US Consumer Sentiment Spotlights the Fed

While Japanese data and the upcoming election influence yen demand, US economic data will affect buying interest in the US dollar.

Later on Friday, US consumer sentiment numbers will take center stage, given the delay to the US jobs report. Economists forecast the Michigan Consumer Sentiment Index to fall from 56.4 in January to 55.0 in February. Waning consumer sentiment could signal a pullback in consumer spending and a softer inflation outlook. Cooling inflation would support a more dovish Fed rate path, weighing on US dollar demand.

A more dovish Fed policy stance and a more hawkish BoJ rate path would indicate a narrowing in US-Japan rate differentials. Narrowing rate differentials in favor of the yen would be bearish for USD/JPY.

According to the CME FedWatch Tool, the chances of a March Fed rate cut increased from 13.4% on January 29 to 24.3% on February 4. Meanwhile, the probability of a June cut jumped from 61.8% to 82.3%.

Technical Outlook: Key Levels to Watch

For USD/JPY price trends, traders should assess technical indicators, incoming economic data, central bank chatter, and political developments.

On the daily chart, USD/JPY remains above its 50-day and 200-day Exponential Moving Averages (EMAs). The EMA positions signal a bullish bias. However, positive yen fundamentals continue to offset technicals.

A break below the 50-day EMA would bring the 200-day EMA into play. If breached, 150 would be the next key support level.

Importantly, a sustained fall through the EMAs would indicate a bearish trend reversal and reaffirm the negative medium-term price outlook.

GBP/USD Falls to 1.36 Ahead of the BoE Rate Decision

The Bank of England will deliver its first monetary policy decision of 2026 at midday today. Expectations are that the central bank will leave interest rates unchanged at 3.75% after cutting rates by 25 basis points at the December meeting.

The December rate count was a narrow vote of five to four. Highlighting how finely balanced the debate about further rate cuts has become. The message from policymakers was still cautiously dovish, with a gradual downward path for rates, meaning that further cuts would be harder to justify as policy moves closer to neutral.

Growth momentum is showing signs of fading, with the economy expected to flatline in Q4. The central bank expects inflation to return to the 2% target by spring, despite rising to 3.4% in January.

There are signs, however, that the labour market is cooling, with the 5.1% percent. data from yesterday showed that the employment subcomponent fell sharply in January, continuing a trend that began in October 2024, marking the longest period of job shedding in the UK service sector in 16 years.

Further weakening in the jobs market would put downward pressure on wage growth and pull service sector inflation lower. Wage growth and service-sector inflation are currently too high for the Bank of England to be comfortable with further rate cuts, or to be consistent with inflation back at 2%.

The focus will be on the vote split, which is expected to be 7-2. A more dovish vote could put pressure on the pound. Bank of England Governor Andrew Bailey’s comments will be in focus, and dovish commentary would be pound-negative.

Meanwhile, the is rising as it nears a 2-week high amid market pricing in a slower pace and potential Federal Reserve rate cuts.

Federal Reserve governor Lisa Cook emphasised concerns over sticky inflation rather than the cooling labour market, suggesting that she was not supporting a rate cut until there are further signs of inflation easing.

Data yesterday showed the remained at 53.8 in January, aligning with the previous month’s figure and exceeding expectations from a client of 53.5. However, prices paid also increased to 66.6 from 65.1, signalling rising inflationary pressures. Attention will now turn to U.S. initial jobless claims, which are expected to rise modestly to 212K, up from 209 K.

GBP/USD Forecast – Technical Analysis

trended higher from 1.30 before running into resistance at 1.3870. GBP/USD rebounded lower from here and is testing support at the 1.36 zone, the round number, horizontal and trendline support.

A break below here exposes the 200 SMA at 1.3420. A break below 1.3350 creates a lower low, bringing 1.32 into focus.

Should the support hold, buyers will look to rise above 1.37. A rise above here brings 1.3870 back into play.

