Weekly FX Technical Analysis - 20th July 2026

This week’s FX charts show a market increasingly shaped by politics, central banks and geopolitical risk. Sterling has regained some ground against the dollar and euro, helped by the UK political reset, while the euro remains under pressure from renewed dollar strength and concern over the growth impact of higher energy prices. USD/JPY continues to trade near historically sensitive levels, with the dollar supported by rate expectations and safe haven demand, although intervention risk is becoming harder to ignore.

GBP/USD

GBP/USD is trading around 1.3460, with sterling having recovered from the 1.3150 to 1.3200 support area but now stalling close to a familiar resistance band between 1.3500 and 1.3600. The pair has regained some short term momentum, but the wider structure remains mixed unless price can hold above 1.3500 and push back toward the 1.3600 region.

Potential Scenarios

• Bullish: A sustained move above 1.3500 would improve sentiment and could open a move back toward 1.3600, followed by the wider resistance area around 1.3800.

• Bearish: A failure to hold above 1.3400 would weaken the recovery and could bring 1.3200 back into focus, with 1.3150 acting as the next key downside level.

Macro Backdrop to Consider

Sterling is being driven by both domestic politics and relative central bank expectations. The UK leadership transition and focus on the next Chancellor may keep GBP sensitive to fiscal credibility, while markets are also watching upcoming UK labour market, inflation and retail sales data. Against that, the dollar remains supported by Middle East risk, oil volatility and uncertainty around the Fed’s next move under Kevin Warsh.

House View

GBP/USD looks constructive above 1.3400, but not yet decisively bullish. We would favour a cautious upside bias while support holds, with 1.3500 to 1.3600 the key area that needs to break for confidence to improve.

GBP/USD: JULY ‘25 - PRESENT

EUR/GBP

EUR/GBP is trading around 0.8495, having broken sharply below the long held 0.8600 to 0.8620 support area. The move lower has pushed the pair toward oversold territory, with the RSI close to the lower end of its range, but the technical damage is clear and the market now needs to reclaim 0.8600 to stabilise.

Potential Scenarios

• Bullish: A recovery back above 0.8550 would suggest some short term exhaustion in the sell off, with 0.8600 to 0.8620 the first major resistance zone.

• Bearish: A sustained break below 0.8490 would confirm downside pressure remains intact and could expose further weakness toward 0.8450 and potentially 0.8400.

Macro Backdrop to Consider

The euro is struggling as the market weighs the inflationary impact of Middle East energy disruption against the risk of weaker European growth. The ECB has already turned more hawkish, but with the UK political reset giving sterling some relative support, EUR/GBP remains vulnerable unless the euro can regain momentum.

House View

EUR/GBP has shifted into a more bearish technical position. We would treat rebounds as corrective unless the pair can regain 0.8600, with downside risk still present while price remains below that level.

EUR/GBP: JULY ‘25 - PRESENT

EUR/USD

EUR/USD is trading around 1.1435, with the pair remaining under pressure after failing to sustain the earlier move above 1.1800. Price action is now consolidating near the lower end of the recent range, with support around 1.1350 to 1.1400 and resistance building around 1.1500 to 1.1600.

Potential Scenarios

• Bullish: A move back above 1.1500 would ease immediate downside pressure and could allow a recovery toward 1.1600 and then 1.1800.

• Bearish: A break below 1.1350 would confirm renewed weakness and could open the door to a deeper move toward 1.1200.

  
  

Macro Backdrop to Consider

The euro remains caught between ECB rate support and broader risk concerns. Energy disruption linked to the Strait of Hormuz and the US Iran conflict is inflationary for Europe, but also a potential drag on growth. The dollar is benefiting from safe haven demand and a Fed outlook that remains highly sensitive to inflation and political pressure from Trump.

House View

EUR/USD remains fragile while below 1.1500. We would need to see a clean recovery through that area before becoming more constructive, otherwise the risk remains for another test of the 1.1350 region.

EUR/USD: JULY ‘25 - PRESENT

USD/JPY

USD/JPY is trading around 162.40, with the pair holding near the top of its recent range and continuing to respect the broader upward trend. Momentum remains supportive, but the market is now close to levels where intervention risk and profit taking become increasingly relevant.

Potential Scenarios

• Bullish: A sustained break above 163.00 would keep the uptrend intact and could open a move toward 164.00 and beyond.

• Bearish: A move back below 160.00 would suggest the rally is losing momentum and could bring 158.00 and 156.00 back into focus.

Macro Backdrop to Consider

The yen remains under pressure from wide US Japan rate differentials and the ongoing demand for higher yielding dollar exposure. However, with USD/JPY now around historically sensitive levels, Japanese authorities may become more vocal if moves become disorderly. Oil and Middle East risk also matter, as higher energy costs are a particular headwind for Japan.

House View

USD/JPY remains technically bullish, but increasingly stretched. We would not fight the trend while the pair holds above 160.00, but the risk of verbal or direct intervention rises the longer price trades above 162.00.

USD/JPY: JULY ‘25 - PRESENT

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.