Created on January 21, 2026

The interest rate differential is still wide enough to drive a truck through in this pair, and that’s the main focus longer-term. At this point, I look at pullbacks as an opportunity.

The British pound initially rallied against the Japanese yen during trading on Tuesday but has given back quite a bit of the gains. This does make a certain amount of sense because it has been more or less a risk-off type of environment. That to me doesn’t really matter, though, because I think that’s a temporary situation. The interest rate differential is still wide enough to drive a truck through, so I still prefer to own the British pound over the Japanese yen.

Furthermore, the bond market in Japan is all over the place, and I think that is a story that will continue to play out. While the interest rates in Japan have been climbing, it’s not for the right reasons, and therefore, I think the Japanese yen will continue to suffer.

Pullbacks and Support Levels

Pullbacks at this point in time will more likely than not look at the ¥210 level as a floor. After that, we have the 50-day EMA sitting just below the ¥209 level. To the upside, the ¥215 level could be your target, but we haven’t made it there yet. It looks like the area right around ¥214 continues to cause a little bit of a headache.

I think it makes a lot of sense to go sideways for a while and perhaps have more of a buy-on-the-dip type of behavior in this market. The Bank of England has a little bit of a negative, kind of dovish tone to it, but it’s not aggressively so, and therefore, the carry trade will be very much alive in this pair going forward for the foreseeable future.

Begin trading our daily forecasts and analysis. Here is a list of Forex brokers in Japan to work with.

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


David Woodsmith

STORY LINK Pound to Dollar Forecast: “Sell America” Risks Test GBP/USD Near 1.35

The Pound to Dollar exchange rate (GBP/USD) has edged closer to 1.35 as renewed dollar weakness offsets a softer risk backdrop, with markets increasingly focused on US political risks rather than UK fundamentals.

GBP/USD Forecasts: Trump Agenda Dominates

The Pound to Dollar (GBP/USD) exchange rate held above 1.3400 in Asia on Tuesday and has advanced to highs just below 1.3500 amid dollar losses. Major GBP/USD resistance levels come in above 1.3550.

Risk conditions are likely to dominate and a key issue will be whether the dollar can gain defensive support or whether there is a renewed sell-off in the currency amid fears over the US outlook. If equities continue to slide, it will be tough for the Pound to make headway.

The key issues are likely to be intense uncertainty and higher volatility with a focus on rhetoric at the Davos gathering.

RBC Capital Markets has a year-end GBP/USD target of 1.36 and added; “while some cable downside risks can be priced out of 2026, new uncertainties may emerge.”

Geo-political developments have dominated with further concerns over the US threat of tariffs on eight European countries if there is no deal on Greenland.

The dollar has been hurt by renewed talk of a sell America mentality, especially with the risk of retaliation from Europe. Overall risk appetite, however, has dipped again with sharp losses for equities.

Adding to the sense of unease has been a highly critical post from Trump calling the UK deal on the Chagos Islands as an act of great stupidity.

Markets are also still having to deal with uncertainty surrounding Federal Reserve independence.

According to MUFG; “The trade uncertainty, Fed independence threats, and Trump’s approach to geopolitics generally are all factors that could result in a sudden pick up in appetite for reducing US dollar exposures. The cost involved in that should also cheapen if we see the Fed deliver further rate cuts this year.”

ING notes that US assets are still performing well and added; “until the performance outlook for those assets significantly shifts, we are unlikely to see a significant exodus of European capital from the US.”

It added; “That said, we are a little negative on the dollar this year for macro reasons. But a 10% sell-off akin to last April’s ‘sell America’ theme looks unlikely.”

As far as data is concerned, the UK unemployment rate held at 5.1% in the three months to November, matching the 4-year high, and in line with consensus forecasts.

The ONS reported a 33,000 decline in payrolls for November with a provisional decline of 43,000 for December.

Headline average earnings growth slowed to 4.7% from 4.8% with underlying growth at 4.5% from 4.6% previously and in line with expectations.

There was no shift in Bank of England expectations with markets not expecting a February cut.

Like this piece? Please share with your friends and colleagues:

International Money Transfer? Ask our resident FX expert a money transfer question or try John’s new, free, no-obligation personal service! ,where he helps every step of the way,
ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Dollar Forecasts

Created on January 21, 2026

The US dollar has been very noisy against the Japanese yen on Tuesday as we see the JGB markets show signs of stress.

The US dollar has been very noisy against the Japanese yen during the bulk of the Tuesday trading session, as we continue to see a lot of noisy action. That being said, you should also pay close attention to the fact that the Japanese bond market is showing extreme stress and volatility, so this is going to make the Japanese yen very difficult to get a handle on in the short term.

