European Currencies Strengthen After Corrective Pullback

The EUR/USD and GBP/USD currency pairs are showing moderate gains following a recent correction, supported by fundamental factors weakening the US dollar. Trade uncertainty, a rising national debt, and declining confidence in US exceptionalism have led to a fall in US asset values and a rise in the euro and pound.

In the upcoming trading sessions, investor focus will shift to the release of key macroeconomic data from the eurozone and the UK, including inflation and retail sales figures. These releases could significantly influence expectations surrounding monetary policy decisions by the ECB and the Bank of England. Additional market volatility may be driven by tomorrow’s release of US retail sales and producer price index (PPI) data for April. These figures could, in turn, reshape expectations regarding US interest rates and impact the dollar’s performance against the euro and pound.

Such a dense news flow may provide clearer signals about the future direction of major currency pairs — and possibly clarify whether the April trends are likely to resume.

EUR/USD Technical Analysis

The EUR/USD pair is trading close to a key resistance level at 1.1300, having recovered from its recent decline. Technical analysis suggests that a breakout above this resistance could open the way for further gains towards the 1.1360–1.1420 area. The nearest support lies at 1.1220; a break below this level could lead to a decline towards 1.1100–1.1080.

Key events that could influence EUR/USD pricing today include:

• 10:00 (GMT+3): ECB non-monetary policy meeting;
• 11:00 (GMT+3): ECB Financial Stability Review;
• 12:30 (GMT+3): German 10-year bond auction;
• 19:00 (GMT+3): Speech by ECB’s Philip Lane.
  

GBP/USD Technical Analysis

The GBP/USD pair has strengthened to the 1.3400 level, continuing its upward movement after forming a bullish engulfing pattern on 12 May. A strong breakout above the 1.3365 level and consolidation above it reinforce the bullish outlook, with a potential target of retesting highs near 1.3445. A key support zone lies between 1.3340 and 1.3320 — a break below this area could trigger a retest of the important 1.3260–1.3230 range.

Upcoming events that may influence GBP/USD pricing include:

• Today at 09:00 (GMT+3): UK Consumer Price Index (CPI);
• Tomorrow at 11:30 (GMT+3): UK Composite PMI;
• Tomorrow at 11:30 (GMT+3): UK Services PMI.

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