EUR/USD, GBP/USD, USD/JPY Analysis: The Dollar Is Weakening Against the Euro and Pound


Recent economic data and comments from Federal Reserve representatives have dampened expectations of a rapid interest rate cut. More optimistic than expected consumer sentiment data added to the list of reliable economic data published this week, including retail sales and unemployment benefit claims. The positive indicators eased expectations that the Fed would begin lowering the key rate as early as March and provided confidence that the US economy is not immediately threatened by a recession. The dollar index, which tracks the dollar's value against a basket of six currencies, fell by 0.08% to 103.26, although it rose by 0.8% over the week.


The EUR/USD pair is showing a modest increase, developing a corrective impulse formed last week. The euro is testing the 1.0900 level for an upward breakout amid the absence of macroeconomic publications. According to EUR/USD technical analysis, immediate resistance can be seen at 1.0909, and a breakthrough could trigger an increase to 1.0958. On the other hand, the nearest support is at 1.0844, and a break below could lead the pair to 1.0800.

Investors will focus on the monthly report from the German Bundesbank during the day, which may influence market expectations regarding the pace of possible ECB interest rate cuts this year. Additionally, on Wednesday, January business activity statistics in the services sector will be presented in the EU and the US. Predictions suggest that the Eurozone services sector index from S&P Global will strengthen from 48.8 to 49.0, while in the US, it will decrease from 51.4 to 51.0. On Thursday, a meeting of the European regulator will take place, and officials may provide comments that will affect the movement of the single currency quotes, although no changes in the direction of the agency's monetary policy are expected: the interest rate is expected to remain at 4.50%, and the deposit rate at 4.00%.

The price broke the upper boundary of the descending channel and may continue to rise.


On the GBP/USD chart, the pair is slightly increasing, attempting to develop a bullish impulse formed last week. Immediate resistance can be seen at 1.2724, and a breakthrough could trigger an increase to 1.2785. On the other hand, the nearest support is at 1.2661, and a break below could lead the pair to 1.2596.

Pound positions were pressured by December retail sales dynamics in the UK, reflecting a 3.2% contraction after a 1.4% increase in the previous month. In annual terms, the indicator declined by 2.4% after a 0.2% growth in November. Investors noted that a decline in consumer demand could contribute to a weakening of inflationary pressure and, consequently, lead to a quicker launch of monetary easing by the Bank of England. On Wednesday, January business activity data will be published for the EU, the UK, and the US. British indicators are expected to show moderate improvement, while US statistics may be mixed. The British manufacturing sector index may strengthen from 46.2 to 46.7 points, and the American index from 47.9 to 48.0 points. In turn, it is expected that the UK services sector index will rise from 53.4 to 53.5 points, and in the US, it will adjust from 51.4 to 51.0 points.

A new ascending channel has formed over the highs of the last two days. The price is now approaching the upper boundary of the channel and may continue to rise.


On the USD/JPY chart, the pair is correcting downward amid the absence of key macroeconomic statistics. Strong resistance can be seen at 148.80, and a breakthrough could trigger an increase to 149.60. On the other hand, the nearest support is at 147.64. A break below could lead the pair to 145.58.

On Tuesday, investors will pay attention to the results of the Bank of Japan's monetary policy meeting: analysts expect the interest rate to be maintained at -0.10%, as inflationary pressure in the country is unstable. Morgan Stanley experts stated that they do not expect the Japanese regulator to abandon its "ultra-dovish" rhetoric and anticipate that active measures will only begin after spring wage negotiations. December data from Japan, published on Friday, reflected a moderate slowdown in inflation growth. The national consumer price index decreased from 2.8% to 2.6%. The indicator fell from 2.5% to 2.3%, and the indicator excluding food and energy dropped from 3.8% to 3.7%. In the US, the University of Michigan's consumer sentiment index increased from 69.7 to 78.8 in January, significantly exceeding preliminary estimates of 70.0.

The price broke the lower boundary of the ascending channel and may continue to decline.

Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips. Open your FXOpen account now or learn more about trading forex with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Latest from Forex Analysis

Market Analysis: GBP/USD Struggles While USD/CAD Aims Higher USD/JPY Technical Analysis: Yen Strengthens after Comments from Japanese Officials The American Currency Resumes Its Growth Australian Dollar Weakens amid Inflation News Exchange Rates Consolidate at the Beginning of the Week

Latest articles

Financial Market News

Weekly Market Wrap With Gary Thomson: CAC 40, AUD, OIL, AMAZON

Get the latest scoop on the week's hottest headlines, all in one convenient video. Join Gary Thomson, the COO of  FXOpen UK, as he breaks down the most significant news reports and shares his expert insights. European Stock Markets on


Price of Gold Briefly Exceeded $2,050 per Ounce

In addition to new records in the stock markets, the reaction to yesterday's news about inflation in the US was also a decrease in government bond yields and a rapid rise in the price of gold — the cost of XAU/


Nasdaq-100 Price Hits All-time High after 4 Straight Months of Gains

The Nasdaq-100 index is holding above 18,000 today following yesterday's bullish momentum, fueled by inflation news. The PCE consumer spending index amounted to 0.4% on a monthly basis, which was in line with analysts' expectations. A year ago,

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 65.68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.