Created on January 12, 2026

The US dollar rallied nicely during the Friday session, despite the fact that the Non-Farm Payroll announcement was weaker than expected.

The US dollar rallied quite significantly during the trading session on Friday to test the crucial 158 yen level. The 158 yen level, of course, is an important area to pay close attention to, and if we can break above there, then I think it truly unleashes the US dollar to go much higher.

The Japanese yen has been struggling for a while, and with the interest rate differential favoring the US dollar the way it does, I do think we break out eventually. I have been buying dips in this pair for as long as I can remember and building a position. If we can break above the 158 yen level on a daily close, then it opens up the possibility to the 160 yen level.

Long-term Outlook and Interest Rate Differentials

Short-term pullbacks, I think, open up the possibility of value yet again with a floor in this market closer to the 154.50 yen level. The Bank of Japan is currently threatening to raise interest rates, but they just have far too much in the way of debt and plenty of other concerns about blowing up the entire carry trade to truly do so aggressively.

The Federal Reserve is likely to cut rates a couple of times during 2026, but it is a bit slower than anticipated, and of course, it is worth noting that inflation is a little sticky at this point, so pay close attention to that. I still like this pair. I get paid at the end of every day for holding it and have continued to do so for several months. Whether or not we can break above 160 yen remains to be seen because it was an area of intervention quite some time ago, so there might be some market memory there.

Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.

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.

– Written by


Ben Hughes

STORY LINK Euro-to-Dollar Forecast: EUR/USD Pressured as Markets Reassess Fed Cuts

The Euro to Dollar exchange rate has drifted lower towards the 1.16 area after the dollar secured net gains during the week.

With US data firm enough to dampen expectations of a near-term Federal Reserve rate cut, markets are increasingly focused on whether the Fed will validate or push back against still-dovish pricing for 2026.

That reassessment is set to be the dominant driver for EUR/USD in the near term.

EUR/USD Forecasts: Fed centre stage

Credit Agricole forecasts EUR/USD will retreat to 1.14 by mid-year with a further slide to 1.10 at the end of the year.

After a hesitant short-term performance, ING forecasts that EUR/USD will strengthen to above 1.20.

The dollar secured net gains during the week and EUR/USD retreated to lows just below 1.1620.

There was mixed US data, but the data was strong enough that markets considered that a further Fed rate cut in January was even less likely.

Geo-political developments will remain a key element of major developments at the start of 2026.

According to Credit Agricole, President Trump’s decision to remove Venezuelan President Maduro could prolong the Ukraine war by lessening pressure on Russian President Putin to make a deal.

It noted; “The conflict in Ukraine could remain a huge source of uncertainty and thus a drag on the Eurozone business and consumer confidence in the foreseeable future. We further doubt that the Eurozone would benefit from any sustained drop in energy prices on the back of growing Venezuelan oil exports just yet.”

Market positioning could also be a significant factor

Credit Agricole commented; “We further note that the EUR remains one of the biggest longs in G10 FX according to our FX positioning data.”

ING expects net dollar losses; “A large part of the dollar’s 10% decline was attributed to currency hedging rather than an outright sale of US assets. We think this move could extend a little further in 2026, given our house call for another 50bp of Fed rate cuts and the acceleration of the eurozone economy on the back of German fiscal stimulus. We’re still happy with our call that EUR/USD ends 2026 somewhere around 1.22.”

According to UBS; “With markets currently assigning a low probability to a January rate cut, the risks are tilted toward USD weakness if the data disappoint and increase the likelihood of a cut.”

Credit Agricole expects a reassessment of Fed policy; “Evidence today that the US labour market conditions and consumer confidence are improving while the FOMC remains noncommittal with respect to further policy easing could encourage US rate markets to reassess their still dovish Fed outlook, in a boost to the USD.

MUFG expects dollar losses, especially with a positive Euro outlook.

The bank expects no further rate cuts; “We see the ECB as on hold this year as any miss to the downside for inflation is unlikely to be large and persistent, and GDP growth should reduce the need for additional rate cuts.”

The bank also expects central bank Euro demand; “Assuming dollar reserves continue to decline (our view) we see the euro better positioned to take up a greater role in diversification. It remains the second largest currency in reserves but well below the pre-GCF peak of around 28% and the end negative rates and economic stability could see a return of central banks.”

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TAGS: Euro Dollar Forecasts

Platinum price leaned in its last trading above %2.0 Fibonacci extension level at $2230.00, to form strong bullish rally this morning to surpass the barrier at $2320, recording some gains by hitting $2375.00 level.

Despite the continuation of the main indicators’ contradiction, the stability above $2320.00 will provide a chance for resume the bullish attempts, to expect targeting $2415.00, to repeat the pressure on the resistance at $2467.00.

