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Created on January 26, 2026

• The Euro was grinding just a touch higher despite the fact that it initially fell as the day started. Ultimately, we find ourselves watching the same important level heading into the weekend.

EUR/USD

The Euro was grinding just a touch higher after initially falling on Friday due to the overall US dollar weakness rather than any intrinsic Euro strength. The primary driver at the moment is heightened political risk in the US, specifically the volatility surrounding the recent tariff threats around Greenland.

But this is just a momentary blip on the radar, and the question now is where these currencies deserve to be. On one hand, we have seen the dollar get punished, and money flew into places like gold and, by default, the Euro. That being said, there is immediate resistance just above the 1.18 level and then again at the 1.1850 level, and I think it’s going to be very difficult to break above there as it has shown multiple times in the past.

Lack of Momentum

Because of this, I anticipate that this sets up for a shorting opportunity early in the week next week, as Friday has shown a real lack of momentum or, quite frankly, interest at this point in time. With that being the case, I think the overall range remains from 1.14 on the bottom to 1.1850 on the top.

The 50-day EMA has provided short-term support between those two levels over the last couple of days and currently sits at the 1.1675 level. Ultimately, I think this is a market that doesn’t really have anywhere to be anytime soon, although it’s clear that the bullish behavior is fairly resilient. But the question now is, as we rise towards the major resistance barrier, is there anything to make it break out? As things stand right now, it.

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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 GBPJPY pair approached from the main target at 215.00 level, forming strong barrier against the attempt of resuming the bullish attack, to force it form strong corrective decline, to resume forming bearish price gap this morning, to settle below the bullish channel’s support at 210.95 level.

The stability below the broken support and providing bearish momentum by the main indicators will confirm the dominance of the bearish bias, to expect suffering extra losses by reaching 209.65 followed by %200 Fibonacci extension level at 208.50.

The expected trading range for today is between 209.65 and 210.80

Trend forecast: Bearish by the stability of 211.00

The GBPJPY pair approached from the main target at 215.00 level, forming strong barrier against the attempt of resuming the bullish attack, to force it form strong corrective decline, to resume forming bearish price gap this morning, to settle below the bullish channel’s support at 210.95 level.

The stability below the broken support and providing bearish momentum by the main indicators will confirm the dominance of the bearish bias, to expect suffering extra losses by reaching 209.65 followed by %200 Fibonacci extension level at 208.50.

The expected trading range for today is between 209.65 and 210.80

Trend forecast: Bearish by the stability of 211.00

Japanese Leading Economic Indicator in Focus

Later on Monday, Japanese economic indicators are likely to fuel speculation about an April Bank of Japan rate hike. According to the preliminary report, the Leading Economic Index (LEI) increased from 109.8 in October to 110.5 in November, suggesting a pickup in economic momentum.

An upward revision to the preliminary number would raise expectations of an April BoJ rate hike, boosting buying interest in the yen. The stronger yen would push USD/JPY lower.

Traders should pay close attention to LEI trends. A higher reading suggests improving business investment, rising employment, and higher wages. Importantly, stronger wage growth would increase households’ purchasing power, fueling spending and demand-driven inflation.

An upward trend in consumption and inflation would align with the BoJ’s upward revisions to inflation in its quarterly outlook report, supporting a more hawkish BoJ rate path.

Rising bets on BoJ rate hikes and Fed rate cuts reaffirm the bearish medium- to longer-term price projections.

US Durable Goods Orders and the Fed in Focus

While the yen gets government support, US economic data will influence the appetite for the US Dollar. Durable goods orders, the Chicago Fed National Activity Index, and the Dallas Fed Manufacturing Index will be in focus. However, durable goods order trends are likely to garner more attention, given that the Index gives insight into business and consumer spending.

Economists expect durable goods orders to rise 0.5% month-on-month in November after sliding 2.2% in October. A higher-than-expected reading would indicate a pickup in manufacturing sector activity, bolstering the US economy. However, the numbers may have limited influence on Fed rate-cut bets, given that the manufacturing sector accounts for just 20% of US GDP.

Traders should closely monitor FOMC members’ speeches, which will likely have more influence on sentiment toward an H1 2026 Fed rate cut and USD/JPY trends.

Technical Outlook: Key Levels to Watch

For USD/JPY price trends, traders should consider technicals and closely follow central bank and political headlines.

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

A sustained drop below the 155 support level would expose the 200-day EMA. If breached, 150 would be the next key support level.

Crucially, a sustained fall through the EMAs would reaffirm the bearish short- to medium-term price outlook.