Forex News

Brown Brothers Harriman (BBH) reports that the USD has pared back some gains, particularly against commodity-sensitive currencies. The report highlights a surge in AI capital expenditures, which is expected to drive commodities, especially precious and industrial metals.

AI spending boosts commodity currencies

"The commodity complex is rallying underpinned by a surge in AI capital expenditures plans. Amazon, Google, Microsoft, and Meta have forecast to spend a total of about $660bn in 2026 (2.1% of US GDP) for new data centers and equipment. That’s 60% higher than in 2025 and 165% higher than in 2024."

"Commodities, particularly precious and industrial metals, will keep benefiting from the ongoing AI spending boom. Every new server and power system requires large amounts of silver, gold, platinum, palladium, and copper, for high performance chips, wiring, and energy infrastructure."

"AUD, CLP, ZAR, BRL, MXN, and PEN all stand to outperform."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

TD Securities anticipates a landslide victory for the LDP in Japan's upcoming Lower House election, which is expected to restore a stable political environment. The report warns that investors should be cautious of potential FX intervention if USD/JPY breaks above 160.

Japanese election outlook

"We expect the LDP to win by a landslide this weekend, achieving an absolute majority in the Lower House which ushers back a stable political environment."

"Investors will be on the lookout for MoF's FX intervention if USDJPY breaks >160 as MoF may take advantage of thinner liquidity during Japan holiday on the 11th Feb."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• EUR/USD bounces up from 1.1765 lows, but remains capped below 1.1800.
• A cautious market mood and weak German Industrial data are weighing on the Euro.
• The ECB kept rates on hold and signalled a steady monetary policy on Thursday.

The Euro (EUR) ticks up against the US Dollar (USD) on Friday, trading near 1.1800 at the time of writing after hitting fresh two-week lows of 1.1765 earlier on the day. The sell-off in Equity markets has cast an overall risk-averse sentiment that is buoying the safe-haven Greenback, while in Europe, German Industrial Production disappointed.

The US Dollar remains supported amid a global rout on Equities, with the tech sector leading losses amid growing market concerns about aggressive spending on Artificial Intelligence (AI). The risk-off mood has offset the impact of a string of downbeat US employment figures, which adds pressure on the Federal Reserve (Fed) to provide further support to employment creation.

On Thursday, the European Central Bank (ECB) stood pat on interest rates, as widely expected, and dismissed concerns about Euro strength, pointing to a steady monetary policy for the foreseeable future.

The focus on Friday preliminary Michigan Consumer Sentiment Index and the speech of Fed Governor Philip Jefferson during the US trading session. The crucial US Nonfarm Payrolls (NFP) report has been delayed for next week due to a partial government shutdown.

Daily Digest market Movers: The US Dollar remains firm in risk-off markets

• The main Wall Street indexes dropped for the third consecutive day on Thursday, dragged down by a sell-off in tech stocks as quarterly earnings boosted investors' concerns about an AI bubble.
• The US Dollar is trading higher against its main currency peers since US President Donald Trump selected former Fed Governor Kevin Warsh as the replacement of Jerome Powell as Fed Chairman. The market views Warsh as someone who will defend the central bank's independence and maintain a cautious approach to monetary easing.
• On Thursday, the ECB left its Rate on Deposit Facility on hold at 2% and stuck to its view that inflation will stabilize around the 2% level, despite the soft Consumer Price Index (CPI) figures seen recently in the Eurozone. ECB President Christine Lagarde reiterated that monetary policy is in a "good place" and downplayed the risks to inflation stemming from a strong Euro.
• On Friday, ECB committee member Martin Kocher, who had previously complained about the effects of Euro appreciation, affirmed that the central bank is not seeing "that much Euro strength", anChart Analysis
• that currency rates are not a very good anchor for ECB decision-making.
• In the US, employment data raised alarms, with weekly Initial Jobless Claims surging to 231K in the week ending January 31, from 209K the previous week, and job openings dropping to five-year lows at 6.542 million in December, from 6.928 million in November.
• The weak employment figures come after a downbeat ADP Employment report on Wednesday and have boosted market expectations of a Fed interest rate cut in the first half of the year. The odds for a March rate cut have increased to 22% from 9% earlier this week, and chances of an April cut have risen to 40% from 24% in previous days, according to the CME Group's Fedwatch tool
• Data from the Eurozone released on Friday revealed that German Industrial Production contracted 1.9% in December, well beyond market expectations of a 0.3% drop, while November's data was revised down to a 0.2% growth from the 0.8% increase previously estimated.
• In the US, the preliminary Michigan Consumer Sentiment Index is expected to have deteriorated to 55.0 in February from 56.4 in January.

