EUR/USD and GBP/USD Continue to Strengthen Ahead of Data Releases

European currencies are maintaining an upward trajectory, having reached previously outlined levels amid sustained demand for the euro and the pound. The current advance is developing against a backdrop of gradually shifting market expectations and ongoing pressure on the US dollar. However, as prices approach key levels, traders are increasingly factoring in the risk of slowing momentum and a transition to more subdued price action.

Support for European currencies is largely driven by expectations surrounding upcoming macroeconomic releases from the UK and the eurozone, which remain in sharp focus for investors. Forthcoming data on economic activity and business conditions could influence expectations regarding central bank policy and, in turn, demand for the euro and sterling. At the same time, the market remains cautious ahead of key US data, which could rebalance expectations for Federal Reserve policy and alter the current market dynamics.

EUR/USD

The EUR/USD pair is trading near the 1.1800–1.1830 range, confirming the persistence of bullish momentum following the breakout. Technical analysis suggests the potential for further gains towards 1.1900–1.1940, provided that 1.1800 holds as support. At the same time, a downside correction towards 1.1740–1.1760 cannot be ruled out in the event of weaker eurozone data or stronger-than-expected US figures.

Key events for EUR/USD:

• today at 13:45 (GMT+3): speech by Bundesbank representative Mauderer;
• today at 15:30 (GMT+3): Philadelphia Fed Manufacturing Index (US);
• today at 19:45 (GMT+3): speech by Bundesbank President Nagel.

GBP/USD

GBP/USD is showing a similar pattern, holding near recent highs and continuing within an upward trend. However, a “harami” reversal pattern formed on the daily chart yesterday, and confirmation of this signal could lead to a pullback towards 1.3480–1.3500. If the pair breaks above 1.3590, the uptrend may extend towards 1.3670–1.3700.

Key events for GBP/USD:

• today at 09:00 (GMT+3): UK Gross Domestic Product (GDP);
• today at 10:55 (GMT+3): UK manufacturing output;
• today at 18:40 (GMT+3): speech by Bank of England Deputy Governor Woods.

European currencies remain in an upward phase, having reached key reference levels, which increases uncertainty over the next directional move. Upcoming macroeconomic releases represent the main risk factor: depending on their outcome, the market may either extend the current uptrend or shift towards consolidation.

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