The EUR/USD pair has been rising for the fourth consecutive session against the backdrop of persistent weakness in the US dollar.
Possible technical scenarios:
Judging by the look of things on the daily chart, EUR/USD has reached the upper boundary of the 1.1788–1.1898 range. If the price manages to move above it, it would open the way toward the next targets at 1.1961 and 1.2010.
Fundamental drivers of volatility:
Pressure on the dollar in the pair is being driven by several factors at once. The US has once again increased trade uncertainty after Donald Trump’s administration decided to raise tariffs on imports from South Korea from 15% to 25%, highlighting the unpredictability of US trade policy.
At the same time, the US is facing growing risks of a partial government shutdown. Senate Democrats are threatening to block budget funding, which could lead to a shutdown as early as this weekend. These factors are limiting demand for the dollar even amid strong macro data, including a 5.3% rise in durable goods orders in November.
The monetary-policy factor is also working against the dollar. Markets are pricing in further Fed easing, while the regulator is beginning a two-day meeting under heightened political pressure from the White House. The policy rate is expected to remain in the 3.50%–3.75% range, but uncertainty over the Fed’s future course is restraining any dollar recovery.
Against this backdrop, the euro is holding up well. Despite the lack of meaningful positive news from the eurozone, the single currency is benefiting from an overall improvement in market sentiment and US dollar weakness.
Investors will also be watching upcoming comments from ECB President Christine Lagarde and Bundesbank President Joachim Nagel, which could provide additional guidance on the regulator’s policy stance. In the near term, the balance of fundamental factors remains in favor of the euro as long as uncertainty around the US persists.
Intraday technical picture:
As we can see on the 4H chart, EUR/USD is testing the upper boundary of the 1.1788–1.1898 range, forming a second consecutive bullish flag, i.e., a pattern signaling trend continuation. If the macro backdrop turns unfavorable for the dollar, 1.1898 could be broken.
GBP/USD continues to strengthen amid weakness in the US dollar ahead of the Fed meeting.
Possible technical scenarios:
Given the ongoing developments on the daily chart, GBP/USD has consolidated above 1.3630, leaving room to move toward the next targets at 1.3752 and 1.3914. If the price fails to overcome strong resistance at 1.3752, a reversal lower from that level could send the pair back toward 1.3436.
Fundamental drivers of volatility:
Sterling has been supported by domestic factors. Strong retail sales and business activity readings released last week reduced the likelihood of an early policy easing by the Bank of England. The divergence in policy expectations for the Fed and the Bank of England continues to work in the pound’s favor.
Any local dollar strengthening remains limited and is largely linked to tactical closing of short positions ahead of the key event of the week, which is the Fed’s interest-rate decision due on Wednesday. The central bank is expected to keep rates unchanged, but markets will be keeping a close watch on Jerome Powell’s rhetoric regarding the future easing path.
From a fundamental standpoint, the dollar remains vulnerable. The market is still pricing in two Fed rate cuts in 2026, which limits the potential for a sustained USD recovery even amid the current correction. In this environment, any attempts for the US currency to strengthen look more technical and short-term than reflective of a sustainable shift in US monetary-policy expectations.
Intraday technical picture:
As evidenced by the situation on the 4H chart, the pair has technical potential to strengthen toward the upper boundary of the 1.3630–1.3752 range.
USD/JPY plummeted on Friday amid expectations of FX intervention from Japan and remains under pressure.
Possible technical scenarios:
On the daily chart, USD/JPY fell to 153.19. If this support holds, the pair may remain within the 153.19–155.03 range for some time. A breakout and consolidation below 153.19 would open the way toward the next support at 151.53.
Fundamental drivers of volatility:
The primary driver behind yen strengthening has been rising expectations of FX intervention by Japan. Pressure on USD/JPY increased after reports that the Federal Reserve Bank of New York had contacted financial institutions with inquiries about the yen’s exchange rate, as well as after Prime Minister Sanae Takaichi said authorities were ready to act against “speculative or very abnormal market moves.” Political sensitivity to elevated USD/JPY levels has increased ahead of the early election on February 8, amplifying the market reaction and triggering the pair’s decline.
Additional support for the yen came from the Bank of Japan. At the January meeting, the regulator kept the rate at 0.75% — the highest level in 30 years — and also raised its growth forecasts for fiscal 2025–2026, while lifting its core inflation forecast for 2026 to 1.9%. These signals reinforced the BoJ’s intentions toward further normalization and strengthened the contrast with Fed expectations, supporting continued downside in USD/JPY.
Meanwhile, further yen gains are being constrained by domestic fiscal risks and external factors. Takaichi’s promises to expand budgetary expenditures and introduce tax cuts have boosted volatility in the Japanese government bond market and refocused attention on public-finance sustainability. In addition, DBS expects USD/JPY declines to be tested by the FOMC meeting: expectations of less dovish Fed rhetoric and still-strong US macro conditions are limiting the potential for a deeper fall in the pair.
