Created on November 06, 2026

The British pound has dropped a bit against the Japanese yen on Thursday, but as we head into the weekend, the question will be whether or not we are going to see a return to the carry trade.

GBP/JPY

The British pound has pulled back just a touch against the Japanese yen in early trading on Friday, as the ¥214 level has offered a bit of a barrier. The ¥214 level is an area that we’ll be watching very closely because, if we can break above there, then I think the pound goes looking toward the ¥216.50 level.

Short-term pullbacks here should see plenty of support. The ¥212 level would be a likely candidate, as it is an area that has been both support and resistance. The 50-day EMA is rising a bit, and it is trying to cross above the 200-day EMA to kick off the so-called golden cross. We’ll have to wait and see if that ends up being the case, with buyers jumping in as well. I think it does make a certain amount of sense.

The interest rate differential still favors the British pound by a wide margin.

As long as we can stay above the moving averages, I think it’s likely that, sooner or later, buyers come in and pick up cheap British pounds. In fact, you get paid at the end of every day quite a bit to do so, and we are starting to see that play out.

There was an ascending triangle that just got broken—a sloppy one, mind you—but you can make an argument that we could be looking at a move to about ¥219, or you could take a look at the double bottom, and that reads for a move to about ¥216.

So, it really just comes down to how you want to read this chart. But either way, getting paid at the end of every day makes a huge difference over the longer term, and traders will be wise to pay attention to that.

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Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire

EUR/USD Outlook: Scotiabank Sees 1.1350-1.1400 Beyond Key Resistance

Scotiabank sees scope for the Euro to extend its recovery against the US Dollar, but a key resistance level still stands in the way of further gains.

The Euro to Dollar exchange rate was trading at $1.1231 on Wednesday, up 0.21%, after giving back part of its advance following the US midterm elections.

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The Euro had reached $1.1272 during the session, coming close to a level Scotiabank says must give way before a more substantial recovery can develop.

Its strategists see scope for EUR/USD to reach 1.1350-1.1400 if it clears 1.1275, a conditional technical objective rather than a forecast tied to a particular month.

The retreat from Wednesday’s high leaves that breakout unconfirmed.

A recovery with a specific hurdle

Scotiabank’s Shaun Osborne and Eric Theoret describe the short-term outlook as neutral to bullish:

“Positive price action overall this week so far plus the resilient EUR support in the low 1.11 zone in recent weeks maintain a broadly positive technical undertone for the EUR. But spot needs a clear push above 1.1275 to progress higher and take a run at 1.1350/1.14.”

The stronger price trend contrasts with the earlier Scotiabank assessment that weak momentum was holding back the Euro, when French bond-market tensions were preventing the currency from benefiting fully from a softer Dollar.

Scotiabank sees the election narrowing some of the advantages that have supported the Dollar:

“Ultimately, this USD reaction among the G10 currencies likely reflects something of a ‘relief rally’ as well as a shift in the USD toward the middle of its ‘smile’, in which relative growth and interest rate differentials narrow as the US/USD drift from the edge linked to exceptionalism-with the other edge of the smile tied to sentiment-driven risk aversion.”

In that framework, the Dollar loses support as US economic outperformance fades, without investors becoming fearful enough to seek safety in the currency.

Richard Lake, writing in Citi’s trading-desk commentary, is also cautious about extrapolating the initial response:

“The usd, modestly lower on the news suggests a slight shift in bias but given the lack of consensus about how to play these midterms before the event, choppy trading right after, is not that surprising.”

December ECB tightening remains in contention

Scotiabank reports that ECB policymaker Joachim Nagel saw a worsening inflation picture and considered further tightening likely in December.

Scotiabank adds:

“His colleague Sleijpen said the Iran shock was more persistent than had been thought-although there were no second-round inflation effects visible at this point-while Governor Kocher said a December rate hike was likely unless circumstances change.”

Second-round effects would involve the original energy shock feeding more persistently into other prices and wages.

The ECB’s latest decision left its deposit rate at 2.50%, acknowledging that expensive energy threatened both higher inflation and weaker growth.

The Governing Council also said underlying inflation had remained broadly stable and declined to commit to a future rate path.

The election has not settled US fiscal policy

Democratic control of Congress also leaves open several possible outcomes for US spending, rather than imposing an immediate brake on the economy.

On President Donald Trump’s response, Lake writes:

“At the moment, his acceptance of the results and promise to work with Democrats (albeit threatening the veto too) is noteworthy. There is a path to higher spending, something Trump and the broader movement have often advocated for, and that seems an obvious place to work together should they choose.”

That possibility complicates expectations that divided government will necessarily reduce inflation pressure and the Dollar’s interest-rate advantage.

For a longer-term comparison, Crédit Agricole puts EUR/USD at 1.13 in December 2026 and 1.17 in December 2027, allowing for a gradual recovery over the following year.

What This Means for EUR/USD

The immediate test is whether Euro buyers can turn a recovery within the recent range into a move above it. Holding above Scotiabank’s 1.1275 threshold would strengthen the case for an advance towards 1.1350-1.1400.

A continued failure there would leave the upper range boundary intact, despite the weaker Dollar. The low 1.11s remain the broader support area identified by Scotiabank.

Beyond the chart, the Euro needs favourable relative policy developments to sustain its gains. December ECB tightening remains possible, but so does US fiscal co-operation that keeps spending and inflation stronger than a simple gridlock argument would suggest.

U.S. Dollar Index gains some ground as traders focus on the Initial Jobless Claims report. The report indicated that 189,000 Americans filed for unemployment benefits in a week, compared to analyst forecast of 196,000.

Traders also reacted to the huge sell-off in U.S. equity markets. Demand for safe-haven assets increased, which was bullish for the American currency.