EUR/USD Steadies Around 1.18 Ahead of the ECB Rate Decision

has fallen back to 1.18 ahead of the ECB rare decision at 13:15 GMT where the central bank is widely expected to leave interest rates unchanged at 2% (deposit rate). The ECB last cut rates in June last year. However, inflation hovering around the 2% target led policymakers to consider monetary policy to be in a good place.

However, this meeting comes after data yesterday showed cooled by more than expected to 1.7% YoY in January, down from 1.9% in December and further from the ECB’s 2% target, reopening the debate over whether the ECB will cut again this year.

A stronger EUR, – EUR/USD rose to a 4-year high above 1.20 in late January, and cheap Chinese exports, which have flooded the eurozone, exert deflationary pressure and, if this persists, could amplify dovish calls within the ECB.

Given that no rate cut is expected, the focus will be on the tone of President Lagarde’s press conference as the near-term catalyst for the EUR.

A stronger USD and a slightly more dovish ECB could pull EUR/USD back towards 1.17.

EUR/USD Forecast – Technical Analysis

After recovering from the 200 SMA support and rising to a 4-year high of 1.2085, EUR/USD has fallen back and is testing the 1.18 support, the round number, the December high and the falling trendline support. The RSI is close to neutral.

Should buyers successfully defend this support, upside resistance is at 1.1870, with a rise above here bringing 1.20, the psychological level and 1.2085 back into focus.

Should sellers remove the 1.18 support, this would expose the 50 SMA and the 1.17 level. Below here, the 200 SMA at 1.16 comes into play, along with the 2026 low.

Original Post

The GBPJPY pair ended its bullish rally by reaching 214.90, forming a strong barrier against the bullish attempts, which pushes it to activate the bearish corrective track, to reach 213.5 attempting to press on the bullish channel’s support that appears in the above image.

Note that stochastic decline below 50 level, and attempt to form extra barrier at 214.15 level, these factors makes us wait for breaking the current support, to reinforce the chances to begin gathering gains, to expect targeting 212.90 level initially, where breaking this barrier might extend the trading towards 212.45 and 212.00, while holding above 214.15 will confirm the continuation of the bullish scenario, waiting to reach 215.00. 

The expected trading range for today is between 212.90 and 214.00

Trend forecast: Bearish

Created on February 05, 2026

The Euro has risen against the Japanese Yen during the trading session here on Wednesday as the interest rate differential continues to be a main driver of things. The ECB meets on Thursday, so be aware that volatility is almost certain to happen.

EURJPY

The Euro has risen against the Japanese Yen during the trading session here on Wednesday as we continue to just see a nice uptrend in a market that quite frankly has been a buy on the dip opportunity every time it falls. We are sitting above the 50-day EMA and of course the uptrend line.

We are hanging around the 185 Yen level and that of course is a large round psychologically significant figure that attracts a lot of attention. If we do pull back from here, I think that opens up the possibility of buyers getting involved on value.

Interest Rate Differentials and Policy Outlook

Keep in mind one problem we have is that the Thursday session has the ECB interest rate decision and that will come into the picture and cause a little bit of noise from everything I can see. With this being the case though, I think unless the ECB sounds suddenly very dovish, which I don’t think they will, you have a scenario where the interest rate differential will continue to favor the upside as the Bank of Japan really can’t do anything.

I suspect at this point we will eventually go looking toward the 190 Yen level, but that might take some time to get to. If we were to break down below the uptrend line and ostensibly the 50-day EMA, then I look for support at the 182 Yen level, possibly even down to the 180 Yen level. I have no interest in shorting this pair. I do not pay the swap and of course the trend is very well established here.

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.

The EURJPY pair succeeded in surpassing the barrier at 184.00, to settle above it to ease the mission of resuming the bullish trend, to settle near the initial bullish target at 184.85 level.

The main stability within the bullish channel’s levels beside providing bullish momentum by the main indicators will increase the chances of recording extra gains, to wait for reaching 185.45 and surpassing it might push it to press on 186.20 barrier, to form the next main target in the current trading.

