Forex News

• USD/JPY turns upside down as the Japanese Yen gains on BoJ hawkish expectations.
• Market sentiment turns risk-averse as the US strikes at Venezuela.
• The US Dollar trades slightly higher ahead of the US ISM Manufacturing PMI data.

The USD/JPY pair gives up its intraday gains and ticks down marginally to near 156.70 during the European trading session on Monday. The pair turns upside down as the Japanese Yen (JPY) outperforms its peers amid growing expectations that the Bank of Japan (BoJ) will continue raising interest rates.

BoJ hawkish expectations are prompted by comments from Governor Kazuo Ueda pointing to hopes increase in wage growth and inflation in the near term. "Wages and prices are highly likely to rise together moderately," Ueda said earlier in the day. He added the central bank is expected to "continue raising interest rates if the economy and prices move in line with our forecast". 

Though investors have underpinned the Japanese Yen (JPY) against the US Dollar (USD), the latter is outperforming its other peers as the United States (US) strike on Venezuela has increased its safe-haven demand.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.15% higher to near 98.60.

In Monday’s session, investors will focus on the US ISM Manufacturing PMI data for December, which will be published at 15:00 GMT.

USD/JPY technical analysis

In the daily chart, USD/JPY trades at 156.74. Price holds above the 20-day EMA at 156.26, which is edging higher and supports a mild bullish bias. RSI at 55.99 remains above the 50 midline, showing steady momentum.

The rising trend line from 154.39 underpins the bullish bias, offering support near 156.56. A daily close below 156.56 would break that base and could trigger a deeper pullback towards the December low of 154.35.

Looking up, the pair could approach the psychological level of 160.00 on a decisive break above the November high of 157.90.

(The technical analysis of this story was written with the help of an AI tool.)

• EUR/USD hits four-week lows below 1.1700 amid the US Dollar's strength.
• FX markets are looking beyond the geopolitical tensions after the US intervention in Venezuela
• Investors await a slew of US macroeconomic data for further insight into the Fed easing calendar.

EUR/USD has opened the week on the same soft tone that closed the previous one. The pair trades at four-week lows of 1.1690 at the time of writing, with traders trying to look ahead to the US intervention in Venezuela into a slew of key US macroeconomic releases due later in the week.

Venezuelan President Nicolas Maduro is expected to appear in a US court later on Monday, after being captured by US forces over the weekend, and US President Donald Trump has warned about the possibility of further attacks on the country if the authorities do not cooperate with US plans to open up the country's Oil industry and stop drug trafficking.

Market sentiment, however, has hardly been affected by the weekend's events. The main Asian indices have been trading higher, and European markets are pointing to a mildly positive opening.

In FX markets, the trend of a stronger US Dollar (USD) observed late last week has extended into this one. Upbeat US home sales and Jobless Claims data last week strengthened the US Federal Reserve's (Fed) stance of a very gradual easing cycle,

Investors await the US ISM Manufacturing Purchasing Managers' Index (PMI) due later on Monday to confirm those views, although the highlight of the week will be December's Nonfarm Payrolls report, due on Friday.

Daily Digest Market Movers: US Dollar gains as investors reassess Fed easing bets

• The US Dollar has opened 2026 on a strong note. Last week, US Pending Home Sales and US Jobless Claims figures beat expectations, and the US S&P Global Manufacturing PMI confirmed a moderate growth of the sector's activity and endorsed the Fed hawks' view supporting a cautious approach to interest rate cuts, considering the sticky inflationary pressures.
• The growing geopolitical tensions after the attack on Venezuela have had a minor impact on markets so far. Stocks rose in Asia, and Oil prices fell in a sign that investors are looking beyond Maduro's capture, focusing on the US economic figures, due to be released this week
• The US calendar opens this week with the ISM Manufacturing PMI, which is expected to show a minor improvement to 48.3 in December from 48.2 in the previous month.
• The highlight of the week, however, will be December's Nonfarm Payrolls report, which will be observed with interest to assess the momentum of the US labour market and will provide further insight into the Fed's interest rate path.

Technical Analysis: EUR/USD is clinging to 1.1670 support

The EUR/USD has extended its correction from 1.1800 highs to four-week lows below 1.1700, and technical indicators point to further decline. The 4-hour Relative Strength Index (RSI) is near 30, and the Moving Average Convergence Divergence (MACD) is printing red bars, highlighting a strong bearish momentum.

