The forex market opened the week with heightened volatility amid a flurry of geopolitical tensions, global economic uncertainties, and mixed signals from central banks. On Monday, traders reacted to recent developments including renewed U.S. trade tensions, upcoming central bank meetings, and cautious global sentiment, leading to sharp moves across major currency pairs.
🌍 Global Market Sentiment & Key Drivers
Investor sentiment remains fragile as markets digest the latest headlines from the U.S. and Asia. Over the weekend, the Biden administration reignited tariff threats on Chinese tech imports, particularly targeting semiconductors, prompting risk-off flows early Monday. In Europe, political instability in France and Germany added to caution, while Japan signaled possible verbal intervention to curb yen volatility.
On the macro front, traders are eyeing several key data releases this week, including U.S. retail sales and inflation figures, UK employment data, and the ECB’s mid-week policy meeting. These events are expected to guide short-term positioning in the FX market.
💱 EUR/USD – Euro Pressured by EU Political Risks, ECB Eyed
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Last Price: 1.0735
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Change: -0.34%
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Resistance Levels: 1.0800, 1.0875
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Support Levels: 1.0670, 1.0600
The euro weakened against the dollar as traders reduced exposure to the common currency ahead of the European Central Bank (ECB) meeting on Thursday. Despite some hawkish commentary from ECB officials last week, political uncertainty in Germany (with coalition tensions) and weak industrial production data from France weighed on sentiment.
Outlook: A dovish tilt from the ECB could push EUR/USD below 1.0670, while a surprise hawkish pivot may provide short-term upside toward 1.0800. Traders are advised to monitor inflation commentary closely.
💷 GBP/USD – Sterling Steady, BOE Expectations Support
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Last Price: 1.2538
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Change: +0.12%
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Resistance Levels: 1.2600, 1.2675
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Support Levels: 1.2460, 1.2400
The British pound remained relatively resilient despite broader dollar strength. Investors are cautiously optimistic ahead of Tuesday’s UK employment data. A stronger-than-expected jobs report could reduce pressure on the Bank of England to cut rates in Q2 2025.
Outlook: If GBP/USD breaks above 1.2600, we could see a move toward 1.2675. However, weak wage growth data could drag the pair back to 1.2450 or lower.
💴 USD/JPY – Yen Strengthens on Intervention Talk
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Last Price: 152.05
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Change: -0.48%
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Resistance Levels: 153.50, 155.00
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Support Levels: 150.80, 149.30
The Japanese yen firmed Monday as traders speculated about potential currency intervention after officials from the Bank of Japan and Ministry of Finance warned against “excessive speculative moves.” U.S.-Japan trade talks scheduled for later this week are also adding caution to bullish USD/JPY bets.
Outlook: While the pair remains in a longer-term uptrend, the possibility of coordinated intervention could cap further upside. Key downside levels to watch are 150.80 and 149.30.
🇨🇭 USD/CHF – Swiss Franc Gains as Risk Aversion Grows
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Last Price: 0.8992
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Change: -0.25%
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Resistance Levels: 0.9050, 0.9100
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Support Levels: 0.8930, 0.8880
The safe-haven Swiss franc strengthened as risk appetite dwindled. The Swiss National Bank remains cautious and unlikely to tighten further, but global risk-off flows continue to favor the franc, particularly against the dollar and euro.
Outlook: A break below 0.8930 could accelerate downside momentum toward the 0.8880 support zone. On the upside, resistance near 0.9050 could attract sellers.
🔀 Other Majors & Emerging Markets
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AUD/USD dropped to 0.6550 (-0.35%) after dovish remarks from RBA board members and a dip in Chinese import data.
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USD/CAD rose to 1.3685 (+0.28%) on weaker crude oil prices and ahead of key Canadian CPI data due Wednesday.
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USD/CNY climbed to 7.2340 amid U.S.-China tensions and sluggish Chinese factory orders.
Emerging market currencies including the Mexican peso and South African rand also retreated, pressured by rising U.S. yields and stronger dollar demand in Asia.
📈 Technical Outlook & Strategy
Overall, the U.S. dollar remains buoyed by safe-haven flows and rising U.S. bond yields, but technical indicators suggest caution at key resistance levels. Traders should watch for:
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DXY (Dollar Index) resistance at 106.30 and support near 104.90
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Volatility ahead of U.S. retail sales (Tuesday) and ECB rate decision (Thursday)
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Geopolitical Risk Premiums driving safe-haven FX such as JPY and CHF
🧭 Trading Outlook
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Short-term bias: Defensive; risk-off sentiment dominates.
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Key events to watch:
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U.S. Retail Sales – Tuesday
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UK Employment Data – Tuesday
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ECB Rate Decision – Thursday
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Japan-U.S. Trade Talks – Ongoing this week
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Strategy: Consider tactical long positions in JPY and CHF on dips. Look for dollar pullbacks near technical resistance to re-evaluate long positions, especially ahead of U.S. macro data.
