Oil Drives EUR/USD and GBP/USD as Markets Turn Rangebound

Right now, EUR/USD and GBP/USD are being driven mainly by oil prices, not interest rate expectations. Both pairs have shown a very strong inverse correlation with crude over the past week, meaning when oil rises, these pairs tend to fall. This has made energy the dominant factor in FX, outweighing rate differentials and even economic data.

The ECB and BoE are both expected to hold rates, and markets have already priced in multiple future hikes. Because of that, today’s decisions may have limited impact unless the tone is clearly more hawkish than expected. Focus will be on communication from Christine Lagarde and the BoE vote split, but even then, energy trends are likely to matter more.

Economic data like GDP and inflation releases are taking a back seat for now, as future growth and inflation expectations are heavily tied to energy prices rather than past data.

Technically, both pairs are trading in clear ranges. EUR/USD is holding support near 1.1670 near the 200-day SMA, with resistance around 1.1720 and 1.1750. GBP/USD is ranging between 1.3450 and 1.3590, with strong support near the 200-day SMA. Momentum indicators show weakening upside strength in both pairs, but no clear trend yet.

Overall, markets are rangebound and cautious. Oil remains the key driver, and traders should focus on price action at key levels, as breakouts from these ranges will likely define the next move.

EUR/USD Daily Chart

GBP/USD Daily Chart