Weekly FX Technical Analysis - 3rd February 2026

The dollar has started February on the back foot, allowing GBP and EUR to extend recent recoveries, while USD/JPY has pulled sharply lower after another rejection from historic highs.

This week’s FX technical analysis breaks down whether these moves mark the start of a more meaningful trend shift, or simply another phase of consolidation as markets reassess rate expectations and global risk sentiment.

GBP/USD

GBP/USD has extended its recovery and is now trading in the upper 1.36s, having broken above the previous consolidation zone around 1.35. The broader structure has improved meaningfully, with price reclaiming key moving averages and pressing into a long-standing descending resistance band that has capped rallies since mid-2025.

Momentum indicators remain supportive. Price is holding above the 20-day moving average, Bollinger Bands are expanding modestly, and RSI has lifted into the low-60s, suggesting bullish momentum is building but approaching levels where follow-through becomes more selective.

Potential Scenarios

• Bullish: A sustained break above 1.3800 would confirm a structural upside breakout and open scope toward the 1.40 region.

• Bearish: Failure to hold above 1.3550 could see price slip back into consolidation, with initial support around 1.3450 and stronger support near 1.3300.

Macro Backdrop to Consider

Sterling remains sensitive to shifts in US dollar dynamics and global risk sentiment. UK data has stabilised, but expectations around the timing of BoE easing continue to cap upside unless US yields trend lower.

GBP/USD: FEBRUARY ‘25 - PRESENT

EUR/GBP

EUR/GBP remains under pressure, with price trading in the mid-0.86s after failing to reclaim the 0.87 handle. The broader structure has softened, and recent rebounds have continued to stall beneath descending trend resistance, reinforcing the medium-term consolidation-to-lower bias.

Technically, price is trading below the 20-day moving average, Bollinger Bands are beginning to widen slightly on the downside, and RSI has dipped into the mid-30s, signalling increasing downside momentum but not yet oversold conditions.

Potential Scenarios

• Bullish: A recovery back above 0.8720 would stabilise near-term price action and open a retest of the 0.8780–0.8800 resistance zone.

• Bearish: A sustained break below 0.8600 would expose the 0.8500 region and increase the risk of a broader downside extension.

Macro Backdrop to Consider

Relative UK–Eurozone growth expectations and shifting BoE versus ECB rate pricing remain the dominant drivers. Near-term direction is likely to stay tactical unless incoming data materially alters rate differentials.

EUR/GBP: FEBRUARY ‘25 - PRESENT

EUR/USD

EUR/USD has pushed back toward the upper end of its medium-term range and is currently trading around the 1.18 area. The broader trend remains constructive, though price is once again testing a well-defined resistance zone that has capped advances multiple times over recent months. From a technical perspective, price is holding above the rising 20-day moving average, Bollinger Bands have expanded on the topside, and RSI has moved back into the low-50s, reflecting improving momentum without yet signalling stretched conditions.

Potential Scenarios

• Bullish: A sustained break above 1.1850 would strengthen the bullish case and open the path toward the psychological 1.20 level.

• Bearish: Rejection at resistance could see a pullback toward initial support around 1.1650, with deeper support near 1.1500.

  
  

Macro Backdrop to Consider

EUR/USD remains closely tied to US yield movements and broader risk sentiment. Markets continue to weigh the pace of Fed easing against ECB policy expectations, keeping the pair prone to range trading unless rate differentials shift decisively.

EUR/USD: FEBRUARY ‘25 - PRESENT

USD/JPY

USD/JPY has seen a sharp pullback after failing to sustain a move above the 160 region, with price now trading in the mid-155s. Despite the recent correction, the broader uptrend from mid-2025 remains intact, though momentum has cooled materially. Technically, price has slipped below the 20-day moving average, Bollinger Bands remain wide, and RSI has fallen back toward the high-40s, indicating a clear loss of upside momentum following the rejection from recent highs.

Potential Scenarios

• Bullish: A recovery back above 158.00 would help stabilise the structure and reopen a test of the 160.00 resistance zone.

• Bearish: A sustained break below 154.00 would increase the risk of a deeper correction toward 150.00, where stronger trend support is located.

Macro Backdrop to Consider

USD/JPY continues to be driven by US–Japan yield differentials and expectations around BoJ policy normalisation. Intervention risk remains elevated near recent highs, contributing to ongoing volatility.

USD/JPY: FEBRUARY ‘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

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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.