Weekly FX Technical Analysis - 26th January 2026

FX markets are once again testing key technical levels across the major currency pairs, with several charts approaching important inflection points. This week’s update focuses on whether recent rebounds in GBP/USD and EUR/USD can develop into sustained breakouts, while EUR/GBP remains range-bound and USD/JPY undergoes a sharp corrective pullback after failing at long-term resistance. As always, we outline the critical support and resistance zones and the scenarios that could shape the next phase of price action.

GBP/USD

GBP/USD has pushed back toward the upper end of its recent range, trading up into the mid-1.36s after a steady recovery from the November lows. Price has now re-engaged with long-term descending trendline resistance, which continues to cap upside momentum for now. While the broader structure remains constructive, repeated failures near this zone suggest the pair may need a period of consolidation before any sustained breakout can develop. RSI has lifted into the upper-60s, reflecting improving momentum but also warning of near-term exhaustion if upside progress stalls.

Potential Scenarios

• Bullish: A sustained break above 1.37 would mark a clear technical breakout and open the door toward 1.38 and beyond.

• Bearish: Failure to clear trendline resistance could see GBP/USD drift back toward 1.3470, with deeper support sitting near 1.33.

Macro Backdrop to Consider

Sterling continues to be driven primarily by US dollar dynamics rather than domestic UK factors. With markets reassessing the timing and scale of Fed easing, near-term direction is likely to remain sensitive to US data surprises and shifts in global risk appetite.

GBP/USD: JANUARY ‘25 - PRESENT

EUR/GBP

EUR/GBP has slipped back toward the 0.8670 region after failing to sustain its move above the 0.88 handle. The pair remains confined within a broad consolidation range, with previous resistance now acting as near-term pressure. While the medium-term uptrend from early 2025 remains intact, momentum has faded and RSI is holding below 50, suggesting a lack of conviction from euro bulls at current levels.

Potential Scenarios

• Bullish: A recovery back above 0.8750 would refocus attention on the 0.8850 highs.

• Bearish: A sustained break below 0.8650 would expose the lower end of the range near 0.85.

Macro Backdrop to Consider

Relative central bank expectations between the ECB and BoE remain finely balanced. With neither side offering a clear policy divergence, EUR/GBP is likely to remain range-bound unless incoming data materially shifts rate expectations.

EUR/GBP: JANUARY ‘25 - PRESENT

EUR/USD

EUR/USD has rebounded sharply and is now trading back toward the upper boundary of its rising channel, testing resistance near the 1.1850 area. The broader trend remains constructive, with higher lows intact and price continuing to respect channel support. However, the pair is once again approaching a technically heavy resistance zone, where upside momentum has previously stalled. RSI has climbed into the high-60s, signalling strong momentum but also highlighting near-term overbought risks.

Potential Scenarios

• Bullish: A clean break above 1.19 would confirm a bullish continuation and open the path toward 1.20.

• Bearish: Rejection at current levels could trigger a pullback toward 1.17, with stronger support around 1.1550.

  
  

Macro Backdrop to Consider

EUR/USD remains highly sensitive to US yield movements and Fed communication. Any renewed pushback against aggressive rate-cut expectations could limit further euro gains in the short term.

EUR/USD: JANUARY ‘25 - PRESENT

USD/JPY

USD/JPY has seen a sharp pullback after failing to sustain its break above the 158–160 resistance zone. Price has fallen back toward the mid-153s, breaking short-term trend support and dragging RSI sharply lower toward oversold territory. Despite the near-term correction, the broader uptrend from mid-2024 remains intact, with major structural support still well below current levels.

Potential Scenarios

• Bullish: A recovery back above 156 would suggest the pullback is corrective, with upside risk returning toward 159–160.

• Bearish: Continued downside pressure below 153 could extend the correction toward 150 and then 148.

Macro Backdrop to Consider

Yen volatility remains driven by speculation around Japanese policy normalisation and the risk of official intervention. With US-Japan yield differentials still wide, pullbacks may continue to attract buyers unless policy expectations materially shift.

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.