Intraday technical picture:
As suggested by the unfolding scenario on the 4H chart, USD/JPY is trading within the 153.19–155.03 corridor. From its lower boundary, there is local recovery potential, provided Fed rhetoric and renewed intervention threats do not reset price benchmarks.
USD/CAD is recovering for the second consecutive session after a decline, although the move remains restrained ahead of key decisions from the Fed and the Bank of Canada.
Possible technical scenarios:
The daily chart shows that USD/CAD fell below 1.3744, and if this level is now confirmed as resistance, further decline may continue toward 1.3642 and 1.3556, marked with dotted lines.
Fundamental drivers of volatility:
On Wednesday, both the Fed and the Bank of Canada will publish their policy decisions, and according to current market expectations, both regulators will keep rates unchanged. For Canada, this implies holding the rate at 2.25% with inflation within the target range, which does not create additional pressure on the Canadian dollar.
The fundamental backdrop for the US dollar remains mixed. On the one hand, expectations of imminent changes in Fed leadership are increasing uncertainty: Donald Trump confirmed his intention to announce a candidate to lead the central bank soon, ahead of Jerome Powell’s term ending in May.
Markets are pricing in the risk that a new chair could be more inclined toward faster rate cuts, which limits the dollar’s upside potential. An additional negative factor is the threat of a partial US government shutdown if Congress fails to approve funding by January 30.
For the Canadian dollar, trade risks remain a constraining factor. Trump has threatened to impose 100% tariffs on Canadian goods if Ottawa signs a trade agreement with China. These remarks heighten concerns about a renewed trade conflict and limit demand for CAD. As a result, USD/CAD is balancing between domestic risks for the US dollar and external pressure on the Canadian currency, while the pair’s next move will largely depend on signals from the Fed and the Bank of Canada.
Intraday technical picture:
A technical picture – a bearish engulfing pattern near its upper boundary – on the 4H chart also supports the likelihood of downside within the 1.3642–1.3744 range.
Gold hit fresh record highs on Tuesday, climbing above $5,000 per ounce amid a sharp surge in demand for safe-haven assets.
Possible technical scenarios:
Given the current developments on the daily chart, gold is rising after consolidating above 4939.80. A consolidation above the psychological $5,000 per ounce level would open the way toward the 5348.71 target.
Fundamental drivers of volatility:
The key driver behind the precious metal’s rally has been geopolitical and trade uncertainty. President Donald Trump said tariffs would be raised to 25% on imports of cars, lumber, and pharmaceuticals from South Korea, and earlier threatened tariffs on Canada amid its closer ties with China. These steps boosted demand for gold as a defensive asset and created a sustained “uncertainty premium” in prices.
Additional support is coming from pressure on the US dollar. The risk of a US government shutdown and the unpredictability of Trump’s economic policy are undermining confidence in the currency, making gold cheaper for holders of other currencies and increasing inflows.
Against this backdrop, expectations that the Fed will keep rates unchanged are not restraining the rally: the market is treating gold not as a cyclical asset, but as protection against political and institutional risks.
Intraday technical picture:
The 4H chart does not provide additional information for analysis. XAU/USD is consolidating below Monday’s highs. The key question now is whether price can consolidate above the psychological $5,000 level. If it fails, price may pull back toward current support at 4939.80.
Brent prices dropped lower on Tuesday, but the move remained limited due to offsetting factors involving supply.
Possible technical scenarios:
As we see on the daily chart, Brent has so far failed to consolidate above resistance at 65.02, and if the breakout ultimately proves false, prices may pull back toward support at 63.23, outlining a bearish double-top reversal pattern. Otherwise, the next upside target will be 66.51.
Fundamental drivers of volatility:
The market came under pressure after news of restored supplies from Kazakhstan and the normalization of export infrastructure operations.
Kazakhstan’s energy ministry reported that production had resumed at its largest field, although industry sources say volumes remain low for now. At the same time, the Caspian Pipeline Consortium said it had returned its Black Sea terminal to full capacity after completing maintenance. These factors reinforced expectations of higher supply and capped prices.
Another bearish factor was profit-taking in the heating fuel market after a sharp rally driven by cold weather in the US.
The decline in prices was limited by serious disruptions to US production and refining. Due to a powerful winter storm, US producers lost up to 2 million barrels per day, equivalent to about 15% of national output. Several refineries on the US Gulf Coast also reported operational issues, increasing concerns about refined-product shortages. Analysts expect a notable drawdown in commercial inventories in the coming weeks. Additional support is coming from ongoing geopolitical risks in the Middle East and expectations that eight OPEC+ countries will keep a pause in ramping up output in March at the February 1 meeting.
Intraday technical picture:
According to the 4H chart, Brent is attempting to retest resistance at 65.02, although the outcome remains difficult to predict. Price is locally at a crossroads between a breakout and further upside, or a decline back toward 63.23.
Login in Personal Account
46