The GBPJPY pair continued forming bullish trading since Friday’s trading, taking advantage of the repeated positive stability above 210.40 support, achieving several gains by reaching 212.75 which forms an intraday obstacle against the bullish trend.

The contradiction between the main indicators makes us expect providing mixed trading until gathering extra positive momentum, to ease the mission of surpassing the current obstacle, to target extra gains by its rally towards 213.40 and surpassing it will confirm its stability within the main bullish channel’s levels, opening the way towards for strong chance of recording new gains that might extend towards 214.15 and 214.90.

The expected trading range for today is between 211.80 and 213.40

Trend forecast: Bullish

The EURJPY pair succeeded in resuming the bullish trend that depends on the main stability within the bullish channel’s levels, reaching 184.25 achieving the suggested target in the previous report.

In general, the main stability above the main bullish channel’s support at 182.60, the main indicators attempt to provide bullish momentum will increase the chances of surpassing the current obstacle to ease the mission of recording new gains that might begin at 184.85 and 185.45.

The expected trading range for today is between 183.40 and 184.85

Trend forecast: Bullish

– Written by


Frank Davies

STORY LINK Pound to Dollar Forecast 2026: USD Rebounds as Warsh Pick Halts GBP Rally

The Pound to Dollar exchange rate (GBP/USD) has retreated from 4-year highs after the dollar staged a rebound on speculation that Kevin Warsh will be nominated as the next Federal Reserve Chair, easing fears over political interference and triggering sharp position unwinds across FX and precious metals.

GBP/USD Forecasts: Retreat from 4-Year Highs

The dollar has been under strong pressure for much of the week, but staged a notable comeback on Friday.

The catalyst for the move was a report that President Trump would nominate Kevin Warsh as the next Fed Chair.

Warsh is in favour of lower interest rates and structural reform within the Fed, but he is seen as a guardian of independence and his nomination would lessen fears over political interference in Fed policy.

The dollar pared losses and there was a dramatic slide in precious metals after posting a series of record highs.

In this environment, the Pound to Dollar (GBP/USD) exchange rate dipped to lows at 1.3725 from 4-year highs above 1.3850 earlier in the week.

According to UoB; “if GBP breaks below 1.3710, it would mean that the advance that started last week has run its course.”

Position adjustment will be potentially important in the near term. According to ANZ head of Asia research Khoon Goh; “Any sensible market participant would not want to carry a big position into the weekend. So some of this could just be positioning lightening up. If you’re short dollars, you’ve done well, take your chips off the table.”

ING commented; “The dollar has been waiting for a catalyst for a recovery, and the news that Kevin Warsh is likely to be announced as the new Federal Reserve Chair nominee today offers exactly that.”

The bank added; “Given how adamant Trump has been on reducing rates, it’s safe to assume Warsh has taken a more dovish stance during the interview process – but this pick may suggest a desire to calm speculation on Fed independence loss.”

According to ANZ head of Asia research Khoon Goh; “The appointment of Warsh, if it’s true, will be seen as someone who can, in a way, remain independent, and not someone seen as likely to be subservient to Trump’s wishes.”

MUFG took a similar line on credibility; “Warsh is a strong advocate of Fed independence so fears over independence being eroded should recede which is also dollar supportive.”

Nevertheless, the bank added that credibility could be a double-edge sword; “That stronger credibility means Warsh stands a much better chance of swaying the rest of the FOMC in the direction he advocates and hence an initial period of rate cuts should actually now be viewed as more likely.”

It added; “with rate cuts potentially more likely to be delivered under a Warsh FOMC we suspect this initial bounce for the dollar will fade.”

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US ISM Manufacturing and the Fed in Focus

Later on Monday, US economic indicators will fuel speculation about an H1 2026 Fed rate cut and demand for the US dollar.

Economists expect the ISM Manufacturing PMI to increase from 47.9 in December to 48.3 in January. A less marked contraction across the manufacturing sector would ease concerns about a sharp slowdown in US GDP growth, bolstering the US Dollar. However, traders should consider price and employment trends, considering the Fed’s dual mandate.

Softer prices and falling employment would likely overshadow a pickup in sector activity, and raise expectations of an H1 2026 Fed rate cut. A more dovish Fed policy stance would weaken the US dollar and send USD/JPY lower. Importantly, a more dovish Fed would support the bearish short- to medium-term outlook for USD/JPY.