The pair has found support near 1.1670, but so far, it seems unable to post any significant recovery. Further down, the 50% Fibonacci retracement of the November-December rally, at 1.1650, might provide support ahead of the 1.1615 area, where the December 8 and 9 lows meet the 61.8% Fibonacci retracement of the mentioned cycle.

A bullish reaction should breach previous support levels at the 1.1715-1.1720 area (December 31, January 2 lows) to ease negative pressure and aim for the January 2 high, at 1.1765.

• The US ISM Manufacturing PMI is expected to improve slightly to 48.3 in December, but still indicating a contraction in the sector.
• Investors will pay attention to the Prices and Employment subindexes to gauge inflation and labor market trends.
• EUR/USD loses its positive momentum but holds above 1.1700 ahead of the announcement.

The Institute for Supply Management (ISM) is scheduled to release the December Manufacturing Purchasing Managers’ Index (PMI) on Monday. The index is a trusted measure of the health of the United States (US) manufacturing sector, closely followed by market players. It is based on a survey conducted by ISM among companies around the US, and the index revolves around the 50 threshold. A reading above the level indicates an expanding manufacturing sector, while a reading below it indicates contraction.

The December ISM Manufacturing PMI is forecast at 48.3, slightly better than the 48.2 posted in November.

What to expect from the ISM manufacturing PMI report?

The November ISM report showed that economic activity in the manufacturing sector remained in contraction territory for the ninth consecutive month, following a two-month expansion that was preceded by twenty-six straight months of contraction. The index declined to 48.2 from 48.7 in October. Key drivers behind the slide were declines in new orders and employment, although production recovered into expansion territory.

The New Orders Index contracted for a third straight month to 47.4, lower than the 49.4 recorded in October. The Production Index in the same period improved to 51.4 from the previous 48.2. Also, the Prices Index remained in expansion, registering 58.5, up from the previous reading of 58, while the Employment Index came in at 44, down from October's figure of 46.

"The manufacturing sector continues to be weighed down by the unpredictable tariffs landscape," said Stephen Stanley, chief US economist at Santander U.S. Capital Markets.

Market participants will pay close attention to the employment-related sub-index ahead of the Nonfarm Payrolls (NFP) report, scheduled for release on Friday. The labor market is likely to be at the top of investors’ priorities this week, given its influence on the Federal Reserve's (Fed) monetary policy decisions.

The headline reading will also be relevant and likely trigger the initial market reaction. A better-than-anticipated outcome, with a reading above the 50 threshold, should boost demand for the US Dollar (USD), as it would both signal economic progress and diminish the odds of upcoming interest rate cuts. The opposite scenario is also valid, with a discouraging result putting pressure on the Greenback and boosting bets for a March interest rate cut.

When will the ISM Manufacturing PMI report be released and how could it affect EUR/USD?

The ISM Manufacturing PMI report is scheduled for release at 15:00 GMT on Monday. As investors slowly return to their desks from the winter holiday season, the EUR/USD pair maintains its near-term negative tone but holds above the 1.1700 mark. Geopolitical tensions and limited volumes have supported the US Dollar (USD) in the past few days, but not enough to change its bearish bias.

Valeria Bednarik, FXStreet Chief Analyst, notes: “The EUR/USD pair closed November and December in the red, extending its decline in early January. The pair has found near-term buyers around the 1.1700 level, but can pierce it on an upbeat outcome. The ISM Manufacturing PMI, however, needs to print above 50 to provide sustained support for the USD. A slide below the 1.1680 price zone would likely trigger stops and exacerbate the slide, with EUR/USD likely to near the 1.1600 threshold before finding more solid buying interest.”

Bednarik adds: “If the ISM Manufacturing PMI comes below expected and even below the November reading, the USD is likely to edge sharply lower across the FX board. The January 2 high at 1.1765 is the immediate resistance level ahead of the 1.1800 mark. Additional gains could see the pair rallying towards the 1.1860 price zone.”

• Gold extends gains beyond $4,400, amid growing geopolitical risks
• The precious metal might find resistance at the $4,445 support area.
• Technical indicators show a growing bullish momentum.

Gold (XAU/USD) accelerated its rebound on Monday, amid rising geopolitical tensions following the US intervention in Venezuela this weekend. The precious metal is nearly 2.4% up on the day, reaching prices at $4,435 at the time of writing, approaching a previous support area at $4,445.

