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• The dollar is under pressure due to threats to the Fed’s independence.
• The yen has weakened due to the government’s political adventurism.

What is happening now is reminiscent of the hysteria that followed America’s Liberation Day. Take a deep breath, exhale, and let events unfold. This is how Scott Bessent tried to calm the financial markets and the US’s European partners. He urged them not to retaliate. However, another parallel with the events of April accelerated the sell-off of everything American. Stocks, bonds and the dollar all collapsed. Admittedly, to a lesser extent compared to the announcement of global tariffs back then.

Pressure on the greenback was created by criticism of the Fed chairman from the Treasury and the Lisa Cook hearing. The court will decide whether the protection of the central bank from political interference, created by Congress 90 years ago, will stand or not. If Donald Trump is able to dismiss and appoint FOMC members at will, the federal funds rate will fall to 1%, and with it, the US dollar will collapse.

Jerome Powell’s intention to attend the Lisa Cook trial outraged Scott Bessent. He accused the Fed chairman of causing huge losses to the central bank due to large-scale monetary stimulus during the pandemic. Everything is bad for the executive branch: both when the Fed keeps rates unchanged and when it lowers them.

The noise and dust surrounding White House politics is causing investors to flee the dollar and other American assets. The surge in Treasury bond yields is the result of a ‘sell America’ attitude. Events in Japan are adding fuel to the fire in global debt markets. There, long-term bond yields have reached record levels on fears that early elections to the lower house of parliament are a political gamble by Sanae Takaichi.

The Liberal Democratic Party’s long-time ally, Komeito, has joined the opposition, and the policy of fiscal stimulus and low interest rates risks fuelling inflation. The associated decline in real household income will lead to discontent with the current government. As a result, the yen feels out of place even against the backdrop of a frankly weak US dollar. USDJPY cannot decide on the direction of further movement and is stuck in indecision.

Gold is another matter. Its new record high is due, among other things, to the Supreme Court’s reluctance to rule on the legality of US tariffs. This could drag on until June.

On Wednesday, GBP/USD remained stable at 1.3436. The British pound was supported by a sell-off in the US dollar following increased trade tensions between the US and Europe over Greenland.

US President Donald Trump has threatened to impose tariffs on imports from the UK, Denmark, Norway, Finland, France, Germany, and the Netherlands if these countries do not agree to transfer control of Greenland to the US. In response, investors began pulling back from American assets, including the dollar, and reallocating funds into European currencies and gold.

While recent UK labour market data showed weakness, with unemployment rates near five-year highs and the largest drop in payrolls since November 2020, there are some positive developments. These include a reduction in layoffs, stabilisation in job vacancies and unemployment, and a slowdown in wage growth that aligns with the Bank of England’s inflation target.

This backdrop sets the stage for further interest rate cuts by the Bank of England. The central bank’s baseline scenario suggests a final reduction to 3.50% in April, with market expectations for one more cut by mid-year and a 60% probability of a second cut by December.

Technical Analysis

On the H4 GBP/USD chart, the market is forming a broad consolidation range around the 1.3455 level. Today, we expect the range to extend to 1.3395. A correction to 1.3450 is likely, followed by a continuation of the downward trend toward 1.3326, with a potential drop to 1.3220. This scenario is supported by the MACD indicator, with its signal line above zero and pointing downward.

On the H1 chart, the market is consolidating around 1.3450, with a potential decline towards 1.3400. If this level breaks, the downward trend could extend to 1.3326. The Stochastic oscillator confirms this bearish outlook, as its signal line remains below the 50 level and continues pointing downward.

Conclusion

GBP/USD growth is closely linked to the weakening US dollar, primarily driven by geopolitical tensions and shifting market sentiment. The UK’s labour market data and the BoE’s expected rate cuts further support the pound’s position. Technically, GBPUSD may continue its downward correction in the near term, with key support levels at 1.3395 and 1.3326.

Daily Pivots: (S1) 1.1649; (P) 1.1709; (R1) 1.1785; More….

EUR/USD's rise from 1.1576 should still be in progress and intraday bias remains on the upside for 1.1807. Firm break there will resume whole rally from 1.1467, and target a retest on 1.1917 key resistance level. For now, risk will stay on the upside as long as 55 4H EMA (now at 1.1666) holds, in case of retreat.

In the bigger picture, as long as 55 W EMA (now at 1.1413) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will carry larger bullish implication. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

Daily Pivots: (S1) 157.55; (P) 158.07; (R1) 158.68; More...

No change in USD/JPY's outlook as consolidation continues below 159.44. Intraday bias remains neutral for the moment. With 156.10 support intact, outlook remains bullish. On the upside, break of 159.44 will resume the rise from 139.87 towards 161.94 high. However, firm break of 156.10 will confirm short term topping, and turn bias back to the downside for deeper pullback.

In the bigger picture, corrective pattern from 161.94 (2024 high) should have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94. Decisive break of 158.86 structural resistance will solidify this bullish case and target 161.94 for confirmation. On the downside, break of 154.38 support will dampen this bullish view and extend the corrective range pattern with another falling leg.

