The EUR/USD pair pulled back from local highs against the backdrop of worsening macroeconomic data from the eurozone.
Possible technical scenarios:
On the daily chart, EUR/USD slipped lower from resistance at 1.1788 and has almost reached the local dotted support at 1.1682. If this level holds, the pair may continue consolidating in a sideways range until new volatility catalysts emerge. A breakout of the 1.1682 support and consolidation below it would open the way toward the next target at 1.1494.
Fundamental drivers of volatility:
A key negative factor for the euro was the downward revision of the December Services Business Activity Index (to 52.4 from the preliminary 52.6), which strengthened doubts about the stability of the eurozone recovery.
US data is still not providing the dollar with meaningful support. The ISM manufacturing index demonstrated the sharpest slowdown in business activity in 14 months, while inflationary pressure persisted in the prices component. Additional pressure on the dollar came from dovish comments by Fed officials, pointing to easing inflation and the risk of deterioration in the labor market, which supports expectations of future monetary easing.
As a result, EUR/USD has shifted into a phase of fragile consolidation: euro weakness driven by disappointing services readings is being offset by the broader vulnerability of the dollar. In the short-term, the risk balance will be shaped by German inflation figures and a series of key US labor market reports, first and foremost Nonfarm Payrolls, which can steer expectations around the timing of Fed rate cuts and define the pair’s next impulse.
Intraday technical picture:
As we can see on the 4H chart, it remains unclear whether EUR/USD will continue recovering within the 1.1682–1.1788 range, or whether this is merely a local rebound before another attempt to break out 1.1682. The presence of a local downtrend does not rule out renewed breakout attempts.
Sterling is strengthening against the dollar amid improving global market sentiment and softer demand for safe-haven assets.
Possible technical scenarios:
Judging by the look of things on the daily chart, following price consolidation above the mirror level at 1.3436, there are preconditions for a move higher toward the 1.3630 target.
Fundamental drivers of volatility:
Reduced geopolitical tensions around Venezuela have boosted interest in risk assets, strengthening the pound. Another driver of GBP/USD gains has been broader dollar weakness following soft US industrial data.
The US currency remains under pressure after December’s ISM Manufacturing PMI fell (47.9 versus the expected 48.2 and versus 48.2 in the prior period), signaling a tenth consecutive month of contraction in industrial activity. Dovish comments from Fed officials, particularly signaling that the labor market is slowing and rates are close to neutral, have reinforced expectations of further policy easing, which, in turn, is weighing on the dollar.
As far as the UK goes, the fundamental backdrop for sterling remains relatively stable. Inflation is slowing, but it is still clearly above the Bank of England’s target, which limits the scope for aggressive rate cuts and supports expectations of a more cautious easing path in 2026.
In the short term, GBP/USD dynamics will primarily depend on US labor market data, which could adjust expectations for Fed policy and set the pair’s next move.
Intraday technical picture:
The 4H chart supports the likelihood of price growth within the 1.3436–1.3630 corridor.
USD/JPY remains under pressure, as the divergence in monetary policy expectations between the Bank of Japan and the US Federal Reserve continues to tilt the balance in favor of the Japanese currency, despite a mixed domestic backdrop in Japan.
Possible technical scenarios:
On the daily chart, USD/JPY is trading within a wide 154.35–157.89 range, where there is sufficient room for further downside.
Fundamental drivers of volatility:
The key support for the yen remains expectations of continued monetary policy normalization by the Bank of Japan. Governor Kazuo Ueda reaffirmed readiness to hike rates if the current trajectory of the economy and inflation remains intact, which has already lifted Japanese government bond yields: 2-year notes hit a high not seen since 1996, and 10-year yields reached their highest since 1999. A narrowing yield differential versus the US limits the yen’s weakening potential and amplifies the effect of official verbal signals about possible FX intervention.
On the US side, pressure on the dollar is increasing amid expectations of a more accommodative Fed stance. Markets are pricing in a potential rate cut as early as March, with a possible additional step by year-end, supported by weak signals from the industrial sector: December’s ISM Manufacturing PMI fell to 47.9, pointing to continued contraction. This contrasts with more resilient—but still mixed—S&P Global readings and keeps the dollar on the defensive.
Meanwhile, improving risk appetite and uncertainty over the timing of the Bank of Japan’s next hike are preventing a more aggressive yen rally. Fiscal risks linked to the government’s large-scale spending plans are another limiting factor. In the near term, the USD/JPY direction will largely depend on US labor market data, but from a fundamental standpoint, the balance of factors still leans in favor of the yen.
