienced a downward correction, continuing the broad trend that has dominated recent weeks. The currency pair has been particularly sensitive to economic data out of both the Eurozone and the United States, as well as diverging expectations for policy adjustments by the Federal Reserve and the European Central Bank.
### Price Actions and Technical Factors
– **Support and Resistance Levels:**
– The euro fell toward the 1.0720 region, marking a significant support level. Should this zone fail to hold, traders would expect a possible extension of downward momentum toward 1.0650.
– On the upside, immediate resistance appears near 1.0800, with a sustainable break above this point necessary for the euro to regain short-term bullish momentum.
– **Momentum Indicators:**
– Daily momentum indicators such as the RSI (Relative Strength Index) have slipped to neutral or mildly bearish territory.
– The moving averages signal increased pressure on the euro, with the 50-day moving average acting as resistance.
### Fundamental Drivers
– **Macro Data:**
– Recent data releases show continued economic headwinds for the Eurozone. Manufacturing activity remains subdued, and growth forecasts remain modest for the coming quarters.
– Comparatively, U.S. economic data, particularly in relation to employment and inflation, has kept the dollar underpinned.
– **Central Bank Divergence:**
– The European Central Bank is expected to retain a dovish tilt for longer, with markets not anticipating dramatic rate hikes and, in fact, beginning to position for potential cuts in the longer run if growth continues to weaken.
– In contrast, the Federal Reserve’s tone remains cautious but relatively more hawkish, with Chair Jerome Powell signaling data-driven, patient policy adjustment.
### Outlook
The near-term trajectory for EUR/USD remains to the downside unless Eurozone data surprises on the upside, or U.S. macro momentum falters sharply. A break and daily close below 1.0720 would add conviction to the bearish case, opening up room toward 1.0650 and potentially to the yearly lows.
## GBP/USD Analysis: British Pound Demonstrates Resilience
The GBP/USD pair showcases the relative strength of the British pound amidst the shifting currents of the forex market. Despite external uncertainties and persistent inflationary pressures within the UK, sterling has managed to outperform both the euro and the U.S. dollar over the past week.
### Price Actions and Technical Factors
– **Key Levels:**
– GBP/USD is holding above the 1.2700 mark, with buyers stepping in to defend the 1.2670-1.2700 support zone.
– Upside resistance is now seen at 1.2850. A convincing break above could trigger additional gains toward the 1.2900 psychological barrier.
– **Momentum Readings:**
– Price action remains supported by higher lows on the daily chart, painting a short-term bullish narrative.
– The 50-day moving average provides dynamic support, while the RSI suggests there is room for further upside before approaching overbought conditions.
### Fundamental Drivers
– **Inflation and Policy:**
– UK inflation remains among the highest in the G10
Read more on GBP/USD trading.