*Last week's forex highlights and what's coming up for US traders*
The US dollar maintained its strength through the last week of January 2026, with markets digesting the latest Fed commentary and economic data. Here's your comprehensive recap and outlook for the week ahead.
Last Week's Major Movers
EUR/USD: Testing Key Support
Weekly Change: -0.8% | Closed at 1.0742
The euro continued its slide against the dollar, testing the critical 1.0750 support level. Key drivers included:
- **Eurozone inflation data** came in softer than expected at 2.1% YoY
- **German manufacturing PMI** disappointed at 47.2, signaling continued contraction
- **ECB members** hinted at potential rate cuts in Q2 2026
Technical View: The pair is now testing its December lows. A break below 1.0720 could open the door to 1.0650. Watch the 1.0800 resistance for any bullish reversal signals.
GBP/USD: Surprise Strength on Jobs Data
Weekly Change: +0.4% | Closed at 1.2685
Sterling was the outperformer among major currencies, supported by:
- **UK employment data** showed unexpected job gains of 48,000
- **Wage growth** remained elevated at 5.8% YoY
- **BOE rate cut expectations** pushed back to Q3 2026
Technical View: Cable found support at 1.2600 and bounced convincingly. The 1.2750 level represents key resistance. A break above could target 1.2850.
USD/JPY: Breaking Higher
Weekly Change: +1.2% | Closed at 152.85
The yen continued its decline as the interest rate differential favors the dollar:
- **BOJ maintained** ultra-loose policy stance
- **Japanese inflation** ticked up but remains below target
- **Carry trade** flows continue supporting USD/JPY
Technical View: The pair is approaching the psychologically important 153.00 level. MOF (Ministry of Finance) verbal intervention warnings may increase above this level. Support at 151.50.
Key Economic Events: What Moved Markets
| Date | Event | Actual | Expected | Impact | |------|-------|--------|----------|--------| | Jan 27 | US New Home Sales | 695K | 680K | USD + | | Jan 28 | US Consumer Confidence | 108.5 | 105.0 | USD + | | Jan 29 | FOMC Meeting | Hold | Hold | Neutral | | Jan 30 | Eurozone GDP (Q4) | 0.1% | 0.2% | EUR - | | Jan 31 | US Core PCE | 2.8% | 2.9% | USD + |
This Week's Calendar: What US Traders Should Watch
Monday, February 3
- **US ISM Manufacturing PMI (10:00 AM ET)** - Expected: 49.5
- This will set the tone for the week. A reading above 50 could boost USD further.
Wednesday, February 5
- **US ADP Employment (8:15 AM ET)** - Expected: 165K
- **US ISM Services PMI (10:00 AM ET)** - Expected: 53.0
- Key leading indicators for Friday's NFP
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Thursday, February 6
- **BOE Rate Decision (7:00 AM ET)** - Expected: Hold at 5.25%
- Watch for GBP volatility regardless of the decision
Friday, February 7
- **US Non-Farm Payrolls (8:30 AM ET)** - Expected: 180K
- **US Unemployment Rate (8:30 AM ET)** - Expected: 3.7%
- The main event of the week. Strong numbers could push EUR/USD below 1.0700.
Our Take: What This Means for US Traders
The Big Picture
The dollar's strength is being driven by several factors:
- **Relative Rate Differential:** The Fed is expected to cut later and less aggressively than the ECB and other central banks
- **Economic Resilience:** US economic data continues to outperform expectations
- **Safe Haven Flows:** Geopolitical uncertainty is supporting USD demand
Trading Considerations
For Beginners:
- This is NOT the time to fight the trend. The dollar is strong for good reasons.
- Focus on learning support/resistance levels rather than predicting reversals.
- Use tight stop losses if trading against USD strength.
For Active Traders:
- EUR/USD short remains the path of least resistance until 1.0700 breaks
- GBP/USD offers better two-way trading opportunities given mixed signals
- USD/JPY longs are working but be mindful of intervention risk above 153
Risk Management Reminder
With major economic data this week, volatility is expected to pick up. Consider:
- Reducing position sizes ahead of NFP Friday
- Not holding positions through major news releases if you're a beginner
- Setting alerts at key technical levels
Broker Spread Comparison This Week
For US traders looking to trade the majors, here's how CFTC-regulated broker spreads compared last week:
| Broker | EUR/USD | GBP/USD | USD/JPY | |--------|---------|---------|---------| | tastyfx | 0.8 pips | 1.2 pips | 0.9 pips | | OANDA | 1.2 pips | 1.8 pips | 1.0 pips | | Forex.com | 1.0 pips | 1.5 pips | 1.1 pips | | IG Markets | 0.9 pips | 1.6 pips | 1.0 pips |
*Spreads as observed during normal trading hours. May vary during high volatility periods.*
Bottom Line
The USD strength story remains intact heading into February 2026. US traders should:
- **Watch NFP closely** on Friday - this could set the tone for the entire month
- **Be cautious with EUR shorts** as we approach oversold territory
- **Consider GBP pairs** for more balanced trading opportunities
We'll be back next Monday with another Weekly Market Wrap. Trade safe, and remember: proper risk management is more important than catching every move.
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*Disclaimer: This analysis is for educational purposes only and does not constitute financial advice. Forex trading involves significant risk of loss. Past performance does not guarantee future results. Always do your own research before trading.*
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