Market Overview

The broader foreign exchange market enters February with a tone that feels balanced yet cautious. U.S. dollar sentiment is fragile, pressured by recent weakness and speculation around monetary policy direction, while safe-haven currencies like the Japanese yen have rallied sharply. Central banks’ policy stances in Europe and the UK are expected to remain broadly steady over the coming week, while labour market data from the United States stands out as the biggest macro event risk. This blend of geopolitical noise, softer dollar dynamics, and important economic releases sets up a week that could see heightened volatility and directional shifts for major currency pairs.

Previous Week Recap

Last week, a notable shift occurred in the Japanese yen, which strengthened significantly against the U.S. dollar as traders began unwinding short positions and speculating about possible coordinated intervention by authorities to support the currency. This move contributed to broad dollar weakness and lifted other currencies such as the euro and pound. Meanwhile, financial markets digested mixed macro signals from the United States, with the dollar index hovering near multi-month lows and traders eyeing forthcoming labor data as a key catalyst for the near-term outlook.

Fundamental Outlook

The table below summarizes the most impactful macroeconomic events scheduled for the coming week. Times are generally in local market context.

Day	Key Macroeconomic Events and Focus
Monday	ISM Manufacturing PMI, ISM New Orders Index, and ISM Prices Paid Index from the United States are scheduled for release during the U.S. morning session. These reports offer an early view of factory activity, demand conditions, and input cost pressures. Markets typically use this data to reassess growth momentum at the start of the month.
Tuesday	JOLTS Job Openings data from the United States will be published in the morning. This release is closely watched as it reflects labour demand and hiring appetite, which remain critical for evaluating wage pressures and broader employment conditions.
Wednesday	ADP Employment Change figures are released during the U.S. morning, offering a private-sector preview ahead of Friday’s official jobs report. Later in the same session, U.S. Services PMI and ISM Services PMI data are due, providing insight into the dominant sector of the U.S. economy. In Europe, preliminary Eurozone consumer inflation figures are also expected late morning.
Thursday	The Bank of England announces its monetary policy decision during the UK morning, followed by its policy statement. On the same day, the European Central Bank delivers its interest rate decision and forward guidance during the European session. These events are likely to influence sterling and euro volatility.
Friday	The U.S. Nonfarm Payrolls report is released during the U.S. morning, alongside the unemployment rate and average hourly earnings data. Shortly afterward, U.S. consumer sentiment figures are published. This combination often defines short-term dollar direction and risk appetite heading into the weekend.

The focus is squarely on U.S. labor data and central bank decisions in Europe and the UK that could underpin broad currency moves.

Technical Analysis

The following technical snapshot reflects where the market stands as this new week begins.

The market’s technical structure suggests that key psychological levels (1.18–1.20 for EUR/USD and 1.33–1.36 for GBP/USD) may act as magnets for price action, while USD/JPY remains in a lower range following the yen’s recent advance.

Pair	Trend	Support	Resistance	RSI Condition
EUR/USD	Mixed, slightly bullish above 1.1825	~1.1825	~1.2000	Neutral to slightly oversold bounce
GBP/USD	Slight uptrend but volatile	~1.3350	~1.3650	RSI near mid–range
USD/JPY	Corrective downtrend after recent sell-off	~153.0	~156.5	RSI showing recovery potential

Weekly Forecast / Bias

EUR/USD is expected to trade with a cautious bias higher if support near 1.1825 holds, with possible targets toward 1.2000 if macro conditions weaken the USD further.
GBP/USD could see increased range expansion given central bank expectations and mixed risk sentiment. A break above 1.3650 could open further upside.
USD/JPY may remain under pressure given the strengthening of the yen and reduced volatility in U.S. economic data leading into the jobs week, though corrective rebounds cannot be ruled out.

We expect volatility into Friday’s Nonfarm Payrolls release, which is often a market-moving event that could define directional bias for the rest of the month.

Key Levels Summary

Pair	Bias	Support	Resistance	Comment
EUR/USD	Slight bullish	1.1825	1.2000	Weak dollar backdrop could lift the pair
GBP/USD	Neutral to bullish	1.3350	1.3650	Central bank expectations may influence trend
USD/JPY	Bearish tilt	153.0	156.5	Strong yen momentum remains a theme

Practical Trading Notes

Headline risk is elevated this week, especially around labor data releases and central bank policy meetings. Large swings at key news times should be expected.
The broader dollar index correlation remains important; continued weakness here typically supports risk currencies and weighs on USD pairs.
Consensus market insight suggests that upcoming jobs figures and PMI data will be pivotal for ongoing monetary policy expectations and risk sentiment positioning.

Final Checklist

Before the new trading week begins, consider the following actionable reminders:

Review key economic releases in your platform’s calendar with local time conversions.
Set alerts around major support and resistance thresholds for the pairs you trade.
Watch U.S. labor data releases closely; these often create intraday volatility that can be harnessed or hedged.
Monitor correlation with the dollar index and safe-haven flows, particularly into USD/JPY and gold prices.

Weekly Forex Forecast: February 2nd-6th, 2026 Outlook

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