Euro May Extend Gains; Yen Strengthens, but Market Reversal Risks Persist
FXOpen
The foreign exchange market remains under pressure from prevailing uncertainty, although corrective movements in major currency pairs appear to be nearing completion.
EUR/USD
The EUR/USD pair is trading above 1.1700, showing resilience following a pullback from local highs. The pair is supported by falling US Treasury yields and a broadly weaker US dollar. Tomorrow’s releases of Germany and Eurozone Purchasing Managers’ Indices (PMIs), along with the European Central Bank’s interest rate decision, may determine the short-term trajectory and act as a catalyst for a new impulse. Key support remains at 1.1600.
Technical analysis of EUR/USD suggests a potential retest of recent highs around 1.1810, as a Tweezers formation has developed on the daily timeframe following a rebound from the 1.1550–1.1600 area. A firm break below the base of this pattern would invalidate the scenario of renewed upward momentum.
Key events that may influence EUR/USD movement:
- Today at 17:00 (GMT+3): Eurozone Consumer Confidence Index
- Tomorrow at 11:00 (GMT+3): Eurozone Services PMI
- Tomorrow at 15:15 (GMT+3): ECB Interest Rate Decision
USD/JPY
The USD/JPY pair is trading just below 147.00, marking its third consecutive day of decline after failing to consolidate above 149.00. Rising geopolitical tensions and a decline in risk appetite may increase demand for the yen as a safe-haven currency. In addition, investors are still weighing the likelihood of changes in the Federal Reserve’s rhetoric, amid weak US data and rumours of a possible leadership change at the central bank.
The nearest area where the downward momentum could slow lies in the 145.70–146.00 range. A daily close above 147.00 may signal yen weakness and open the way for another test of the 149.00 level.
Key events likely to affect USD/JPY pricing:
- Today at 17:00 (GMT+3): US Existing Home Sales
- Today at 17:30 (GMT+3): US Crude Oil Inventories
- Tomorrow at 15:30 (GMT+3): US Initial Jobless Claims
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