Currency pair of the week

We maintain a bearish USD/JPY outlook and reckon an eventual break below the 140.00 is likely. A mix of risk aversion amid trade war uncertainty and fiscal concerns creates an ideal environment for the yen to prosper.

The US dollar has had a decent day so far today, especially against the Japanese yen. But it was higher event against the commodity dollars despite a sharp improvement in risk appetite.

EUR/USD forecast boosted as Moody’s downgrade rekindles the 'Sell America' theme. Dollar come under pressure despite rising yields, as the EUR/USD attempts to breakout from a bullish continuation pattern.

It will be a busy week for the cable with key data from both sides of the pond to come. For the GBP/USD forecast to turn decisively negative, US dollar will now have to improve markedly to prevent the Fed from cutting rates meaningfully this year.

While the EUR/USD forecast is far from bearish, the loss of strong bullish momentum points to a period of consolidation or a bit of retracement ahead of a busy week.

The EUR/USD forecast is turning bearish amid investor fears and market realisation that tariffs may be here to stay as Trump digs in, telling reporters that "sometimes you have to take medicine to fix something.

The US dollar was on the back foot in the first half of Wednesday’s session as the trade war enters a critical phase. Trump’s reciprocal tariffs day finally arrives later on, with risk sentiment remaining fragile following a bruising few weeks for global markets, especially Wall Street.

Despite a weaker start to the new week, the EUR/USD forecast remains bullish in our view in light for Germany’s historic spending shift that was approved last week.

In the US, weakening data and trade uncertainty has undermined the dollar, while over in Europe, attention has been on fiscal stimulus measures and defence spending commitments from Germany. Against this backdrop, it is difficult to be bearish on the EUR/USD forecast.

The US dollar is likely to remain under pressure this week as weakening US data raises the prospects of a sooner-than-expected rate cut by the Federal Reserve, keeping the EUR/USD forecast bullish. We reckon the single currency is heading to $1.10 following last week’s bullish reversal.

The EUR/USD has been able to rally at the start of this week, despite Trump’s trade tariffs and uncertainty over Ukraine. This pair will remain in sharp focus for these reasons alone, but also have the ECB rate decision and key data from the US to look forward to as well. The EUR/USD forecast is therefore subject to great uncertainty, but for now it looks like the path of least resistance is to the upside.