The expected trading range for today is between 184.30 and 185.45

Trend forecast: Bullish

– Written by


Ben Hughes

STORY LINK GBP/USD Forecast: Pound Sterling Loses Momentum as Dollar Firms on US Data

The Pound to US Dollar exchange rate (GBP/USD) drifted lower on Wednesday, easing back as investors digested a fresh batch of US economic data that lent modest support to the Dollar.

At the time of writing, GBP/USD was trading close to $1.3663, down around 0.2% from the start of the European session.

The US Dollar found some footing after the latest ISM services PMI signalled continued resilience in the US economy. January’s index held steady at 53.8, outperforming expectations for a slight dip to 53.5 and reinforcing the view that the services sector remains a source of strength.

Although the data lacked the punch of recent manufacturing releases, it was sufficient to underpin the Dollar and offset weaker labour market signals from the ADP employment report.

With the official non-farm payrolls release postponed due to the partial government shutdown, markets paid closer attention to the ADP figures, which showed job creation slowed sharply last month. Employment growth eased from 37,000 to just 22,000, highlighting a cooling trend in hiring.

The Pound, meanwhile, struggled to gain traction following the release of the UK’s final services PMI for January.

The index was revised down to 54 from an initial estimate of 54.3. While still marking the fastest pace of expansion since August 2025, the downgrade disappointed hopes of a fresh multi-month high and limited Sterling demand.

The survey also flagged ongoing weakness in employment, with service-sector firms continuing to scale back hiring. An increasing focus on automation and efficiency is weighing on job creation, tempering the otherwise upbeat headline reading.

GBP/USD Forecast: Bank of England Signals in Focus

Looking ahead, near-term direction in the Pound to US Dollar exchange rate is likely to hinge on the Bank of England’s first policy decision of 2026.

While no change in interest rates is expected, traders will scrutinise the BoE’s guidance for clues on how policymakers assess the outlook for inflation and growth. Any shift towards a firmer or more cautious tone could help Sterling stabilise as markets reassess expectations for future rate cuts.

For the US Dollar, attention will turn to the University of Michigan’s latest consumer sentiment survey. A further dip in confidence could erode some of the Dollar’s recent support if household morale continues to weaken.

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 February 04, 2026

I look at this market as one that could offer opportunities on dips, but it will also be very noisy and rocky to say the least.

USD/JPY

The US dollar has gone back and forth against the Japanese yen during trading here on Tuesday and it does suggest that perhaps we do not really know what to do next as we are hanging around the 50-day EMA which in and of itself will cause a certain amount of chaos.

But I think you also have to realize that this pair is struggling due to the fact that the US dollar itself is a little soft during the trading session. However, I look at this as a buy on the dip opportunity and you do get paid to hang on to the US dollar against the Japanese yen.

Furthermore, this is a great measuring stick as to how the Japanese yen may or may not behave. And I think at this point it is obvious that the Japanese yen is in significant trouble and with that being the case I do prefer to hold the dollar as it pays you at the end of every day.

Monetary Policy and Technical Support

But we are also a little stretched from a longer-term perspective. Maybe a little bit of choppiness here is on tap. I suspect you probably have an easier time with something like the British pound against the Japanese yen but I also recognize that they all tend to move in the same direction over the longer term.

The Bank of Japan finds itself in a situation where it has a lot of problems tightening monetary policy despite the fact that yet again people fell for that line. Now we have a situation where I think the 200-day EMA becomes increasingly important.

As long as we can stay above there, I am looking to buy dips, maybe collect profit on the way up and then buy the next dip. I do think the US dollar does eventually reach the 158-yen level again.

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

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 benefited from providing bullish momentum by the main indicators, especially with stochastic reach towards 80 level, forming a strong bullish rally to surpass the barrier at 213.00, to settle above the bullish channel’s support at 213.55 level, to target some extra gains by reaching 214.30.

The stability above the bullish channel’s support will provide strong chance of recording extra gains; to expect to form initial target at 214.90 level and surpassing it might extend the trading in the near period towards 215.55 and 216.35.

The expected trading range for today is between 213.80 and 214.90

Trend forecast: Bullish