Beyond the economic data, traders should closely monitor Fed speeches for insights into inflation, the economy, and the timeline for rate cuts.

According to the CME FedWatch Tool, the probability of a March Fed rate cut fell from 15.4% on January 23 to 13.4% on January 30, following a larger-than-expected rise in US producer prices. Meanwhile, the chances of a June cut rose from 60.7% to 61.8% last week. The modest increase in bets on a June cut underscored optimism that inflation will cool, enabling the Fed to lower rates.

Importantly, an H1 2026 Fed cut would support expectations of multiple rate cuts in 2026. Multiple Fed rate cuts would coincide with the BoJ’s hawkish policy outlook, signaling narrower US-Japan rate differentials. Narrowing rate differentials, favoring the yen, would weigh on USD/JPY.

Technical Outlook: Key Levels to Watch

For USD/JPY price trends, traders should assess technicals and monitor economic data, central bank chatter, and geopolitical headlines.

On the daily chart, USD/JPY trades below its 50-day Exponential Moving Average (EMA), but above the 200-day EMA. The EMA positions signaled a near-term bearish trend reversal, aligning with the negative price outlook for USD/JPY. Notably, positive yen fundamentals have aligned with the near-term technicals.

A break below the 200-day EMA would bring the 150 support level into play. If breached, October’s low of 146.585 would be the next key support level.

Importantly, a sustained fall through the EMAs would reaffirm the bearish trend reversal. These scenarios would reinforce the negative short- to medium-term price outlook.

I wrote on the 25^th January that the best trades for the week would be:

1. Long of the EUR/USD currency pair following a daily close above $1.1866. This gave a loss of 0.24%.
2. Long of Silver. This gave a loss of 18.62%.
3. Long of Gold following a daily close above $5,000. This gave a loss of 2.26%.

Overall, these trades gave a large loss of 21.12% (7.04% per asset). Despite the size of this loss, following my weekly forecasts over the past few weeks would still have been profitable, as the recent wins were enormous.

A summary of last week’s most important data in the market:

1. US Federal Reserve Policy Meeting – no surprises, rates were left unchanged.
2. US PPI – this was the major surprise of the week, as this inflation indicator came in much higher than expected, showing a monthly increase of 0.5% and a core monthly increase of 0.7%, when an increase of only 0.2% was expected for both. This is seen as a hawkish tilt for the Fed, and this news helped drive the US Dollar higher and accelerate the bursting of the Silver (and Gold) bubble. This has pushed back the expected timing of the second rate cut for 2026 to October and strengthened the US Dollar a bit.
3. Bank of Canada Policy Meeting – no surprises, rates were left unchanged.
4. Australia CPI (inflation) – this came in higher than expected, showing an annualized rate of 3.8% when 3.5% was expected, which strengthened the case a little for RBA rate hikes, boosting the Australian Dollar during the earlier part of last week.
5. Canadian GDP – just a tick lower than expected, showing no month-on-month growth.
6. US Unemployment Claims – as expected.

The PPI and Australian inflation data had some impact on markets last week, but there were two other events that probably had a stronger overall impact on the market:

1. President Trump finally nominated his choice for the next Chair of the Federal Reserve: Kevin Warsh, who is seen as a hawk, but who is expected to believe now that interest rates should be lower. His appointed helped burst the Silver bubble and boost the US Dollar somewhat.
2. The US continues its military build up near Iran, with tensions rising as a full-scale regional war looks increasingly likely. The prediction site Polymarket sees a US strike on Iran as likely to happen in March, with President Trump still talking about a potential deal with Iran in which it would commit to not building nuclear weapons. This is probably driving the price of crude oil higher, with WTI reaching a new 4-month high last week.

The US stock market’s broad S&P 500 Index briefly made a new record high above 7,000. The Index remains resilient, but it is showing very little upwards momentum. I see this as unlikely to change until the prospect of war between the USA and Iran is resolved one way or another.

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

1. US Average Hourly Average Earnings & Non-Farm Employment Change
2. Preliminary UoM Inflation Expectations
3. European Central Bank Main Refinancing Rate & Monetary Policy Statement
4. Bank of England Official Bank Rate, Votes, Monetary Policy Summary & Report
5. RBA Cash Rate, Rate Statement, and Monetary Policy Statement
6. US JOLTS Job Openings
7. Preliminary UoM Consumer Sentiment
8. US ISM Services PMI
9. US ISM Manufacturing PMI
10. US Unemployment Rate
11. New Zealand Unemployment Rate
12. Canada Unemployment Rate
13. US Unemployment Claims

It will be a busy week, with three major central banks holding policy meetings, so it could be an important week. Friday is a public holiday in New Zealand.