Intraday technical picture:
The 4H chart shows that a drop below 156.71 and the formation of a bearish flag set the stage for a decline toward the nearest support at 155.03.
USD/CAD is balancing between a softer US dollar and constraining factors on the Canadian side. The pair is correcting from recent highs but is not showing a strong bearish impulse.
Possible technical scenarios:
On the daily chart, USD/CAD is attempting to recover, but its rise has stalled at the local mirror resistance at 1.3799, marked with a dotted line. A reversal pattern—an inverse head and shoulders—is taking shape here. If it fully forms and the trend reverses, a move toward the nearest target at 1.3861 is possible. An alternative scenario would be a decline toward the December lows (1.3642).
Fundamental drivers of volatility:
The dollar’s weakness in this pair reflects rising expectations of further Fed easing amid mixed US PMI signals, as well as a constructive global risk backdrop and concerns over the Fed’s independence. These factors reduce demand for the dollar as a safe-haven currency and apply moderate pressure on USD/CAD.
In the meantime, CAD strength is being restrained by lower oil prices. Expectations of higher global supply, including on the back of possible increased US control over Venezuelan oil, are offsetting geopolitical risks and weighing on crude, which reduces support for the Canadian dollar.
A hawkish signal from the Bank of Canada partially offsets this impact, preventing a deeper decline in the pair. In the near term, the USD/CAD direction will be driven by US and Canadian labor market data scheduled for release later this week.
Intraday technical picture:
Given the ongoing developments on the 4H chart, USD/CAD is trading in a tight 1.3744–1.3799 sideways range, with a remaining room for a movement towards its resistance.
Gold is trading near weekly highs, drawing support from two fronts, which are specifically rising geopolitical risks and a softer US dollar amid expectations of Fed easing.
Possible technical scenarios:
On the daily chart, gold has moved above 4375.25 and is heading toward the all-time high from December 26, 2025 (4550.03 per ounce). If that high is broken, the next upside target will be resistance at 4635.63.
Fundamental drivers of volatility:
Rising tensions around Venezuela following the detention of Nicolas Maduro increased demand for safe-haven assets and revived interest in gold as a defensive instrument.
Another supportive factor has been weak US macro data, which pressured the dollar, an inverse correlation driver for precious metals. A sharp deterioration in manufacturing PMI and Fed comments, allowing for higher unemployment, reinforced expectations of rate cuts. Markets are pricing in at least two cuts this year, which is structurally supportive for gold.
In the short term, price action will largely depend on US labor market data, especially Nonfarm Payrolls. Weaker-than-expected figures would add pressure on the dollar and could open the way for another test of record highs, while strong data could trigger a correction after the recent impulsive rally.
Intraday technical picture:
As suggested by the unfolding scenario on the 4H chart, there is still room to move toward the all-time high at 4550.03. If price fails to overcome that level, a pullback toward support at 4264.44, marked with a dotted line, is plausible.
Brent crude rose as the market evaluates the potential impact of changes around Venezuelan output and a reduction in Russian oil supplies to India.
Possible technical scenarios:
On the daily chart, Brent remains in a downtrend, where a local reversal from resistance and weakening toward the $58 area is possible. That being said, if the trend changes and price exits the channel to the upside, the nearest upside target would be 63.23, followed by 65.02.
Fundamental drivers of volatility:
The key factor remains the prospect of higher global supply. Analysts estimate that even without a substantial increase in Venezuelan production, global oil supply in 2026 will be sufficient against the backdrop of weak demand growth. A Reuters survey in December suggested that most market players expect downward pressure on prices, specifically due to an imbalance between supply and consumption.
Developments around Venezuela add uncertainty but do not yet change the baseline balance. The detention of Nicolas Maduro raises the probability of an easing or revision of US sanctions, which could theoretically open the door to higher output. That said, expectations for incremental supply remain modest: estimates point to 300–500 thousand barrels per day over a two-to-three-year horizon, which is not enough to materially shift the market without major investment.
An additional local factor has been a reduction in Russian oil supplies to India in January after Reliance Industries decided to stop purchases, which could temporarily alter trade flows. Even so, the market continues to operate under a structural surplus scenario for 2026, which is why Brent’s current rise looks limited and largely corrective in nature.
Intraday technical picture:
According to the 4H chart, the price has formed a range inside the broader downtrend. Further direction will depend on whether quotes exit the channel near $62 per barrel or reverse lower. In the latter case, a decline toward 58.68 is possible.
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