The expected trading range for today is between $2265.00 and $2415.00

Trend forecast: Bullish

I wrote on the 4^th January that the best trades for the week would be:

1. Long of the USD/JPY currency pair following a daily close above ¥157.75. This did not set up until Friday’s close.
2. Long of the S&P 500 Index following a daily close above 6,940. This set up on Tuesday and produced a gain of 0.24% by the end of the week.
3. Long of Silver following a daily close above $80. This set up on Tuesday and produced a loss of 1.67% by the end of the week.
4. Long of Gold following a daily close above $4,533.21. This did not set up.

Overall, these trades gave a loss of 1.43% (0.36% per asset).

A summary of last week’s most important data:

1. US Average Hourly Earnings – as expected, a month-on-month increase of 0.3%.
2. US Preliminary UoM Inflation Expectations – no change on last month.
3. US Non-Farm Employment Change – very slightly below expectations.
4. US JOLTS Job Openings – a little below expectations, but not significantly.
5. US Preliminary UoM Consumer Sentiment – just a fraction above expectations.
6. US ISM Services PMI – this was better than expected, suggesting a buoyant services sector.
7. US ISM Manufacturing PMI – very slightly worse than expected.
8. Australian CPI (inflation) – this was the surprise of the week: Australian inflation was expected to fall from 3.8% to 3.6% but it fell even further, to 3.4%.
9. Swiss CPI (inflation) – zero as expected.
10. US Unemployment Rate – this was expected to fall to 4.5%, but it fell a little further, to 4.4%.
11. US Unemployment Claims – this was as expected.
12. Canada Unemployment Rate – this unexpectedly rose to 6.8%, suggesting the Canadian economy is slowing, sending the Canadian Dollar lower.

Last week’s data had limited impact. You can say there were two effects:

1. The resilience of the US economy continues and gives a very slight hawkish tilt on Fed rate expectations. This has helped send the US Dollar a bit higher.
2. A weaker Canadian economy, with the market now asking if the Bank of Canada will cut rates more quickly.

The major geopolitical event right now is likely to be the unrest in Iran. Despite the internet blackout of the past 48 hours, and very limited coverage by much of the media, it seems as if the unrest is threatening the survival of the Islamic Republic.

The other major story of the week was the continuing bullishness in all metals, not just precious metals, with Gold notably closing very near $4,500 which is within sight of its record high. Silver also traded above $80 on Friday before closing a little below that round number.

The coming week’s most important data points, in order of likely importance, are:

1. US CPI (inflation)
2. US PPI
3. US Retail Sales
4. UK GDP
5. US Unemployment Claims

Although there are not a lot of data items, the first few are highly important for the Forex market, so it could be an important week. Monday is a public holiday in Japan.

Currency Price Changes and Interest Rates

For the month of January 2026, I forecasted that the USD/JPY currency pair would rise in value.

January 2026 Monthly Forecast Performance to Date

Last week, I made no forecast, as there were no recent excessive moves in currency crosses. I again make no forecast, as low volatility persists.

The US Dollar was the strongest major currency last week, while the Canadian Dollar was the weakest. Directional volatility remained low last week, with only 11% of all major pairs and crosses changing in value by more than 1%.

Next week’s volatility will probably be considerably higher.

You can trade these forecasts in a real or demo Forex brokerage account.

Key Support and Resistance Levels

Last week, the US Dollar Index printed a relatively large bullish candlestick which closed near the high of its range. These are moderately bullish signs. The price action is still suggesting a long-term bullish trend with the price above its levels of both 13 and 26 weeks ago.

The slightly stronger than expected US economic data released last week helped firm up the Dollar, as it has given a slightly hawkish tilt against rate cut expectations in 2026, although two rate cuts of 0.25% are still widely seen as likely to happen.

I take a weakly bullish bias on the US Dollar right now and am comfortable being long of the greenback.

US Dollar Index Weekly Price Chart

The USD/JPY currency pair advanced last week, making a significant bullish breakout on Friday which pushed the price near to a fresh 1-year high.

The price closed quite near its high, but below the round number at ¥158, which might be a little worrying for bulls.

Another thing for bulls to worry about is that the price chart below shows there is a major inflection point just ahead which made the high of 2025. The price has still not got beyond this.

Despite these fears, we have a long-term bullish trend, a bullish breakout, and reasons to be bullish on the US Dollar (strong US economy) and bearish on the Japanese Yen (too much debt to hike rates significantly), so I am very comfortable being long of this currency pair, even if the trade is requiring patience.

USD/JPY Weekly Price Chart

After reaching a new record high three weeks ago, and making a meaningful dip last week, the US stock market has recovered, and this Index broke to a new all-time high last Friday.

I think the bullish momentum in the US stock market has slowed, and I was even thinking we were starting to see a top, but it seems that bulls have further to go.

I am already long here as a trend trader, but the real test for bulls will be the big round number at 7,000 – more cautious traders or market timing investors might want to see a close above this level before entering a long trade.