Currency Price Changes and Interest Rates

For the month of January 2026, I forecasted that the USD/JPY currency pair would rise in value. Unfortunately, this was a losing trade.

January 2026 Monthly Forecast Final Performance

For the month of February, I forecast that the EUR/USD currency pair will rise in value.

Last week saw three crosses with excessive volatility, so I made the following weekly forecast then:

• Short NZD/JPY: this gave a loss of 0.57%.
• Short AUD/JPY: this gave a loss of 0.32%.
• Short NZD/CAD: this gave a loss of 0.39%.

The Swiss Franc and New Zealand Dollar were the strongest major currency last week, while the US Dollar was the weakest. Directional volatility fell significantly last week, with only 11% of all major pairs and crosses changing in value by more than 1%.

Next week’s volatility is likely to be notably 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 fairly large bullish pin bar candlestick which rejected a new 4-year low. This is bullish by itself but we also have a long-term bearish trend with the price below its levels of both 13 and 26 weeks ago. This gives us a conflicted technical picture on the US Dollar.

The appointment of Kevin Warsh as Fed Chair helped strengthen the Dollar last week, but I see the outlook now as uncertain and the best market opportunities will probably not be US Dollar-dependent.

US Dollar Index Weekly Price Chart

The EUR/USD currency pair made a strong long-term bullish breakout a few days ago when the US Dollar started weakening at a faster pace and dropping a new 3.5-year low, but it quickly flopped right back down, finding very little support.

This suggest we have seen a spike, but I would not rule out a long-term bullish trend taking off – this pair does tend to trend reliably.

However, with the new Fed Chair and USD strength at the end of the week on higher inflation indicators, it makes sense to be cautious.

I will only take a long trade if we get a daily (New York) close above $1.2039.

EUR/USD Daily Price Chart

WTI Crude Oil has risen powerfully over recent days as the threat of a regional war centred on Iran has grown, with prediction markets currently seeing a US attack on Iran as likely to happen in March. This could seriously disrupt the supply of crude oil, so we have seen the price made a new 4-month high at the end of last week. A daily close above $66.25 would represent a new 6-month high.

Two notes of caution are necessary:

1. Although a daily close above $66.25 would usually trigger a long entry from trend-following funds, the moving averages do not support a long trade. Even if war breaks out, this could just be a spike which flops back rapidly with a speedy American victory, leading to a losing trade.
2. The Trump administration will move heaven and earth to bring down the price of crude oil, unlike recent Democratic administrations.

WTI Crude Oil Daily Price Chart

BTC/USD has finally made a very significant bearish breakdown below the long-term support level just above $81,000 and is now established below that level and reaching a new 9-month low. This is technically very significant in a bearish way.

While stocks and precious metals were rising strongly over recent months, Bitcoin fell from a record high a few months ago and continued to decline. It is clear the crypto sector is in decline, and that Bitcoin is in serious trouble. Bitcoin was meant to change the world, but outside of Africa, is just has not – you still can’t use it and it is unclear what value it really holds.

I do not like shorting assets, but Bitcoin looks weak and is well established within a bearish long-term trend. I certainly wouldn’t buy it now, and you might consider shorting it, but be very careful shorting is best done by experienced traders.

Bitcoin Daily Price Chart

Silver had a wild week, rising by well over 15% to reach a new all-time high and option target of $120, before making an epic crash on Thursday and Friday, mostly on Friday, on which day alone it declined by 28%.

I warned that this was prone to crashing, and that while it made sense to be long, a small position size should be used.

The size of the crash, despite the bullishness and mild resilience in the bounce at the weekly low, suggests we are not going to see a new high any time soon. This amazing trade is over, and we will probably now see wild consolidative swings with gradually declining volatility.

Silver Daily Price Chart

Everything I wrote above concerning Silver also applies to Gold. However, it can be added that the volatility here was somewhat less, and the resilience at the lows a bit stronger. It is likely that Gold will also trade sideways now for a while, but it is showing signs that it will recover more quickly to the upside than Silver will.