Venezuelan President Nicolas Maduro is expected to appear in a US federal court on Monday, facing charges of drug and weapons trafficking. Meanwhile, the US President has threatened Mexico and Colombia and said that the US “needs Greenland,” increasing the tensions with Denmark.

Technical Analysis: Indicators show a growing bullish momentum

XAU/USD has bounced up from the area between 61.8% and 76.2% Fibonacci retracement levels and confirmed its recovery, breaking above the $4,400 area (December 30 and January 2 highs). The Moving Average Convergence Divergence (MACD) strengthens in positive territory, suggesting that buyers have taken control. The Relative Strength Index (RSI) stands above the 50 midline.

Bulls might find resistance at the $4,445 area (December 24 lows) ahead of the reverse trendline, now at $4,525. Further up, the record high, at $4,550, will come into focus. Supports are at the mentioned $4,400, previous support, ahead of Friday's low of $4,310, and the December 31 low, at 4,274.

(The technical analysis of this story was written with the help of an AI tool)

• The Pound Sterling is under pressure as the US raid in Venezuela has increased the safe-haven demand.
• The BoE is expected to follow a gradual monetary easing cycle in 2026.
• Investors await the US ISM Manufacturing PMI data for December.

The Pound Sterling (GBP) outperforms its risky currency peers, faces selling pressure against safe-haven ones at the start of the week. The British currency gains on expectations that the Bank of England (BoE) will follow a gradual monetary easing cycle in 2026. The BoE stated in its last policy meeting of 2025 that the monetary policy will remain on a “gradual downward path” after reducing interest rates by 25 basis points (bps) to 3.75% with a 5-4 majority in December.

Market experts believe that the BoE favored a moderate easing campaign as the United Kingdom (UK) inflation is well above the 2% target despite cooling down in the last two months. The UK headline Consumer Price Index (CPI) inflation came down to 3.2% in November from the peak of 3.8% seen in September.

Pound Sterling falls against US Dollar ahead of ISM Manufacturing PMI data

• The Pound Sterling drops 0.2% to near 1.3420 against the US Dollar (USD) as investors turn risk-averse, following the United States’ (US) strike on Venezuela and the capture of President Nicolas Maduro against drug-trafficking charges.
• At the same time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, revisits an over three-week high at 98.80.
• Over the weekend, the US raided Venezuela and announced that it will restructure its Oil industry by bringing American Oil companies. US President Donald Trump also threatened to conduct raids in Colombia and Iran. "Colombia’s very sick, run by a sick man who likes making cocaine and selling it to the United States,” Trump said, Reuters reported. On Iran, US President Trump said the country would “get hit very hard” if Tehran began killing protestors. 
• This week, the GBP/USD pair is expected to face significant volatility as a string of US economic data is lined up for release, notably the Nonfarm Payrolls (NFP) data for December on Friday.
• Investors will pay close attention to the US official employment data to get fresh cues on the current state of the job market. In 2025, the Federal Reserve (Fed) delivered three interest rate cuts, pushing them lower to the 3.50%-3.75% range to support weakening labor market conditions.
• In Monday’s session, investors will focus on the ISM Manufacturing Purchasing Managers’ Index (PMI) data for December, which will be published at 15:00 GMT. The ISM Manufacturing PMI is expected to tick higher to 48.3 from 48.2 in November, suggesting that the business activity contracted again, but at a slightly moderate pace.

Technical Analysis: GBP/USD retraces to near 20-day EMA

In the daily chart, GBP/USD trades at 1.3427 at the time of writing. Price holds marginally above a rising 20-day Exponential Moving Average (EMA) at 1.3422, keeping the short-term bias pointed higher. The average has advanced steadily and continues to underpin shallow pullbacks.

The Relative Strength Index (RSI) indicator at 54 (neutral) has slipped from recent elevated readings, signaling moderating bullish momentum.

Measured from the 1.3791 high in early July to the 1.3008 low in November, the 61.8% Fibonacci retracement at 1.3491 stands as the next resistance, while the 50% retracement at 1.3399 defines the immediate support. A daily close above 1.3491 would extend the advance, whereas a drop back below 1.3399 could invite a deeper pullback.

(The technical analysis of this story was written with the help of an AI tool.)

