Weekly FX Technical Analysis - 20th September 2026

This week’s FX charts show a market still being shaped by central bank divergence, energy driven inflation pressure and renewed volatility in the yen. GBP/USD has broken lower from the 1.3450 to 1.3500 area, while EUR/GBP continues to consolidate below 0.8600. EUR/USD has slipped beneath 1.1500 as the dollar remains supported by last week’s Fed hike, and USD/JPY has rebounded from the 152.00 to 153.00 support region but remains below key resistance near 158.50.

GBP/USD

GBP/USD is trading around 1.3390 after breaking below the 1.3450 to 1.3500 area. The pair has lost momentum following its rejection from the 1.3600 region, with price now testing the lower end of its recent range. RSI has moved into softer territory, suggesting the recovery has faded and sellers are currently in control unless the pair can quickly reclaim 1.3450.

Potential Scenarios

• Bullish: If GBP/USD can recover back above 1.3450 and then 1.3500, the next upside target sits around 1.3635. A stronger break above that level would bring 1.3800 back into focus.

• Bearish: If the pair fails to regain 1.3450, downside pressure could extend towards 1.3275 and then the broader 1.3150 to 1.3200 support region.

Macro Backdrop to Consider

Sterling remains under pressure from the combination of softer technical momentum and ongoing UK policy uncertainty. The Bank of England held Bank Rate at 3.75 percent by a 6 to 3 vote, while also slowing quantitative tightening and halting long dated gilt sales, reflecting continued sensitivity in UK borrowing costs. The dollar is being supported by last week’s Fed rate hike to 3.75 to 4.00 percent and the Fed’s message that inflation remains elevated.

House View

Our house view is mildly bearish while GBP/USD remains below 1.3450. A short term rebound is possible, but the break lower suggests the pair needs to reclaim 1.3500 before the outlook can turn more constructive.

GBP/USD: SEPTEMBER ‘25 - PRESENT

EUR/GBP

EUR/GBP is trading around 0.8575, continuing to consolidate above the recent support base but still below the 0.8600 to 0.8625 resistance zone. The pair has recovered from the July lows, but the broader structure remains cautious while price holds beneath the former breakdown area. RSI is close to neutral, suggesting neither side has a decisive advantage at current levels.

Potential Scenarios

• Bullish: If EUR/GBP can break above 0.8600 and then 0.8625, the pair could move towards 0.8650 and then 0.8750.

• Bearish: If the pair slips back below 0.8525, downside pressure could return towards 0.8500 and then 0.8450.

  
  

Macro Backdrop to Consider

EUR/GBP remains caught between two central banks dealing with energy driven inflation risk. The ECB raised rates by 25 basis points earlier this month and said Middle East conflict was adding inflation pressure, while the BoE has held rates but warned that energy and inflation risks remain relevant. This leaves the cross finely balanced, with rate expectations and UK gilt market stability likely to remain important drivers.

House View

Our house view is neutral while EUR/GBP remains between 0.8525 and 0.8625. The pair needs a clean break above 0.8625 to suggest a more convincing euro recovery.

EUR/GBP: SEPTEMBER ‘25 - PRESENT

EUR/USD

EUR/USD is trading around 1.1480 after falling below the 1.1500 area. The pair has lost the momentum built during August and is now back near an important support region. RSI is weak, suggesting sellers currently have the upper hand, although the pair is approaching levels where a short term stabilisation attempt could develop.

Potential Scenarios

• Bullish: If EUR/USD can recover above 1.1500 and then 1.1575, the next upside target sits around 1.1700. A move above 1.1700 would improve the wider recovery structure.

• Bearish: If the pair remains below 1.1500, downside pressure could extend towards 1.1400 and then 1.1350. A break below 1.1350 would put the July lows back in focus.

  
  

Macro Backdrop to Consider

The euro has some support from the ECB’s more hawkish stance, with rates raised by 25 basis points and inflation projected to remain above target for an extended period. However, the dollar side is dominant for now after the Fed raised rates last week and signalled that inflation remains a priority, while geopolitical tension and higher energy costs continue to support demand for dollar liquidity.

House View

Our house view is mildly bearish while EUR/USD trades below 1.1500. The pair needs to regain 1.1575 to stabilise the outlook, otherwise the risk remains for a deeper move towards 1.1400.

EUR/USD: SEPTEMBER ‘25 - PRESENT

USD/JPY

USD/JPY is trading around 156.85 after rebounding from the 152.00 to 153.00 support area. The pair has recovered from oversold conditions but remains below the key 158.00 to 160.00 resistance zone. RSI is back near neutral, suggesting the recent bounce has reduced immediate downside pressure, although the wider structure remains fragile after the sharp fall from July highs.

Potential Scenarios

• Bullish: If USD/JPY can break above 157.50 and then 158.50, the pair could retest 160.00. A move above 161.00 to 162.00 would be needed to materially improve the broader technical picture.

• Bearish: If the pair fails below 158.50, price could rotate back towards 155.00 and then 152.00 to 153.00. A break below 152.00 would reopen the path towards 150.00.

Macro Backdrop to Consider

The yen remains highly sensitive to Japanese policy and intervention risk. The Bank of Japan raised rates to 1.25 percent, the highest level in 31 years, but the yen weakened after markets judged the guidance as insufficiently hawkish. Japan and the US have also been closely watched after earlier joint yen buying intervention, keeping markets alert to the risk of further official action if yen weakness accelerates again.

House View

Our house view is neutral to mildly bearish while USD/JPY remains below 158.50. The bounce from 152.00 is notable, but the pair needs to reclaim 160.00 before the wider bullish structure can properly recover.

USD/JPY: SEPTEMBER ‘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.

info@k2-fx.com

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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.