Gold Daily Price Chart

I see the best trades this week as:

1. Long of the EUR/USD currency pair following a daily close above $1.2039.

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There is no change on GBPJPY pair’s track until this moment, due to its stability above 210.40 support, to notice forming bullish waves and settling near 212.10 barrier.

The attempts of the main indicators to provide bullish momentum will increase the chances of breaching the current obstacle, opening the way for recording new gains that might begin at 212.55, then pushing the resistance to reach 212.85, which represent the confirmation point of regaining the main bullish trend, while the decline below the mentioned support and holding below it will confirm its move to the negative trend, forcing it to suffer several losses by reaching 209.60 and 209.00.

The expected trading range for today is between 211.30 and 212.55

Trend forecast: Bullish

Created on February 01, 2026

The WTI Crude Oil $66 level is an area that seems to be offering quite a bit of resistance and now we find ourselves pulling back from there. I think there are a lot of questions out there as to whether or not we are going to see strikes against the Iranians over the weekend. That being said, supply and demand continue to be a major headwind for pricing, so I would not look for massive moves, and I do think fading rallies continue to be the case.

The British pound broke out above the 1.3750 level and have seen a lot of selling pressures to show signs of exhaustion. In fact, the weekly candlestick is a bit of a shooting star. It suggests that we might struggle to continue to the upside. A fall from here could find the British pound dropping to the 1.35 level, which of course is a large round psychologically significant figure. I think part of this is Kevin Warsh being named as the nominee for the new Federal Reserve Chairman, and he is quite a bit more hawkish than many others.

The Euro rallied rather significantly during the week but has been absolutely crushed after initially taking off to the upside. I do think that we are very likely to see the potential for more consolidation. In other words, that breakout might have been false. We will just have to wait and see how the market reacts to the new Federal Reserve Chairman nomination, but as things stand right now, this looks like a market that I think is struggling. The 1.16 level is an area that we could find ourselves reaching towards, but if we turn around and see buyers right away for the next week, then we could see this market really take off, perhaps even heading back towards the 1.20 level followed by the 1.23 level.

The German DAX has been negative most of the week but it is hanging onto the 24,500 level. This is an area that I have been talking about as being important for support as it was previous resistance. All things being equal, this is a market that I think continues to see plenty of interest as we had broken out above there and now it looks like we are perhaps trying to turn things around and rally to the upside. I think the DAX will be one of the better performers this year as the Germans will continue to throw a lot of money into the economy and that should help the DAX, so I am bullish still.

The silver market will be what everybody is talking about as in one week we see it reaches $122 or so and as we are closing out the day on Friday, there is an absolute bloodbath. Silver broke below the $90 level in one fell swoop on Friday and it looks like it is going to race towards the $80 level. Eventually gravity had to return, and I think that is what we are seeing here. The Federal Reserve Chairman being nominated was a little bit more hawkish than most people expected and silver of course is going to be extraordinarily volatile under the best of circumstances, and at this point, it is not the best of circumstances. Silver has become pretty much untouchable.

Gold markets find themselves equally as brutalized, but gold has the backing of central banks so I think that gold will more likely than not recover much quicker than silver will because quite frankly silver had gotten so far out of its own element that it had become something akin to one of these altcoins you see in the crypto markets. Gold on the other hand does have a lot of interest from central banks, but we may have just seen the highs. I think it is a little early to call that, but the way the markets are behaving on Friday, it is almost impossible to believe that there won’t be some type of follow-through. Quite frankly, considering that just two years ago gold was closer to the $1,700 level, it is not a huge surprise that there had to be a reckoning. Sooner or later, markets that are out of control see this type of behavior.

The US dollar plunged against the Japanese yen during the trading week but has seen a massive turnaround and it now looks as if the markets are starting to realize a potential mistake in shorting the dollar the way they have. That being said, this is a market also featuring a massive interest rate differential between the two currencies, so this is essentially how I would have expected the market to behave all along. We bounced from the 50-week EMA, and it looks like if we can break back above the 155 yen level then we could go looking to the 158 yen level.

The US dollar has fallen rather significantly against the Swiss franc and tested the 0.76 level. The 0.76 level is an area that I don’t know is particularly important by itself, but we also have to worry about the idea of the Swiss National Bank coming in and intervening if the Swiss franc gets a little too strong. I still think that is a threat, but the fact that we are forming a hammer after a breakdown like this and, more importantly, we are seeing the US dollar turn things around globally, I think this one might be ripe for a bounce as well.

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