GBP is likely to trade sideways between 1.3430 and 1.3490. In the longer run, momentum indicators are mostly flat; GBP is likely to trade in a range between 1.3400 and 1.3535, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Momentum indicators are mostly flat

24-HOUR VIEW: "GBP swung between 1.3435 and 1.3502 last Friday, closing modestly lower at 1.3462, down by 0.10%. There has been no clear shift in directional momentum. Today, we expect GBP to trade sideways, most likely between 1.3430 and 1.3490."

1-3 WEEKS VIEW: "While GBP rose to a high of 1.3533 late last month, it eased quickly from the high. Momentum indicators are mostly flat, and GBP is likely to trade in a range for now, most likely between 1.3400 and 1.3535."

After briefly trading above 1.1800 in late December, EUR/USD is under renewed pressure, with scope for a move toward 1.1640–1.1600 if support at 1.1680 gives way. Near-term risks are shaped by geopolitical developments and US data, while euro support may emerge later in the year as German fiscal stimulus gains traction, ING's FX analyst Chris Turner notes.

Dutch pension reform in focus for EUR Rates

"Having very briefly traded above 1.1800 in late December, EUR/USD is back under pressure again. Depending on events in Venezuela over the next few days, EUR/USD could come lower still. Below 1.1680, we are looking at 1.1640 and possibly 1.1600 too. There is also the release of the US ISM manufacturing data to consider today, which may have an impact."

"Perhaps the hottest topic for European asset markets this week is the Dutch pension reform and whether local pension funds will start paying longer-dated EUR swap rates as they shift from a defined benefit to a defined contribution system. The 10-30 year EUR swap curve steepened a lot in the second half of last year in anticipation of these moves. The question is whether this activity is enough to move the shorter-dated swap rates higher as well – perhaps providing the euro with some support."

"We suspect the first quarter might be a consolidative one for EUR/USD. The best chance of it moving higher may come from the second quarter onwards as German fiscal stimulus starts to take effect."

• The Indian Rupee declines against the US Dollar at the start of the week, with the USD/INR rising to near 90.50.
• US President Trump threatens to raise tariffs on imports from India.
• Market sentiment turns sour as the US strikes Venezuela.

The Indian Rupee (INR) slides to a fresh almost two-week low against the US Dollar (USD) on Monday. The USD/INR pair jumps to near 90.50 as the Indian currency weakens, following threats from United States (US) President Donald Trump that he could further raise tariffs on imports from India for not supporting Washington in resolving the Russian oil issue.

“We could raise tariffs on India if they don't have help on Russian oil issue,” US President Trump said, Reuters reported. Trump added, “They wanted to make me happy, basically PM Modi's a very good man. He's a good guy. He knew I was not happy. It was important to make me happy. They do trade, and we can raise tariffs on them very quickly."

The tariff threat from US President Trump on India has renewed trade frictions between the two nations. In 2025, Trump raised import duties on India to 50%, which included punitive 25% tariffs for buying Oil from Russia.

Trade tensions between the US and India led to a significant increase in the demand for the US Dollar by Indian importers and an outflow of foreign funds from the Indian stock market. Strong demand for the US Dollar pushed the USD/INR pair to its lifetime high at 91.55 and forced the Reserve Bank of India (RBI) to intervene in spot and Non-Deliverable Forward (NDF) markets to support the Indian Rupee.

In 2025, Foreign Institutional Investors (FIIs) pared their stake worth Rs. 3,06,418.88 crore in the Indian equity market. FIIs have also turned out to be overall net sellers in the first two trading days of January 2026 and have offloaded their stake worth Rs. 2,978.80 crore.

