Weekly FX Technical Analysis - 19th January 2026

FX markets remain tightly range-bound as traders reassess central bank expectations and the outlook for global rates in the early part of the year. This week’s update focuses on how GBP/USD and EUR/USD continue to struggle for sustained upside, EUR/GBP shows signs of fading momentum after its recent rally, and USD/JPY remains firmly supported near multi-year highs. We highlight the key technical levels that matter most and outline the potential scenarios that could shape the next phase of price action.

GBP/USD

GBP/USD remains in consolidation mode after failing to sustain momentum above the mid-1.35s, with price currently oscillating around the 1.34 handle. The broader recovery structure from the late-2025 lows remains intact, but the pair continues to respect descending trendline resistance overhead, which has capped rallies consistently. Bollinger Bands are flattening, signalling reduced volatility, while RSI has eased back toward the mid-40s, suggesting momentum remains neutral rather than decisively bullish.

Potential Scenarios

• Bullish: A sustained break back above 1.3550 would improve the short-term outlook and reopen scope for a retest of the upper 1.36s.

• Bearish: A clean break below 1.33 would expose downside toward 1.3150, where trend support comes back into focus.

Macro Backdrop to Consider

Sterling continues to trade largely as a function of US dollar dynamics and broader risk sentiment. With UK data offering limited near-term catalysts, attention remains firmly on US rates and Fed communication, which are likely to dictate direction in the weeks ahead.

GBP/USD: JANUARY ‘25 - PRESENT

EUR/GBP

EUR/GBP has edged lower after failing to hold above the 0.88 region, with price now gravitating back toward the 0.8650–0.87 zone. While the medium-term uptrend from earlier in 2025 remains broadly intact, momentum has clearly softened. The pair is now testing a confluence of former resistance turned support, and a sustained break below this area would represent a meaningful technical deterioration. RSI remains subdued, reflecting fading upside pressure.

Potential Scenarios

• Bullish: A recovery back above 0.88 would re-establish bullish momentum and bring 0.8850 back into view.

• Bearish: A decisive move below 0.8650 would expose a deeper pullback toward 0.85.

Macro Backdrop to Consider

Relative central bank expectations continue to drive EUR/GBP. With markets increasingly focused on the timing and scale of ECB easing versus a more cautious BoE, shifts in rate expectations remain a key driver of medium-term direction.

EUR/GBP: JANUARY ‘25 - PRESENT

EUR/USD

EUR/USD remains under pressure after rolling over from resistance just below 1.18, with the pair now trading back toward the lower end of its recent range. Price action has slipped beneath short-term trend support, while longer-term structure remains constructive above the 1.15 area. Bollinger Bands are beginning to widen modestly to the downside, and RSI has dipped below 50, suggesting near-term momentum favours consolidation or further weakness.

Potential Scenarios

• Bullish: A recovery back above 1.17 would stabilise the outlook and keep the broader range intact.

• Bearish: A break below 1.15 would significantly weaken the technical picture and expose downside toward 1.13.

  
  

Macro Backdrop to Consider

Dollar strength continues to be driven by resilient US data and cautious Fed rhetoric. Until markets gain greater clarity on the timing of US rate cuts, EUR/USD is likely to remain sensitive to shifts in yield differentials and broader risk appetite.

EUR/USD: JANUARY ‘25 - PRESENT

USD/JPY

USD/JPY continues to grind higher, trading just below the 158–159 resistance zone after an extended bullish run. The broader uptrend remains firmly in place, supported by rising trend structure and strong momentum readings. RSI remains elevated but not yet overstretched, suggesting upside risks persist despite the growing risk of consolidation. The lack of sustained pullbacks highlights persistent yen weakness.

Potential Scenarios

• Bullish: A clear break above 159 would open the door toward the psychological 160 level.

• Bearish: A move back below 155 would signal a deeper corrective phase toward 152.

Macro Backdrop to Consider

The policy divergence between the Federal Reserve and the Bank of Japan remains the dominant driver. With Japanese policy still highly accommodative and US yields elevated, intervention risk remains the key counterbalance to further upside.

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.

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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.