That being said, longer term, we certainly have a lot of upward pressure at this point with the 158 yen level being a bit of a magnet, and I think the 160 yen level being a bit of a target. Short-term pullbacks would open up the possibility of buying opportunities with the 156 yen level offering support at the 50-day EMA.

The 50-day EMA, of course, is an indicator that I think a lot of people will continue to look at as a potential trend line. To the upside, I do think that we could eventually go looking to the 162 yen level after we get above 160 yen, but I think that would take a certain amount of momentum.

The Carry Trade Is Still Alive

Keep in mind that the carry trade is still very much alive, and of course, the US dollar does pay you to hold it against the Japanese yen despite the fact that yields are rising in Japan, because that’s a sign of stress.

That will be very volatile, and I think at this point in time, the market is trying to tell Japan you are not going to be able to raise rates too much, and therefore, the Bank of Japan may find itself acquiescing. There is the possibility of intervention, but intervention just gets bought into before it’s all said and done, as we have seen multiple times.

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

Created on January 21, 2026

EUR/USD Analysis Summary Today

• Overall Trend: Bearish Technical Correction
• Support Levels for EUR/USD Today: 1.1590 – 1.1530 – 1.1440
• Resistance Levels for EUR/USD Today: 1.1800 – 1.1860 – 1.1920

EUR/USD Trading Signals:

• Buy EUR/USD from the support level of 1.1650 with a target of 1.1800 and a stop-loss at 1.1560.
• Sell EUR/USD from the resistance level of 1.1800 with a target of 1.1500 and a stop-loss at 1.1880.

Technical Analysis of EUR/USD Today:

For two consecutive sessions, the EUR/USD pair has been rebounding from the support level of 1.1576 – the pair’s lowest level in two months. Gains extended to the resistance level of 1.1768, and the price is currently stabilizing around 1.1730 at the time of writing. According to performance on reliable trading platforms, the “Greenland Deal” continues to dominate the narrative for the second straight day, as traders begin to fear this is more than just a passing headline.

Generally, financial markets perceive heightened risks associated with the confrontation between the United States and Europe over the Greenland issue. As of Tuesday, Trump did not appear willing to back down from his stance on annexing Greenland to the United States, meaning that the UK and the EU will face a 10% tariff starting February 1st.

According to Forex market activity, the U.S. Dollar tends to decline as investors realize the negative economic impact of tariffs, which are largely borne by American consumers. Conversely, the Euro tends to benefit as a “large” and more liquid alternative to the U.S. Dollar, even if it is the party directly hit by Trump’s tariffs.

In general, Trump’s recent statements represented a new escalation in the Greenland dispute and confirmed the deterioration in relations between the United States and the European Union, keeping financial markets on edge. However, the euro avoided sustained losses. Its strong inverse relationship with the US dollar (USD) provided some protection, as the dollar came under pressure following Trump’s latest tariff threat.

EUR/USD Opportunities for a Bearish Breakout

The EUR/USD pair’s upward trend, as seen on the daily chart, could gain positive momentum if bulls manage to push the currency above the psychological resistance level of 1.1800. Recent gains have pushed the 14-day Relative Strength Index (RSI) towards 57, away from the neutral line, suggesting bullish momentum towards stronger upward levels if investor sentiment improves amid the recent US-EU dispute over the Greenland trade deal. Technically, the MACD indicator is also trending upwards, awaiting further positive momentum.

A EUR/USD a bearish scenario on the daily chart would require bears to push the currency back towards the support levels of 1.1655 and 1.1580, respectively. The EUR/USD’s direction today will be influenced first by statements from European Central Bank President Lagarde at 9:30 AM Egypt time. Then, most importantly, statements from US President Trump at 3:30 PM Egypt time.

Trading Advice:

We advise waiting for the EUR/USD to break through the 1.1800 resistance level before considering selling again. However, never take risks, no matter how strong the available currency trading opportunities may seem.

Ready to trade our daily Forex analysis? We’ve made this forex brokers list for you to check out.

The GBPJPY pair ended its last bullish rally by recording the target at 213.45, to form a strong obstacle against the attempts of resuming the bullish trend, which forces it to activate with the stochastic negativity by forming corrective rebound, to notice testing the bullish channel’s support at 212.30.

Reminding you that the repeated rise above 212.00 level which represents %2.380 Fibonacci extension level supports the chances of renewing the bullish attempts, to expect targeting 213.00 level, to attempt to surpass the mentioned obstacle, while declining below 212.00 and providing a negative close will confirm its surrender to the dominance of the bearish corrective bias, to expect suffering some losses by reaching 211.45 initially.

The expected trading range for today is between 212.00 and 213.45

Trend forecast: Bullish