Weekly Forex Forecast: January 11th–16th, 2026
Adapted and Expanded from Original Analysis by Christopher Lewis, DailyForex.com
The upcoming trading week from January 11th to 16th, 2026, promises heightened activity and potential volatility across major currency pairs. Market sentiment is currently shaped by multiple key factors, including central bank policies, global inflation trends, geopolitical tensions, and macroeconomic data releases. Technical chart setups also show potential turning points in several major forex pairs. This forecast breaks down anticipated price movements for the most actively traded currency pairs.
EUR/USD Forecast
The EUR/USD pair has shown signs of resistance near the 1.10 psychological level, suggesting a potential reversal or consolidation phase in the short term. Last week, the pair struggled to maintain momentum beyond 1.10, with sellers returning near this level and pushing it lower.
Key Technical Considerations:
– Strong resistance established around 1.10 due to previous price reactions in that zone
– Immediate support appears near the 50-day Exponential Moving Average (EMA), situated around 1.0850
– RSI levels suggest neutral market sentiment, with no overbought or oversold conditions
Fundamental Factors:
– Anticipation that the European Central Bank (ECB) might adopt a cautious stance toward further monetary tightening
– Mixed Eurozone economic data has led traders to reduce aggressive long positions in EUR
– In contrast, improving U.S. economic indicators could firm up expectations for higher interest rates from the Federal Reserve
Trading Outlook:
– Bearish sentiment prevails below 1.10
– A break below 1.0850 could accelerate selling pressure, targeting 1.0750
– If 1.10 is broken cleanly and sustained, EUR/USD could retest the November highs near 1.1140
Overall, traders should monitor inflation data from both regions and Fed commentary closely.
GBP/USD Outlook
The British pound has maintained a bullish tone since early December, but much like the euro, it now approaches critical technical resistance. GBP/USD remains sensitive to both Bank of England rhetoric and U.S. economic signals.
Technical Overview:
– Resistance zones at 1.2800 and 1.2900 show history of bearish reversals
– The currency pair remains supported by the 200-day EMA near 1.2610
– Price action continues to form higher lows over the past three weeks, suggesting upward pressure
Relevant Fundamentals:
– The UK economy continues to flirt with stagnation, leading to speculation about rate pauses by the Bank of England
– U.K. inflation data this week will be pivotal in shaping near-term interest rate expectations
– The Federal Reserve’s tone remains more hawkish relative to the BoE
Trading Strategy Points:
– Bullish bias remains intact above 1.2610
– Short-term targets include 1.2800 and potentially 1.2900 on bullish breakouts
– A drop below the 1.2600 threshold may open downside potential towards 1.2500
USD/JPY Forecast
The USD/JPY pair has stabilized near 146.00, a key resistance area that could determine whether the currency strengthens or corrects. The pair benefited from last week’s stronger-than-expected U.S. employment report.
Chart Technicals:
– Price remains firmly above 50-day EMA, indicating bullish momentum
– Resistance seen at 146.80 and 147.50
– Support sits at 144.30, with next key level at 143.00
Market Influences:
– U.S. bond yields rose significantly last week, backing USD strength
– The Bank of Japan remains committed to an ultra-loose monetary policy
– Any verbal intervention or policy hint from Japanese officials may introduce downside risk for the pair
Trade Planning:
– Buying opportunities on dips near 144.30 with stop-losses below 143.
Explore this further here: USD/JPY trading.