US-Venezuela clash improves safe-haven demand

• A positive weekly start by the USD/INR pair is also driven by strength in the US Dollar due to risk-off market sentiment. During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.35% higher to near 98.80.
• Investors turn risk-averse following the US’ strike on Venezuela and the capture of President Nicolas Maduro against drug-trafficking charges in New York, and threats from US President Trump to take action on Colombia and Iran too.
• Escalating geopolitical risks have forced investors to shift to the safe-haven fleet, improving demand for bullion, base metals, and the US Dollar.
• US President Trump has also stated that Washington will take over and restructure Venezuela’s Oil industry, which accounts for 7% of global reserves or 303 billion barrels, according to the London-based Energy Institute.
• The impact of the US-led takeover of Venezuela’s Oil industry is expected to be significant for the Indian economy, assuming that the additional supply of Oil will lower energy prices. Given that India is one of the largest Oil-importing countries in the world and meets 85% of its energy needs from imported Oil, lower crude prices will be favorable for the Indian Rupee.
• Going forward, the US Dollar is expected to trade with volatility in a US data-packed week, starting from the ISM Manufacturing Purchasing Managers’ Index (PMI) data for December, which will be published at 15:00 GMT. The ISM Manufacturing PMI is expected to come in mildly higher at 48.3 from 48.2 in November, suggesting that activity has contracted again, but at a slightly moderate pace.
• This week, the notable release will be the Nonfarm Payrolls (NFP) data for December, which is scheduled to be released on Friday. The US NFP data will have a significant influence on market expectations for the Federal Reserve’s (Fed) monetary policy announcement later this month.
• According to the CME FedWatch tool, the Fed is expected to hold interest rates steady in the current range of 3.50%-3.75% in the policy announcement on January 28.

Technical Analysis: USD/INR stays firmly above 20-day EMA

In the daily chart, USD/INR trades at 90.4470. The 20-day Exponential Moving Average (EMA) slopes higher at 90.2130, maintaining a modest bullish bias. Price holds above the gauge, indicating dip demand persists.

The 14-day Relative Strength Index (RSI) at 56.86 is rising, confirming firming momentum.

Initial support sits at the rising 20-EMA; a daily close beneath it would temper the upside and lead to a deeper retracement towards the December low of 89.50. While the all-time high of 91.55 will remain a key barrier on the upside.

(The technical analysis of this story was written with the help of an AI tool.)

• EUR/GBP trades lower at the start of the week, hitting a more-than-two-month low.
• Rising geopolitical tensions between Ukraine and Russia weigh on sentiment around the Euro.
• The Pound Sterling remains supported by the Bank of England’s cautious approach to monetary easing.

EUR/GBP trades around 0.8690 on Monday at the time of writing, down 0.20% on the day, hitting its lowest level in more than two months. The cross loses ground as geopolitical tensions in Eastern Europe intensify, while the Pound Sterling (GBP) continues to find support.

The Euro (EUR) comes under increased pressure as uncertainty surrounding the Russia–Ukraine conflict escalates. Moscow claims its territory has been targeted by repeated drone attacks, while Kyiv says it aims to disrupt Russian military and energy infrastructure. This escalation revives concerns over Europe’s energy security, as the Eurozone was heavily dependent on Russian Oil and natural Gas imports in the past. Against this backdrop, investors adopt a more cautious stance toward the single currency.

The Pound Sterling, by contrast, benefits from relatively supportive expectations regarding monetary policy in the United Kingdom (UK). The Bank of England (BoE) has indicated that monetary policy will follow a gradual downward path after cutting its key interest rate by 25 basis points to 3.75% at its December meeting. Markets expect at least one further rate cut in the first half of the year, while anticipating that the pace of easing will remain measured.

Investors believe this cautious approach is justified by still-elevated inflation in the United Kingdom. Although headline Consumer Price Index (CPI) inflation eased to 3.2% in November from a peak of 3.8% in September, it remains well above the 2% target, encouraging the British central bank to proceed carefully.

On the Eurozone side, the Euro could find some support from the wait-and-see stance of the European Central Bank (ECB). The institution kept interest rates unchanged in December and signaled that they are likely to remain on hold for an extended period. ECB President Christine Lagarde stressed that heightened uncertainty makes it difficult to provide clear forward guidance on future policy decisions, contributing to limited visibility for the Euro against the Pound Sterling.

EUR/USD failed to sustain a breakout above the 1.1800–1.1830 resistance zone and has since broken below its short-term rising trend line, shifting near-term risks toward a corrective decline with key support seen at the 200-day moving average around 1.1550–1.1590, Société Générale's FX analysts note.

Uptrend break signals fading momentum

"EUR/USD recently tested the upper boundary of its multi-month consolidation around 1.1800/1.1830, a key resistance zone, before pulling back sharply. The pair has broken below a short-term ascending trend line, signalling weakening upward momentum."

"The December low near 1.1590/1.1550, which coincides with the 200-DMA, is a crucial support. Failure to defend this zone could denote the risk of a deeper decline."