Technical Analysis: EUR/USD maintains its bearish tone, with 1.1765 low at risk

The EUR/USD is in a bearish correction, with technical indicators in the 4-hour chart showing a neutral-to-bearish trend. The Moving Average Convergence Divergence (MACD) line flattens near the Signal line, while the Relative Strength Index (RSI) remains steady below the 50 line, at levels consistent with a moderate bearish momentum.

The pair has found support in the area between the 61.8% Fibonacci retracement of the late January rally, at 1.1772, and the January 20 and 22 highs above 1.1765. Below these levels, the next target is the January 21 lownear 1.1670.

On the upside, the pair should break Wednesday's high, at 1.1838, and Monday's high, at 1.1874, to confirm a trend shift.

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

Silver has experienced a sharp decline, entering a critical USD 70–80 retracement zone. OCBC Group Research analysts Sim Moh Siong and Christopher Wong note that despite this correction, silver remains sensitive to USD movements and policy uncertainties. A potential period of choppy trading is anticipated as market confidence is not fully restored.

Silver's sharp drop into key zone

"Silver’s sharp drop into the key USD 70–80 retracement zone reflects stop-loss and margin-driven selling. Despite the correction, precious metals remain highly sensitive to USD moves, yield shifts, and policy uncertainty when the Fed leadership changes."

"The speed of the move suggests position-adjustment, stop-loss triggering and margin-related selling, consistent with silver’s higher-beta profile as sentiment remain fragile. Even as prices of precious metals, including silver are now less elevated following the correction, sensitivity to the USD, yield repricing, and uncertainty around Fed policy under new leadership remains high."

"We continue to reiterate that 70–90 region now represents a critical stabilisation zone; sustained failure to hold above this area may risk deeper correction towards USD 58/60 levels."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• USD/JPY remains steady at 157.00 on track to a 1.5% weekly appreciation.
• Reports suggesting a landslide victory by Takaichi are weighing down the Yen.
• The US Dollar has shrugged off the disappointing US labour data seen this week.

The US Dollar (USD) remains firm on Friday, with the Yen (JPY) showing the weakest performance of the major currencies for the second consecutive week. The pair trades at 157.00 at the moment of trading, after bouncing from 156.45 lows earlier on the day, on track for its strongest weekly performance since October.

Investors remain away from the Yen heading into this weekend’s snap elections. The market is wary of a strong victory by Prime Minister Takaichi, which would grant her stronger parliamentary support to apply her expansive fiscal policy, in a country with one ot the largest public debts in the developed world.

The polls are pointing to a landslide by Takaichi’s Liberal Democratic Party (LDP). Reports by the Japanese agency Kyodo News suggest that the LDP might win 233 of the 465 seats in the Lower House, which would allow the current prime minister to rule without the constraints of a coalition, a possibility that spooks traders.

In the US, a string of downbeat employment figures has shifted the focus back to the Federal Reserve (Fed), with investors ramping up bets of further rate cuts in the coming months. Jobless Claims rose well beyond expectations in the last week of January, and the JOLTS Job Openings showed their weakest print in more than five years. These figures come after the ADP Employment report revealed that net job creation fell to 22K in January from 41K in December.

With the Key US Nonfarm Payrolls report delayed for next week, due to a government shutdown, the focus on Friday is on the Michigan Consumer Sentiment Index, which is expected have declined to 55 from 56.4 in December. Later on, Fed Governor Philip Jefferson might give fresh hints about the central bank’s monetary policy after this week’s labour data.

Commerzbank’s commodity team, led by Barbara Lambrecht, notes that Oil volatility has risen as markets watch US–Iran talks and updated forecasts from the IEA, EIA and OPEC. The bank expects near‑term support for Brent as winter storms and outages curb supply and boost demand, but still projects renewed oversupply and lower prices later in 2026 as OPEC+ output rises.

