Positioning and Risk Outlook

In my view, warnings of yen intervention, a hawkish BoJ policy stance, and expectations of Fed rate cuts support a negative price trajectory. However, Japan’s upcoming election, US economic indicators, and Fed Chair Powell’s speech will be key, given recent price action.

Furthermore, a higher BoJ neutral interest rate level (potentially 1.5%-2.5%) would signal a narrower US-Japan interest rate differential. A sharply narrower rate differential may trigger a yen carry unwind, as seen in mid-2024. An unwind of yen carry trades would likely send USD/JPY toward 140 over the longer term.

However, upside risks to the bearish outlook include:

• Dovish BoJ rhetoric and a lower neutral interest rate (potentially 1% – 1.25%).
• Fed Chair Powell downplays the chances of an H1 2026 cut.
• Robust US economic data dampens bets on an H1 2026 Fed rate cut.

These factors would send USD/JPY higher. However, ongoing warnings of yen intervention are likely to cap the upside at the 155 level.

Read the full USD/JPY forecast, including chart setups and trade ideas.

Conclusion: Politics, the BoJ, and the Fed in the Spotlight

In summary, the USD/JPY trends will hinge on Japan’s election result, Prime Minister Takaichi’s fiscal spending plans, the BoJ’s policy stance, the Fed’s rate path, and Trump’s tariff policies.

A higher BoJ neutral rate (1.5%-2.5%) would signal a hawkish BoJ rate path, strengthening the yen. Meanwhile, Prime Minister Takaichi’s snap election will also be crucial for the near-term USD/JPY trends, given her fiscal policy goals. Additionally, dovish Fed rhetoric would suggest narrower rate differentials, reaffirming the bearish medium-term outlook for USD/JPY.

A stronger yen and the unwinding of yen carry trades would likely push USD/JPY toward 140 over the longer 6-12 month timeline.

For more in-depth analysis, review today’s USD/JPY trading setups in our latest reports and consult the economic calendar.

– Written by


Frank Davies

STORY LINK GBP/USD Forecast: Pound Sterling Edges Higher as USD Headwinds Mount

The Pound to US Dollar exchange rate (GBP/USD) hovered near a four-month peak on Tuesday, supported by ongoing weakness in the US Dollar, although a lack of fresh data kept volatility contained.

At the time of writing, GBP/USD was trading at $1.3701, moving sideways just shy of the previous session’s four-month high.

The US Dollar (USD) remained under pressure, extending recent losses after a heavy selloff earlier in the week dragged the currency to multi-month lows.

Sentiment towards the Greenback has deteriorated amid growing unease over both foreign policy and domestic political strains. While President Donald Trump stepped back from threatening new tariffs on Europe, markets were unsettled by fresh warnings aimed at Canada, with Trump suggesting 100% tariffs could be imposed if Ottawa pursues a trade agreement with China.

At home, the mood darkened further following public outrage over the second fatal shooting of a US citizen by immigration agents in Minneapolis. The incident reignited fears of political gridlock, with some Democrats withdrawing support for funding the Department of Homeland Security, raising the prospect of another government shutdown.

With tensions simmering on multiple fronts, investors have grown increasingly cautious about holding US Dollar exposure. Although USD briefly stabilised after Trump attempted to cool the situation in Minneapolis, the currency struggled to attract sustained buying interest.

The Pound (GBP), meanwhile, found it difficult to extend gains, with a quiet UK data calendar leaving Sterling short of clear direction.

Political developments also weighed on sentiment. Reports of renewed friction within the governing Labour Party surfaced after allies of Prime Minister Keir Starmer moved to block Andy Burnham from standing in a forthcoming by-election. The move fuelled speculation it was designed to head off a potential leadership challenge, adding another layer of uncertainty that appeared to cap demand for the Pound.

