Market Overview

The first full trading week of 2026 feels like a return to reality after the holiday stretch. Liquidity is gradually improving and major economic releases are clustered toward the middle and end of the week. With the U.S. Dollar recently finding footing after its sharp drop last year, traders are once again watching labor data, manufacturing surveys and inflation signals closely. The overall bias across many major pairs leans toward cautious positioning at the start of the week, while sentiment starts to shift toward data-driven decisions as the week unfolds. There is a sense of anticipation mixed with careful risk management as markets shake off the thin liquidity of the previous weeks and begin to price in real macro catalysts.

Previous Week Recap

Last week, the broad U.S. Dollar showed strength, reversing some of the steep losses it endured in 2025, the largest annual slide in years. Traders mentioned that this bounce was modest but important in setting expectations for 2026. The British Pound softened slightly against the Dollar at the market open, reflecting broader dollar strength rather than country-specific weakness. Risk appetite remained subdued as traders digested year-end data and positioned for the key employment figures at week’s end.

Fundamental Outlook

Below is a summary table of the major macroeconomic events and releases scheduled for the week of 5 to 9 January 2026. Local times are as reported in widely recognised economic calendars. These are the types of data points that have historically moved currencies because they influence interest rate expectations, growth forecasts and risk sentiment.

Day	Date	Key Economic Events and Releases
Monday	5 January	United States ISM Manufacturing PMI at 10:00 local time; United States Trade Balance at 08:30 local time; Japan Preliminary Machine Tool Orders released during the Asian session
Tuesday	6 January	United States ADP National Employment Report at 08:15 local time; United States Global Supply Chain Pressure Index at 10:00 local time
Wednesday	7 January	Euro Area Unemployment Rate at 05:00 local time; United Kingdom Monthly Business Activity data released during the London morning
Thursday	8 January	No major high-impact macroeconomic releases scheduled; market focus shifts toward positioning and risk management ahead of employment data
Friday	9 January	United States Non-Farm Payrolls, Unemployment Rate, and Average Hourly Earnings at 08:30 local time; Canada Employment Change and Unemployment Rate at 08:30 local time; Euro Area Retail Sales at 05:00 local time

Technical Analysis

The table below is a snapshot of technical conditions on major pairs heading into the week. Trends and momentum indicators are evolving, with some pairs caught in consolidations and others showing clearer directional potential.

Pair	Trend	Support	Resistance	RSI (14)
EUR/USD	Range-bound to slightly bullish	~1.1600	~1.1750	~52
GBP/USD	Mild bullish channel developing	~1.3380	~1.3600	~55
USD/JPY	Trading in broad range with upward bias	~150.00	~158.00

These levels are based on recent price action and typical technical zones identified by oscillators and trend lines. For example, EUR/USD appears to be oscillating but showing tentative support near the 1.16 region, while GBP/USD is carving out higher lows, hinting at buying interest. USD/JPY remains choppy but with a slight upward tilt as markets reassess monetary policy expectations for both economies.

Weekly Forecast / Bias

For the coming week, the directional bias for each pair will depend heavily on macro data. The expectation is that:

EUR/USD should remain range-bound until a clear catalyst such as stronger or weaker than expected U.S. jobs data breaks the congestion. The anticipated trading range is between 1.1600 and 1.1750.
GBP/USD has potential to grind higher if global risk sentiment improves and UK activity data surprises to the upside, but support on dips is expected around the lower boundary near 1.3380.
USD/JPY could see increased volatility as traders digest Japanese macro prints and U.S. jobs data. A breakout above the upper resistance would suggest broader Dollar strength into the start of 2026.

Key Levels Summary

Pair	Bias	Support	Resistance	Comment
EUR/USD	Neutral to bullish	1.1600	1.1750	Watching macro cues for breakout
GBP/USD	Slightly bullish	1.3380	1.3600	Sensitive to risk sentiment
USD/JPY	Neutral	150.00	158.00	Volatility likely on jobs data

Trading Notes

In terms of headline risk, the U.S. employment report on Friday is the standout risk event for the week. Markets have been positioning for it with caution because it will heavily influence Federal Reserve rate cut expectations. The Dollar Index correlation remains important; if the index extends its bounce, it may dampen strength in higher-beta currencies. Conversely, soft U.S. jobs data could re-ignite broader dollar weakness that was persistent in late 2025. Consensus insights suggest that while the dollar might weaken over the longer term, near-term rebounds are possible if economic data surprises to the upside.

Final Checklist

Review positioning ahead of Friday’s U.S. employment data.
Confirm support and resistance levels on hourly and daily charts.
Monitor early releases like ISM Manufacturing for initial trend indications.
Keep correlation between the Dollar Index and major pairs in view.
Be prepared for range expansion after thin liquidity in previous weeks.

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