Created on January 13, 2026

The Euro has peaked above the swing high during the trading session here on Tuesday as the Japanese yen continues to struggle overall.

The Euro has peaked above the swing high during the trading session here on Tuesday against the Japanese Yen, and it does look to me like a market that is probably going to continue to find plenty of buyers. This is not necessarily a situation where I love the Euro; I just think the Japanese Yen is going to continue to be that weak.

We have been in a nice uptrend in all of the yen-denominated pairs for some time now, and one thing that you could look at on this chart, at least in the sense of whether or not you should trade this pair, is that at least you avoid the US dollar. There are a lot of questions about the US dollar at the moment.

Bank of Japan Policy and the Carry Trade

That being said, the one thing that’s not a question is that the Japanese Yen continues to weaken, and I think there are a lot of problems in Japan that will continue to show themselves in the currency markets. Traders continue to look at the Bank of Japan and recognize that they can’t tighten policy too much.

And while the European Central Bank isn’t necessarily going to make big moves going forward, as we are essentially where we need to be there, the reality is that the Bank of Japan is going to have a problem where it cannot raise rates enough to avoid the carry trade.

I think this is a big situation where looking at the Japanese Yen as a funding currency and continuing the overall carry trade is going to appear in this pair as well as many others. I believe that as long as we can stay above the 50-day EMA, this is a strong market that could continue much higher, possibly even as high as 188 Yen.

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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.

GBP/USD Technical Analysis

The British pound, of course, is looking very much like a market that is going to respect the 1.35 level as a magnet for price, but also for a barrier that extends possibly all the way to the 1.36 level.

With this being the case, I think you look at short-term rallies that show signs of exhaustion, like we are seeing early in the day, as a potential selling opportunity. I do believe the US dollar is turning the corner, and with that being the case, you have to look at this through the prism of a market that you are fading as it shows signs of exhaustion. If we break above the 1.36 level, that invalidates everything.

EUR/GBP Technical Analysis

The euro continues to drift lower against the British pound, but we’re sitting right here at the 200-day EMA. It’ll be interesting to see if we can break down below there, because if we do, I think it opens up the door to 0.86, and then after that, much lower, maybe 0.84.

This is not a quick-moving pair, but when you look at the euro against the dollar, and you look at the British pound against the dollar, you can definitely see that the British pound is less bad. And that’s what I’m trading here. The ECB is already pretty low with its rates, and it’s not going to do anything, but the Bank of England, despite the fact that it just cut its rates, looks very much like it’s going to be hesitant to do so aggressively. I still like the downside here; I like fading rallies; I like shorting this pair below the 200-day EMA.

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Created on January 13, 2026

The British pound has rallied Monday as the Department of Justice announced it was investigating Jerome Powell. However, we see the same resistance area.

• The excuse this morning was that the Department of Justice is looking at Federal Reserve Chairman Jerome Powell, and that had the markets nervous.
• Anytime you start to see politics played with major participants, they do not like that.
• At this point though, the reality of the situation is whether or not he gets indicated really does not matter. He will not be the Federal Reserve Chairman by the time anything would happen, and I think that is what you are starting to see the markets come to grips with.

The reality is it really does not change anything. With that being the case, the 1.3550 level continues to be significant resistance and I am looking for signs of exhaustion to start shorting. I do believe that we are starting to see that in short-term charts.

A Market Stuck in a Familiar Range

I am not looking for a big move to the downside; in fact, I think the 50-day EMA at the 1.3372 level continues to offer a floor. As a result, I think this is a short-term back and forth type of setup. But when I look at the longer-term charts, it is worth noting that despite the volatility, we are at the same place we were at in June.

Although it has been exhausting to trade this pair at times, the reality is nothing has changed. We have made a series of lower highs though, and that might be something looked at through the lens of a longer-term trader. If we break down below the 1.33 level, I think at that point in time the bottom falls out and it would not surprise me if that ends up being the case. Keep in mind that the British pound has outperformed its peers against the US dollar both up and down over the last couple of years and I think that will probably continue to be the case.

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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.

Created on January 13, 2026

• The US dollar initially fell against the Japanese yen during early trading on Monday, only to turn around and show signs of life again.
• All things being equal, this is a market that I think continues to see a lot of value hunting, and I recognize that the 158 yen level is an area of significant resistance and an area that’s been important multiple times.

The fact that we look like we are trying to reclaim that and go higher is a very bullish sign, and in that environment, we could go looking to the 160 yen level. The 160 yen level is an area that we have seen the Bank of Japan intervene at previously.

Taking Advantage of Carry Trade

But with this, I also keep in mind that the market is going to continue to see a lot of traders trying to take advantage of the carry trade, and although the US dollar is a little bit soft against multiple other currencies, the reality is that the Japanese yen is extraordinarily weak. It should be because the Bank of Japan has no real chance of raising rates significantly, as the debt level is far too high for the interest rates to be very elevated.

This being the case, I think you continue to see a lot of buy on the dip behavior with the 156 yen level offering support as the 50-day EMA is racing towards there. If we can break above the 160 yen level, we could really take off, and we could be talking about a multi-year rally.

I don’t know that’s going to happen yet, but I certainly know that I have no interest in shorting this pair. Therefore, I look at it as the same as I have for the last year or so, I just look at anytime the US dollar falls against the Japanese yen, you have to believe it’s an opportunity to get involved.

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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.