Created on February 06, 2026

• The Euro has been slightly negative during fairly quiet trading on Thursday, as the ECB rate decision has come and gone.
• At this point, the market looks like it is ready to make a decision.

The Euro has been slightly negative during fairly quiet trading on Thursday despite the fact that we had an ECB decision. Ultimately, not much changed. That is not a huge surprise because quite frankly, that is what we had anticipated. So, we are just hanging around the 1.18 level, and we will have to look through this market through the prism of what the US dollar is doing.

During the trading session, it has been a touch stronger against Europe and a touch weaker against Asia—at least some Asia. So, with that being said, I think we have a potential for a move to the upside on any type of momentum breaking above the 1.1850 level.

Binary Choice for Momentum

If we break above there, then the 1.20 level would be the target. If we break down from here, then we will test the 50-day EMA. If we were to break down below the 50-day EMA, then it opens up the Euro to go to the 1.16 level, which is just sitting right around the 200-day EMA.

We are essentially in the middle of a binary choice like this, so that being said, if we see some type of momentum, I think we have a couple of targets ahead of us based on those. We will have to wait and see how Friday plays out, but as things stand right now, we still have a situation where we broke out of consolidation, we pulled back to retest that previous resistance. Now the question is, will we find buyers to push this thing to the upside?

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

The GBPJPY pair succeeded in breaking the bullish channel’s support that is represented by 213.45 level, activating the previously suggested bearish corrective track, recording all the waited targets by reaching 211.60 level, attempting to recover some of the losses by its rally towards 212.85, attempting to retest the extra barrier that appears in the above image.

Confirming the bearish scenario requires providing new bearish close below 212.85, to ease the mission of targeting 212.00 level and surpassing it might extend the losses towards 211.25 and 210.45, while regaining the bullish trend requires forming strong bullish moves to settle above 214.15 level.

The expected trading range for today is between 211.25 and 213.00

Trend forecast: Bearish

The EURJPY pair provided several weak sideways trading, delaying the bullish trend due to its stability below 185.45 barrier, to form some mixed trading by reaching 184.35 level.

Note that stochastic exit from the overbought level might increase the negative pressures on the trading, forcing it to provide negative corrective trading, to target 183.85 level reaching the bullish channel’s support at 183.20, while breaching the barrier and holding above it will reinforce the chances of recording extra gains that might begin at 186.20.

The expected trading range for today is between 183.85 and 185.40

Trend forecast: Fluctuating within the bullish trend

– Written by


Frank Davies

STORY LINK GBP/USD Forecast: Pound Sterling Weakens after BoE Policy Shift

The Pound to US Dollar exchange rate (GBP/USD) sold off sharply on Thursday as markets digested the Bank of England’s latest policy decision, which was viewed as more dovish than expected.

At the time of writing, GBP/USD was trading near $1.3570, marking a decline of around 0.6% from the start of the day’s session.

Sterling came under sustained pressure after the Bank of England left interest rates unchanged at its first meeting of 2026, but with a narrower vote split than markets had anticipated.

Rather than the widely expected 7–2 decision in favour of holding rates, the Monetary Policy Committee delivered a 5–4 vote, signalling a growing divide within the committee and a stronger appetite for looser policy.

The unexpectedly tight outcome reinforced expectations that interest rate cuts could arrive sooner rather than later. Markets moved to price in as much as 50 basis points of easing this year, with some traders now seeing scope for the first cut as early as March, dragging the Pound lower.

The US Dollar, meanwhile, found some support through Thursday’s European session, benefiting from safe-haven demand amid choppy market conditions.

However, the Greenback’s gains were capped following the release of the latest US jobless claims figures. Initial claims for unemployment benefits rose to 231,000 last week, up from 209,000 previously.

The increase prompted investors to reassess the resilience of the US labour market, unwinding part of the recent hawkish repricing of Federal Reserve rate expectations and limiting further USD upside.

GBP/USD Forecast: Will Softer US Confidence Weigh on the Dollar?

Looking ahead, attention turns to the University of Michigan’s consumer sentiment survey, which could provide the next directional cue for the Pound to US Dollar exchange rate.

A further deterioration in household confidence may revive concerns over the durability of US economic momentum, potentially weighing on the Dollar.

On the UK side, the economic calendar remains sparse. In the absence of fresh data, Sterling may remain sensitive to domestic political developments, with questions continuing to swirl within the Labour Party over Prime Minister Keir Starmer’s leadership following the Mandelson–Epstein controversy.

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US Consumer Sentiment Spotlights the Fed

While Japanese data and the upcoming election influence yen demand, US economic data will affect buying interest in the US dollar.

Later on Friday, US consumer sentiment numbers will take center stage, given the delay to the US jobs report. Economists forecast the Michigan Consumer Sentiment Index to fall from 56.4 in January to 55.0 in February. Waning consumer sentiment could signal a pullback in consumer spending and a softer inflation outlook. Cooling inflation would support a more dovish Fed rate path, weighing on US dollar demand.

A more dovish Fed policy stance and a more hawkish BoJ rate path would indicate a narrowing in US-Japan rate differentials. Narrowing rate differentials in favor of the yen would be bearish for USD/JPY.

According to the CME FedWatch Tool, the chances of a March Fed rate cut increased from 13.4% on January 29 to 24.3% on February 4. Meanwhile, the probability of a June cut jumped from 61.8% to 82.3%.

Technical Outlook: Key Levels to Watch

For USD/JPY price trends, traders should assess technical indicators, incoming economic data, central bank chatter, and political developments.

On the daily chart, USD/JPY remains above its 50-day and 200-day Exponential Moving Averages (EMAs). The EMA positions signal a bullish bias. However, positive yen fundamentals continue to offset technicals.

A break below the 50-day EMA would bring the 200-day EMA into play. If breached, 150 would be the next key support level.

Importantly, a sustained fall through the EMAs would indicate a bearish trend reversal and reaffirm the negative medium-term price outlook.