GBP/USD Forecast: Fed Leadership Decision Looms

Looking ahead, markets are bracing for an announcement from President Donald Trump on his preferred candidate to succeed Jerome Powell as Chair of the Federal Reserve, with the nomination expected before the end of the month.

Given Trump’s repeated criticism of Powell’s policy stance, investors anticipate a more dovish nominee when Powell’s term expires in May. Such an outcome could undermine confidence in the US Dollar and place USD under renewed pressure.

With little in the way of UK economic data scheduled, movement in the Pound is likely to remain closely tied to shifts in global risk appetite and developments surrounding US monetary policy.

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– Written by


David Woodsmith

STORY LINK Pound to Dollar Forecast 2026: Gold and Yen Surge Expose USD Vulnerability

The Pound to Dollar exchange rate (GBP/USD) surged to fresh four-month highs above 1.3680 as the dollar slid sharply on yen intervention fears and another surge in gold prices, pushing the DXY index into a technically fragile zone.

GBP/USD Forecasts: Fresh 4-Month Best

The dollar posted sharp losses in New York trading on Friday and has lost further ground on Monday.

The Pound to Dollar (GBP/USD) exchange rate surged to a 4-month high just above 1.3680 before a slight correction

UoB commented; “We continue to expect a stronger GBP today, but given the deeply overbought conditions, any advance is likely part of a higher range of 1.3590/1.3700. In other words, GBP is unlikely to break clearly above 1.3700.

The bank notes that levels above 1.3700 are the September 2025 high of 1.3730 and the July 2025 peak at 1.3790.

There are no major UK data releases this week with global developments set to dominate GBP/USD moves.

The dollar slide was triggered to an important extent by a slump against the yen amid fears that central bank intervention to buy the yen was imminent. Overall dollar sentiment also remained negative while there was another surge in precious metals with silver and gold both jumping to fresh record highs.

MUFG commented; “The broad US dollar index (DXY) remains under downward pressure, having slipped below the 98.00 handle. The index now sits at a technically pivotal zone – any further deterioration risks opening the door to an extended phase of USD softness.”

Overnight, the Bank of Japan and Federal Reserve looked to check dollar positions against the yen. This is the final move before a potential move to actually intervene and buy the yen.

ING commented; “Suspected intervention to sell USD/JPY, plus US authorities reportedly getting involved, has prompted a near 3.5% drop since Friday morning. This is not a fundamentally driven dollar move, but the dollar risk premium can stay elevated.”

ING is not convinced that the dollar slide will continue; “away from the geopolitical risk premium being attached to US assets, the dollar’s fundamental story has not deteriorated. Plus, we suspect this week’s FOMC meeting could prove slightly dollar bullish.

It added; “for the dollar sell-off to continue like this, we will probably need to see some poor domestic US news. Away from the FOMC, this will heighten scrutiny on earnings releases from US Big Tech this Wednesday and Thursday.

The Fed will announce its interest rate decision on Wednesday with strong expectations that rates will be held at 3.75%.

Danske Bank commented; “We expect the Federal Reserve to maintain its monetary policy unchanged, in line with broad consensus and market pricing. The Fed will not publish updated projections, so the focus is strictly on Powell’s remarks.”

From a longer-term view it added; “We maintain our forecast for two more Fed cuts, in March and June, slightly ahead of market pricing.”

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USD/JPY Inches Higher as Yen Strengthening Lacks Follow-Through, Fed 2-Day Meeting Begins

is edging higher on Tuesday with the yen weakening amid concerns about Japan’s fiscal health on the back of Prime Minister Takaichi’s plans for aggressive spending and tax cuts. Furthermore, the market mood is more positive, which is also undermining safe-haven demand for the JPY.

Yesterday’s strengthening of the yen is lacking follow-through for now. However, the downside in the yen could be limited given the willingness of US and Japanese authorities to step in and support the currency and the BoJ’s hawkish stance.

The sharp move in USD/JPY in recent sessions highlights market nervousness over a possible intervention.