S&P 500 Index Daily Price Chart

Silver is still showing very high volatility, but it rose quite strongly over the past week, making a new record high close on Tuesday, then pulling back, then advancing again.

The most discouraging thing for bulls last week was the fact that the price was unable to close the week above the big round number at $80, which is a mildly bearish sign.

Volatility is much higher here than in Gold, but it is still possible that we could see a bullish breakout and new record highs, and the price possibly even reaching $100 or beyond within a few days or weeks.

All precious metals are advancing, so I think it is worth going long if we get another record daily closing price. As we had one on Tuesday, I am already long, but only with half of my normal position size.

I think it makes sense to think about getting long here, but with a smaller than usual position size.

Silver Daily Price Chart

Gold saw quite a firm rise last week, as did all other precious metals. However, Gold has still not made a fresh record high, although it is within sight of the high. Possibly the most bullish signs were that it closed near the top of its weekly range above the big round number at $4,500.

I am prepared to enter another long trade if we do get a new record high daily (New York) closing price (above $4,533.21), and I think it might happen this week.

The new record high made Friday in the S&P 500 Index also makes me more bullish on Gold, as recent years have seen a strong positive correlation between these two assets.

Gold Daily Price Chart

The industrial metal Copper has reached new long-term high prices, due partly to supply (mining) problems, and partly due to massive demand from the technology sector, as well as general industrial demand.

Monday and Tuesday saw Copper futures advance strongly, before pulling back over most of the rest of the week. Friday saw a fresh advance but the highs earlier in the week were not recaptured.

We are seeing industrial metals starting to advance strongly as an asset class just as we saw earlier with precious metals – and precious metals have advanced again, so it looks as if money is flowing into all metals.

For this reason, I think a long Copper trade is worth looking out for, once we get a new fresh daily high close.

If you can’t afford Copper futures (there is a CME micro future sized at about $15,000), you could try a Copper ETF like CPER.

Copper (ETF CPER) Daily Price Chart

I see the best trades this week as:

1. Long of the USD/JPY currency pair following a daily close above ¥158.
2. Long of the S&P 500 Index. More cautious traders might want to wait for a daily close above 7,000.
3. Long of Silver following a daily close above $81.25.
4. Long of Gold following a daily close above $4,533.21.
5. Long of Copper (CPER) following a daily close above $37.27.

Ready to trade our Weekly Forex forecast? Check out our list of the best Forex brokers in the world.

– Written by


David Woodsmith

STORY LINK Pound-to-Dollar Forecast: GBP/USD Risks Sustained Decline Below 1.34

The Pound to US Dollar exchange rate (GBP/USD) briefly tested the 1.34 level after US jobs data showed slowing payroll growth but a firmer unemployment picture.

The mixed outcome left the dollar supported and reinforced caution around further near-term Fed easing.

GBP/USD Forecasts: Tests 1.34 Support

The Pound to Dollar rate touched the 1.3400 level in immediate reaction to the US jobs data before a recovery to 1.3435 as the dollar failed to hold gains.

The 1.3400 level remains a significant support area for the pair.

UoB commented; “Our view remains unchanged. Looking ahead, if GBP breaks below 1.3400, it could trigger a more sustained decline.”

According to Scotiabank, there has been some evidence of a shift in Pound dynamics; “we see some added near-term risk from the turn in sentiment as we note the signs of exhaustion in risk reversals stalling out after fading a considerable portion of the premium for protection against GBP weakness over the past month or so.”

It added; “We remain neutral absent a clear break below the 200 day MA (1.3393), after which we see risk of an extension to the 50 day MA at 1.3304.”

The latest US jobs report recorded an increase in non-farm payrolls of 50,000 for December compared with consensus forecasts of around 65,000 while the November increase was revised down slightly to 56,000 from the 64,000 reported previously.

The October figure was revised to show a 173,000 decline, primarily due to the slump in government jobs.

The household survey recorded a decline in unemployment to 4.4% from 4.6% and compared with expectations of a slight decline to 4.5%.

Overall, the data was not considered weak enough to justify a further near-term cut in interest rates.

In response, markets priced out the potential for a rate cut at the late-January meeting with the chances of a March move lowered to around 30%.

Peter Cardillo, Chief Market Economist at Spartan Capital Securities commented; “It should mean that the Fed will continue to eye the labor market before cutting rates in the first quarter.”

Markets remain on alert for any nomination over the next Fed Chair.

Scotiabank commented; “President Trump said yesterday that he had made up his mind on his Fed chair pick. There was no additional information from the president—other than he had not divulged his choice to anyone— but the comment will likely bolster speculation that an announcement could come shortly.”

There is also the potential for the Supreme Court to make an announcement on the reciprocal tariffs announced in April.

Either of these factors could have a significant impact on the dollar, wider currency markets and risk appetite.

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TAGS: Pound Dollar Forecasts

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