Daily Pivots: (S1) 1.3398; (P) 1.3445; (R1) 1.3488; More...

GBP/USD failed to break through 1.3494 resistance and retreated, and intraday bias remains neutral. On the upside, firm break of 1.3494 will suggest that pullback from 1.3567 has completed at 1.3342, after drawing support from 55 D EMA (now at 1.3379). Intraday bias will be back on the upside for 1.3567 first. Break there will resume the rally from 1.3008 to retest 1.3787 high. On the downside, sustained trading below 55 D EMA will argue that the decline is another falling leg in the corrective pattern from 1.3787.

In the bigger picture, price actions from 1.3787 (2025 high) are seen as a correction to the larger up trend from 1.3051 (2022 low). Deeper decline could be seen as the pattern extends, but downside should be contained by 38.2% retracement of 1.0351 to 1.3787 at 1.2474 to bring rebound. Break of 1.3787 for up trend resumption is expected at a later stage.

Daily Pivots: (S1) 0.7858; (P) 0.7921; (R1) 0.964; More….

No change in USD/CHF's outlook as intraday bias stays on the downside at this point. Firm break of 0.7860 support will argue that larger down trend is ready to resume through 0.7828 low. Next target will be 0.7382 projection level. For now, risk will stay on the downside as long as 55 4H EMA (now at 0.7967) holds, in case of recovery.

In the bigger picture, price actions from 0.7828 are seen as a correction. Larger down trend from 1.0342 (2017 high) is still in progress. Break of 0.7828 will target 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8332 support turned resistance holds (2023 low).

Daily Pivots: (S1) 0.6713; (P) 0.6730; (R1) 0.6753; More...

Intraday bias in AUD/USD remains neutral and range trading continues below 0.6757. Further rally is expected with 0.6659 support intact. On the upside, above 0.6765 will resume the whole rise from 0.5913 and target 61.8% projection of 0.5913 to 0.6706 from 0.6420 at 0.6910. However, considering bearish divergence condition in 4H MACD, firm break of 0.6659 will confirm short term topping, and bring deeper correction back to 55 D EMA (now at 0.6637) and below.

In the bigger picture, current development argues that rise from 0.5913 (2024 low) is reversing whole down trend from 0.8006 (2021 high). Further rally should be seen to 61.8% retracement of 0.8006 to 0.5913 at 0.7206. This will remain the favored case as long as 0.6420 support holds, even in case of deep pullback.

Daily Pivots: (S1) 1.3808; (P) 1.3844; (R1) 1.3873; More...

Intraday bias in USD/CAD remains neutral and more consolidations would be seen below 1.3927. Further rise is still in favor with 1.3789 minor support intact. On the upside, above 1.3927 will target 1.4139 first. Break there will target 100% projection of 1.3538 to 1.4139 from 1.3641 at 1.4242, as the third leg of the corrective pattern from 1.3538. However, firm break of 1.3789 will bring deeper fall back to 1.3641 support instead.

In the bigger picture, price actions from 1.4791 are seen as a corrective pattern to the whole up trend from 1.2005 (2021 low). Deeper fall could be seen as the pattern extends, and break of 1.3538 will target 61.8% retracement of 1.2005 to 1.4791 at 1.3069. For now, medium term outlook will be neutral until there are signs that the correction has completed.

Daily Pivots: (S1) 0.9247; (P) 0.9270; (R1) 0.9286; More....

Intraday bias in EUR/CHF remains mildly on the downside for the moment. Fall from 0.9394 should target 100% projection of 0.9394 to 0.9268 from 0.9347 at 0.9221. Break will bring retest of 0.9178 low. On the upside, above 0.9297 minor resistance will turn intraday bias neutral again first.

In the bigger picture, persistent bullish convergence condition in W MACD is a medium term bullish sign. Firm break of 0.9394 resistance should bring sustained trading above 55 W EMA (now at 0.9360). That should indicate medium term bottoming at 0.9178. Further break of 0.9452 resistance will bring stronger medium term rally towards 0.9928 resistance next, even still as a corrective bounce. Nevertheless, rejection by 55 W EMA will retain bearishness for another fall through 0.9178 at a later stage.

Daily Pivots: (S1) 0.8684; (P) 0.8708; (R1) 0.8746; More…

EUR/GBP's rebound from 0.8643 extended first and intraday bias stays on the upside. Sustained trading above 55 D EMA (now at 0.8717) will argue that whole fall from 0.8863 has already completed as a correction. Retest of 0.8863 should be seen next. Nevertheless, rejection by the 55 D EMA will bring another decline to 0.8631 cluster support (38.2% retracement of 0.8221 to 0.8663 at 0.8618).

In the bigger picture, rise from 0.8221 medium term bottom (2024 low) is seen as a corrective move. Upside should be limited by 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Sustained trading below 55 W EMA (now at 0.8623) should confirm that this corrective bounce has completed. In this case, deeper fall would be seen back to 0.8201/21 key support zone. However, decisive break of 0.8867 will suggest that EUR/GBP is already reversing whole decline from 0.9267 (2022 high). That should pave the way back to 0.9267.