Exchange Rate Forecasts for British pound, Euro, US Dollar and Yen
- Written by: Gary Howes
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We consider the latest exchange rate forecasts on the GBP/USD, EUR/USD and US/JPY issued by those currency analysts we regularly follow.
Latest currency market action
In the aftermath of Friday's weaker US jobs data we saw US dollar selling across the board before some bounce back - notably in USD/JPY, quickly reclaiming a 102 handle after trying twice below 101.50.
"EUR/USD steadied in the low 1.36s and GBPUSD has well and truly bounced from the 1.6260 support to reclaim a birth at 1.64 and open up for a retest higher - that support level is now even more important for the pair and when we break below it will likely see considerable momentum, which could drag GBP/USD close to 1.6000," says a note issued by Investec.
A potential catalyst for a GBP/USD move lower this week is the Bank of England Quarterly Inflation Report on Wednesday.
"Many economists expect Governor Mark Carney to change the current forward guidance rhetoric and potentially lower the knockout criteria for a review on policy, since the UK unemployment rate has fallen more sharply than expected," say Investec.
Note: All AUD quotes here refer to the wholesale spot market. Your bank will charge a spread at their discretion when passing on a retail rate. However, an independent FX provider is so well placed on the market that they are able to deliver you up to 5% more currency. Please learn more here.
Pound dollar exchange rate forecasts
ICN Financial:
"The pair managed to move to the upside and stabilised above 1.6390 which is positive because it favours extending bullishness of the alternative Bat Pattern as showing on graph. Based on technical analysis rules, stabilising above the referred to level represented in 38.2% correction might extend bullishness towards 1.6485.
"Of note, 1.6485 level determines the bullish extension, whereas breaching it might extend the upside move towards 1.6545 while failing to breach will bring the overall downside move again."
UniCredit Bank: "The lower USD on the back of weaker US labor data lifted cable back to 1.64 with investors now waiting for the BoE’s inflation report on Wednesday. The bank is likely to reduce its jobless rate forecast and this is expected to provide sterling with some tailwinds back towards 1.65."
"The pair has been consolidating over the past few weeks, and there’s potential for more downside. Support is at 100.76 ahead of the critical 99.96. Resistance is at 102.41 ahead of 103.44." - UBS.
Euro dollar exchange rate forecast
UniCredit Bank:
"Range-bound activity at around 1.36 is likely to continue today on the back of a very light agenda and some prudence ahead of tomorrow’s testimony by the new Fed chair Janet Yellen. Charts indicate 1.3550 and 1.3650 as the two key levels to be monitored at the moment."
ICN Financial:
"The pair moved to the upside last week and traded above 23.6% correction at 1.3625 levels showing on graph. Stabilising above the referred to level might extend the upside move that is a possible retest of the broken support of the ascending channel that turned to resistance as shown on graph.
"In fact, the upside move requires breaching 1.3745 this week, if not the downside move will return and the upside move will be a retest. On the other hand, breaking 1.3530 will bring negativity again."
"The latest recovery does not change the bearish picture as long as resistance holds at 1.3639. The risk is for resumption of downtrend from here to break through support 1.3458 and then test 1.3400." - UBS.
Dollar Yen exchange rate forecast
"The USD/JPY gapped higher to start this week’s trade, but rates have since pulled back to the key 102.00 level. Over the past few weeks, the 102.00 handle has served as a reliable level of support and resistance, so we wouldn’t be surprised to see rates bounce back from here. On the other hand, a break below 102.00 would open the door for another pullback toward 101.00 over the course of this week," says Matt Weller at GFT.
"The pair has been consolidating over the past few weeks, and there’s potential for more downside. Support is at 100.76 ahead of the critical 99.96. Resistance is at 102.41 ahead of 103.44." - UBS.
"USDJPY extended the bullish rebound on Friday, as the price maintained trading above 101.75 support level, which enhanced the technical picture slightly over the short term. However, the overall bearish wave that started from 105.45 top is sill intact, and accordingly, we expect a sideways this week." - ICN Financial.
"The dollar has recently been testing support in the region of ¥100 and the fact that this key support level has held has been acting as a positive on Tokyo stocks over the last few sessions. However, a short-term downtrend is now in place and the US currency would need to push above 104 to break that – and that looks unlikely just now." - analyst Bill McNamara at Charles Stanley.
"USD-JPY has gradually recovered to 102 on the back of lower risk aversion across markets. Investors may still remain cautious in the near term, but we maintain our bullish view for the medium term." - UniCredit.