European currencies remain under pressure and are trading close to key support levels amid cautious sentiment and anticipation of a dense slate of macroeconomic releases. After a sharp decline in previous sessions, the euro and the pound attempted a modest corrective rebound, but the recovery proved limited. The market has shifted into range-bound trading, reflecting a balance between short-covering and a reluctance to increase risk ahead of data yet to be released.

EUR/USD is consolidating after its recent downturn, responding to mixed expectations regarding the euro area economy. The latest figures have reinforced doubts about the sustainability of the recovery, while analysts continue to point to weak momentum in the region’s largest economies and a subdued inflation impulse. In this environment, market participants are in no hurry to return to euro buying, preferring to wait for fresh macro signals that could clarify the outlook for ECB policy.

GBP/USD also remains under pressure despite an attempt at a corrective rise following a sharp sell-off. Expectations for upcoming UK data remain muted: analysts forecast moderate GDP and industrial production growth, which does not provide a solid basis for sterling appreciation. An additional source of uncertainty is the US dollar backdrop. During the session, several US indicators are due, including export and import price data, manufacturing activity indices, as well as speeches by Federal Reserve officials.

EUR/USD

After a sharp decline at the end of last year, EUR/USD buyers managed to find support near the key 1.1600 level. Following a retest of 1.1620, the pair rose towards 1.1700, but has so far failed to develop a full corrective move. If EUR/USD holds above 1.1700 in the coming trading sessions, a move towards 1.1760–1.1800 is possible. A break below support at 1.1600 could pave the way for a renewed decline with a subsequent test of 1.1550.

In the coming trading sessions, the following events may influence EUR/USD pricing:
– today at 09:40 (GMT+2): France’s Harmonised Index of Consumer Prices (HICP);
– today at 10:00 (GMT+2): Spain’s Consumer Price Index (CPI);
– today at 11:00 (GMT+2): Germany’s annual GDP.

GBP/USD

The GBP/USD pair continues to trade within a narrow range between 1.3400 and 1.3500. In the event of weak UK macroeconomic data, the pair may test support at 1.3400–1.3410. A move above 1.3500 could open the way for a retest of recent highs near 1.3570.

In the coming trading sessions, the following events may influence GBP/USD pricing:
– today at 09:00 (GMT+2): UK Gross Domestic Product (GDP);
– today at 11:30 (GMT+2): Bank of England Credit Conditions Survey;
– today at 15:30 (GMT+2): Philadelphia Fed Manufacturing Index (US).

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