Weekly FX Technical Analysis - 12th January 2026

The first full week of the year has brought a familiar theme: markets consolidating after strong late-2024 trends, with price action increasingly driven by rate expectations and US yield moves. GBP/USD is holding its recovery in the mid-1.34s, EUR/USD is pausing below 1.18 resistance, EUR/GBP is drifting lower with momentum weakening, and USD/JPY remains supported as yields keep the pair pinned near multi-month highs.

Below are the key technical levels and scenarios we’re watching into the week ahead.

GBP/USD

GBP/USD is holding in the mid-1.34s and remains in recovery mode, but recent upside momentum has faded after failing to sustain the move into the mid-1.35s. Price action is still respecting the broader upward structure from the late-2024 lows, though rallies continue to run into layered resistance overhead. RSI is holding around the mid-50s, signalling neutral-to-mildly constructive momentum and an environment that still favours consolidation rather than a clean trend.

Potential Scenarios

• Bullish: A sustained break back above 1.3550 would improve the technical tone and reopen the path toward 1.3670, and potentially the high-1.37s if momentum builds.

• Bearish: A break below 1.3345/1.3380 would warn that the recovery is losing traction, increasing the risk of a deeper pullback toward the low-1.33s before buyers re-emerge.

Macro Backdrop to Consider

Sterling remains sensitive to USD yield dynamics and broader risk sentiment as markets reset for the year. UK data stability helps, but expectations around the pace of 2025/26 BoE easing remain an overhang. Near-term direction is likely to track US rate repricing and any shifts in the growth/inflation narrative on either side of the Atlantic.

GBP/USD: JANUARY ‘25 - PRESENT

EUR/GBP

EUR/GBP has slipped back toward the 0.8680 area and momentum has deteriorated, with RSI now sitting in the high-30s (bearish/oversold-leaning). Price action has rolled over from the late-2024 highs and is now probing the lower end of the recent range. The key question for the week ahead is whether 0.8640/0.8600 holds as near-term support, or whether sellers press for a deeper retracement.

Potential Scenarios

• Bullish: A rebound that reclaims 0.8720, and especially 0.8750, would suggest the sell-off is stalling and could see EUR/GBP rotate back toward 0.8785–0.8800.

• Bearish: A clean break below 0.8640 would increase downside risk toward 0.8600, with further weakness exposing the next support band lower down if momentum accelerates.

Macro Backdrop to Consider

EUR/GBP remains driven by relative rate expectations and any repricing in UK vs Eurozone growth. With liquidity normalising post-holidays, near-term direction is likely to be influenced by incoming inflation/growth prints and central bank commentary, particularly anything that shifts the expected timing/scale of BoE easing versus the ECB.

EUR/GBP: JANUARY ‘25 - PRESENT

EUR/USD

EUR/USD remains constructive longer-term but has eased back to the 1.1680 region after failing to sustain a push into the 1.18 area. The broader uptrend from earlier in the year is still intact, however price is consolidating beneath a clear overhead resistance zone. RSI is hovering around the high-40s, consistent with a market pausing rather than trending aggressively.

Potential Scenarios

• Bullish: A decisive break back above 1.1725/1.1730 would improve the near-term tone and reopen a test of the 1.1810–1.1820 resistance area.

• Bearish: If 1.1680 gives way, a pullback toward 1.1600 becomes more likely, with a deeper dip potentially probing the mid-1.15s if the dollar catches a bid.

Macro Backdrop to Consider

Direction remains highly sensitive to US yields and shifting Fed pricing. With markets fully back online, any re-acceleration in US data surprises or hawkish repricing could pressure EUR/USD, while softer US numbers and easing yields would favour renewed upside attempts toward the 1.18s.

EUR/USD: JANUARY ‘25 - PRESENT

USD/JPY

USD/JPY is pressing higher again and is now trading around 157.8, continuing to respect the broader uptrend. Momentum is firmer (RSI low-60s) and the pair remains biased to the upside while it holds above the mid-156s. The key technical focus is the heavy resistance band overhead around 158, and then the upper zone near 160–162.

Potential Scenarios

• Bullish: A sustained break above 158.0 would reinforce upside momentum and reopen a run toward the 160.0 handle, with the next major resistance area higher up near 162.

• Bearish: A rejection from resistance followed by a break below 156.4 would suggest a near-term top and raise the risk of a deeper pullback toward 154.8, where buyers would be expected to defend the trend.

Macro Backdrop to Consider

USD/JPY remains primarily a rates trade. Any renewed upside in US yields tends to support the pair, while a meaningful drop in yields would likely trigger profit-taking. Japanese policy signalling and any volatility around risk sentiment can add fuel to moves, but the core driver remains the US–Japan yield differential.

USD/JPY: JANUARY ‘25 - PRESENT

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As always, if you’d like to discuss these moves in more detail, or how they could impact your business or personal requirements, please don’t hesitate to get in touch.

info@k2-fx.com

+44 203 355 4603

Disclaimer: The information in this publication is provided for general information purposes only. It does not constitute financial or investment advice, nor should it be relied upon as such. Readers should consider their own circumstances and seek independent advice where appropriate.