EUR/USD and GBP/USD Gain Momentum amid Dollar Weakness

The Euro and the British Pound continued to gain momentum against the US Dollar, driven primarily by broad greenback weakness following remarks from Federal Reserve Chair Kevin Warsh. With the Fed offering no clear signal regarding further rate hikes or an imminent pause, the US Dollar lacked fresh catalysts for upside, allowing major European currencies to advance despite mixed regional economic data.

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In the Eurozone, final September CPI was confirmed at 3.8% year-on-year, matching preliminary estimates but accelerating from 3.2% in August. Core CPI rose slightly to 2.5% from 2.4%, highlighting underlying inflationary pressures. While persistent inflation reinforces expectations for European Central Bank policy tightness—with markets eyeing a potential deposit rate hike to 2.75% in December—real-sector data proved weak. The Eurozone posted an unexpected trade deficit of €6.8 billion in August, down from a €1.4 billion surplus in July, while August industrial production contracted by 0.5% month-on-month.

Meanwhile, the British Pound traded with a bullish bias in the absence of new UK economic releases. Sterling maintained support from strong previous-day reports, including August GDP growth of 0.1% month-on-month and an industrial production surge of 0.8%, which helped support the currency's ongoing recovery.

Looking ahead to the US session, market participants are monitoring secondary economic indicators, including US industrial production, manufacturing output, and capacity utilization. Unless these figures deliver significant upside surprises, the prevailing soft dollar environment is expected to maintain upward bias for risk assets in the near term.

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Technical Analysis: EUR/USD

EUR/USD trades near the upper boundary of its 1.1234–1.1275 defined range, hovering around 1.1268. A sustained close above key resistance at 1.1275 would open the path toward upside targets at 1.1310 and 1.1336. Mean reversion analysis highlights key inflection levels at 1.1276 and 1.1242. Conversely, a breakdown below support at 1.1234 would expose lower targets at 1.1193 and 1.1156.

Technical Analysis: GBP/USD

GBP/USD is testing immediate resistance near 1.3341, currently trading around 1.3344 within its 1.3307–1.3341 range. A confirmed close above 1.3341 would validate a bullish breakout toward 1.3368 and 1.3397. On the downside, a retreat back into the range and below support at 1.3307 would shift focus toward lower targets at 1.3273 and 1.3233, with 1.3317 acting as a key mean-reversion level.

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