Created on February 03, 2026

The euro did try to rally a little bit during the early hours here on Monday but simply cannot hang onto gains at the moment as the Federal Reserve Chairman nominee has the markets rethinking things.

EUR/USD

The euro did try to rally a little bit during the early hours here on Monday but then turned around to show signs of weakness as we are testing the 1.18 level, an area that is going to be important for our next move.

The 1.18 level is an area that I think a lot of people will be watching and with that being said I think this is a market that is going to continue to play based on the central banks around the world specifically the European Central Bank which is doing nothing and then the Federal Reserve which of course has just got itself back into the headlines due to Kevin Warsh being nominated.

Central Bank Impact and Technical Levels

That’s a little bit more conservative than I think people thought was going to be the case. With that there is some doubt as to how many Federal Reserve rate cuts there are going to be and with that I think we have to look at this as a market so that if it breaks down below the 1.18 level we could be re-entering consolidation. This would be typical euro/dollar behavior to be honest.

If we turn around and take out the 1.1875 level above, then I think you have a real shot at this market rallying perhaps to the 1.20 level followed by the 1.23 level which is what the implied move from the consolidation range suggests.

Lots of things are going on and then on top of that we have the employment figures later this week.

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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 EURJPY pair failed to breach 184.00 barrier, obstructing the attempts to resume the bullish trend, which forces it to form sideways trading by its fluctuation near 183.55.

Reminding you that the bullish scenario will remain valid by the stability of the trading above the bullish channel’s support at 182.75, confirming the importance of surpassing the barrier, to ease the mission of recording extra gains by its rally towards 184.85 and 185.45, while breaking the bullish channel’s support and holding below it will force it to form strong bearish waves to suffer several losses by reaching 181.50.

The expected trading range for today is between 183.00 and 184.00

Trend forecast: Sideways 

– Written by


Ben Hughes

STORY LINK GBP/USD Forecast: Pound Sterling Lacks Momentum Ahead of US Jobs

The Pound to US Dollar exchange rate (GBP/USD) traded in a narrow range on Monday, with an upbeat revision to the UK’s final manufacturing PMI failing to generate meaningful momentum for Sterling.

At the time of writing, GBP/USD was trading at $1.3699, edging only marginally above opening levels as markets largely shrugged off the data.

The US Dollar (USD) was broadly steady at the start of the week, pausing after the rebound it mounted late on Friday.

The ‘Greenback’ had slumped to multi-year lows last week before finding support after US President Donald Trump confirmed Kevin Warsh as his pick for Federal Reserve Chair. Warsh is widely viewed as the most market-friendly of the potential nominees, helping to spark a sharp recovery in USD demand.

That momentum, however, faded on Monday. While Warsh’s nomination eased concerns over political interference at the Fed, investors remain confident the US central bank will still move to cut interest rates later this year, limiting the Dollar’s upside.

The Pound (GBP) initially came under pressure as a mild risk-off mood weighed on risk-sensitive currencies.

Sterling was able to recover those losses early in the session after the UK’s final manufacturing PMI for January was revised higher.

The index was confirmed at 51.8, its strongest reading in 17 months and slightly above the preliminary estimate of 51.6, signalling improving conditions in the factory sector.

Despite the positive revision, GBP gains proved limited. While analysts welcomed signs of stabilisation in manufacturing, many warned that ongoing trade uncertainty and rising cost pressures could continue to weigh on UK industry well into 2026.

GBP/USD Forecast: US Labour Data in Focus

Looking ahead, attention turns to Tuesday’s release of the US Job Openings and Labour Turnover Survey (JOLTS).

The data is expected to show a modest decline in job vacancies in December, with openings forecast to drift back towards the near four-year low seen in September 2024.

Confirmation of a cooling labour market could place renewed pressure on the US Dollar by reinforcing expectations for Federal Reserve interest rate cuts later this year.

With the UK data calendar remaining light, movements in GBP/USD are likely to be driven by shifts in global risk appetite. A risk-off tone could favour the safe-haven Dollar, while an improvement in sentiment following the JOLTS release may allow Sterling to regain some ground.

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TAGS: Pound Dollar Forecasts

USD/JPY trades below 155 as of writing, extending last week’s drop and marking a shift in short- to medium-term market dynamics. The pair dropped after failing to sustain momentum above levels that had anchored price action for months. The move followed a volatile and bearish January that saw USD/JPY swing between a low of 152.09 and a peak around 159.45. 

While price found support near long-term averages, momentum weakened, and traders began reassessing the durability of the yen-funded carry trade. Is the market preparing for a deeper reset?

Hawkish BoJ Signals Reshape Expectations

Yen demand strengthened as investors reacted to signs that the Bank of Japan may continue tightening policy. Preliminary PMI data pointed to improving momentum in manufacturing and services, supporting a firmer economic outlook. GDP upgrades reinforced expectations that inflation and growth may align with the BoJ’s projections. 

These developments raised bets on further rate hikes in 2026, narrowing the gap between Japanese and US yields. As rate spreads compressed, the appeal of holding leveraged dollar-long positions weakened. The Bank of Japan’s latest policy meeting on January 23, 2026, kept rates unchanged at 0.75%, with a dissenting vote for a hike, as policymakers viewed risks to the economic & price outlook as broadly balanced ahead of February’s snap election.

Source: MacroEdge Data Stream via X

Summary of Opinions Takes Center Stage

The BoJ’s Summary of Opinions, scheduled on February 2, has become a focal point for markets as traders looked for clarity on wage growth, tariff risks, and price stability. The Summary of Opinions from the January policy meeting pointed to a clearer sense of urgency around raising interest rates as policymakers track the inflationary impact of a weak yen. 

References to “a weak yen” and “foreign exchange” doubled from the prior meeting, signaling that currency depreciation now sits at the center of policy discussions. One board member said the bank should move to a rate hike without missing the right timing, citing rising prices as an urgent priority. 

The summary suggested growing support for tightening at a faster pace than the market’s expectation of roughly one hike every six months, reinforcing the view that yen weakness strengthens the case for earlier and more frequent policy action.

Election Uncertainty Adds Political Noise

Japan’s snap election on February 8th adds another layer of uncertainty. Prime Minister Sanae Takaichi seeks a stronger mandate to pursue fiscal spending plans. Earlier concerns over rising debt and issuance contributed to yen weakness during USD/JPY’s surge from October to January. 

A decisive election outcome could revive those fears. However, markets also recognize that fiscal expansion may pressure the BoJ to normalize policy faster, which could support the yen. This tension keeps volatility elevated and discourages one-directional trades.

U.S. Data and Fed Signals Guide the Dollar Side

On the US side, economic data and Federal Reserve communication continue to steer dollar demand. The ISM Services PMI and the February jobs report will shape expectations for rate cuts. Forecasts point to moderating service sector growth and slower wage gains. 

Such trends could cool inflation pressures and support a dovish shift later in 2026. FedWatch data already show declining odds of an early rate cut, yet markets still expect easing later in the year. This gradual repricing limits upside for the dollar against the yen.

Outlook: Volatility Remains High

USD/JPY now trades in a more fragile environment as policy signals, political risk, and yield dynamics intersect. Levels near 155 have shifted from support to resistance, while areas below 152 and toward 150 draw attention. Yen intervention rhetoric continues to cap sharp upside moves, even as occasional rebounds emerge. 

With multiple catalysts ahead, traders brace for continued volatility. Will narrowing rate spreads and BoJ guidance drive the next leg lower, or will dollar resilience delay the adjustment? The coming weeks may decide.