PM Takaichi has called a snap election for February 8, aiming to capitalise on her popularity to strengthen her mandate and push ahead with fiscal expansionary policies. Japanese bond yields have soared in recent weeks amid nervousness over Japan’s fiscal outlook. That same nervousness had weighed on the yen.

data is due late in the week. The BoJ lifted its growth and inflation forecasts in last week’s meeting, keeping more rate hikes on the table.

This is in contrast to the Federal Reserve, which kicks off its two-day meeting today. The Fed is expected to leave rates unchanged at 3.5% to 3.75% after three consecutive last year. Attention will be on Fed Chair Powell’s press conference for further clues on the timing of further rate cuts.

The has steadied around a 4-month low, weighed down in recent sessions by the “sell America” trade, by Trump’s threats of 100% tariffs on Canada and higher tariffs on South Korea, by fears of another US government shutdown, and by speculation of JPY intervention.

USD/JPY Forecast – Technical Analysis

USD/JPY broke aggressively below its rising trendline dating back to mid-September, and the 50 SMA, falling to a low of 153, before settling above the 154.25 support.

USD/JPY bulls are extending the recovery today towards 155.00. A rise above the 155 puts the pair on a more stable footing and brings 156.00 back into focus ahead of 157.50 as the next key resistance area to watch; this had acted as a support before the sharp selloff.

On the downside, there isn’t that much in the way of support. Should sellers take out the 153.30 low, this exposes the longer-term trendline support around 152.00. A break below here exposes the 200 SMA at 149.75.

DAX Rises as EU-India Trade Deal Is Agreed

, along with European shares, is seen opening broadly higher on Tuesday, with trade tensions, the upcoming Fed rate decision, and mega cap tech earnings all in focus.

The EU and India have concluded a free trade agreement after almost 20 years of negotiations, and space science seeks to deepen economic ties and offset the impact of Trump’s tariff policies.

The deal is expected to double EU goods exports to India by 2032, eliminating or reducing tariffs on almost 97% of those exports. This includes a range of products from automobiles and industrial goods to wine and chocolate. India has agreed to allow up to 250,000 European-made vehicles into the country at preferential duty rates.

Meanwhile, the EU will eliminate or reduce tariffs on almost 100% of goods imported from India over the coming seven years. The deal is set to give India a competitive edge in exporting labour-intensive goods, which have been hit hard by Trump’s steep tariffs.

Looking ahead, today also sees the start of the FOMC meeting ahead of tomorrow’s rate decision, where investors will be looking for clues on the timing of the Fed’s next rate cut. President Trump is expected to nominate a new Federal Reserve chair within the coming days.

In the US, 100 companies are due to release their quarterly earnings results this week. Among these firms, , , and will unveil their latest results.

DAX Forecast – Technical Analysis

 After running into resistance at 25,500, the record high, the DAX fell lower, breaking below its near-term rising trendline dating back to mid-November before finding support at 24,350 and settling above the 24,600 support. From here, the price has extended its recovery, and while remaining below the rising trendline, it is tracking the line higher. The long-term uptrend also remains intact.

Buyers, supported by momentum, will look to extend the recovery above 25,500 to fresh record highs.

Immediate support is seen at 24,600, the July and October highs. A close below here opens the door to the 50 SMA at. 24,330.

Original Post

Copper price reached $5.9700 level yesterday to settle below it, affected by the continuation of the contradiction between the main indicators, especially by stochastic exit from the overbought level, which forces it to fluctuate in sideways range by its stability near $5.8300.

We expect the price to be affected by a state of instability due to the ongoing divergence of the main indicators, despite the presence of an opportunity to edge toward $5,720.00. However, exposure to negative pressure may force it to retest the solid support near $5,510.00, while surpassing this level and holding above it will reinforce the chances of recording new gains that might extend towards $6.1200 and $6.2400.

The expected trading range for today is between $5.7500 and $6.000

Trend forecast: Fluctuating