Short term support, longer term headwinds

"Volatility has also increased on the oil market. The main focus today is likely to be on the talks between Iran and the US. In the run-up to the talks, oil prices came under pressure because this fueled hopes of an easing of the conflict, which had previously threatened to escalate."

"At the start of the talks, Iran dampened expectations of a quick agreement. Should the situation become tense again, the price of a barrel of Brent crude oil could rise back to USD 70."

"Next week, the three energy agencies will present their new forecasts. In view of the cold weather, they are likely to revise their expectations for global oil demand upwards for the current year, while production expectations are likely to be adjusted downwards due to numerous outages."

"However, we fundamentally stand by our assessment that oversupply will cause prices to fall over the course of the year. After all, the production outages are only temporary and OPEC+ is likely to further increase production from April onwards."

"All in all, the oversupply in the oil market at the beginning of the year is likely to have been significantly lower than previously expected. The IEA had already downgraded its expectations regarding the supply surplus in the previous month. This should support prices for the time being."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• The Pound Sterling bounces back against its major currency peers, recovering some of the previous day’s losses.
• A higher-than-expected number of BoE members supporting an interest rate cut on Thursday weighed on British currency.
• The US Dollar retraces as soft US labor market data supports dovish Fed bets.

The Pound Sterling (GBP) regains ground against its major currency peers on Friday after a sharp fall the previous day, which was driven by the Bank of England’s (BoE) signal that there is a high chance of an interest-rate cut in the near term.

In the monetary policy announcement on Thursday, the BoE unanimously decided to leave interest rates unchanged at 3.75%, with a 5-4 vote split. The BoE was widely expected to maintain the status quo, but the number of Monetary Policy Committee (MPC) members supporting keeping rates unchanged was lower than the seven expected by markets.

Regarding the monetary policy outlook, the BoE reiterated that the policy will remain on a “gradual downward path”, while expressing confidence that inflationary pressures will return to the 2% target “ahead of the schedule expected in November”. Governor Andrew Bailey refrained from setting a timeframe for the next interest-rate cut and declined to endorse 3.25% as a terminal rate, a level that neither restricts nor stimulates economic growth.

Still, markets quickly priced in a higher likelihood of a near-term cut. The Pound Sterling lost 0.8% on the day against the US Dollar (USD), with the GBP/USD pair touching a two-week low.

In Friday’s session, investors will pay close attention to BoE Chief Economist Huw Pill’s comments in a National MPC Agency briefing scheduled at 12:00 GMT for further details about the BoE's interest-rate outlook. Pill was one of five MPC members who voted to leave interest rates unchanged on Thursday.

Daily Digest Market Movers: Investors shift focus to US NFP data

• The Pound Sterling trades 0.35% higher to near 1.3580 against the US Dollar (USD) during the European trading session on Friday. The GBP/USD pair recovers after posting a fresh weekly low near 1.3500.
• A slight corrective move in the US Dollar after a week-long rally has also supported the pair. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is down 0.15% to near 97.80.
• The US Dollar has come under pressure as traders have raised bets supporting an interest rate cut by the Federal Reserve (Fed) at its Marchmonetary policy meeting. According to the CME FedWatch tool, the possibility of the Fed reducing interest rates next month by 25 basis points (bps) to 3.25%-3.50% has advanced to 22.7% from the 9.4% seen on Monday.
• Dovish Fed prospects have increased after the latest batch of United States (US) job market-related data showed continued weakness in the labor demand. The US JOLTS Job Openings report for December showed on Thursday that employers posted lower job vacancies – at 6.542 million against 6.928 million in November.
• ADP reported on Wednesday that the private sector created 22K jobs in January, less than the 37K added in December.
• For more cues on the current state of the US labor market, investors will focus on the Nonfarm Payrolls (NFP) data for January, which will be released on Wednesday.

Technical Analysis: GBP/USD revisits 20-day EMA

GBP/USD gains to near 1.3580 as of writing. The 20-day Exponential Moving Average (EMA) has softened to 1.3591 after a steady ascent, with price holding just beneath it and dampening immediate upside traction.

The 14-day Relative Strength Index (RSI) at 50 (neutral) confirms waning momentum from prior overbought readings.

The flattening 20-day EMA signals consolidation in the near term, though its elevated level still frames the upward trend bias. A decisive daily close back above 1.3591 could extend gains toward the February 4 high of 1.3733, while repeated rejection would keep the pair range-bound.

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