Market Sentiment:
FX markets are positioned cautiously early in the European session on 4 Feb 2026. The U.S. dollar remains steady following political developments around the Federal Reserve leadership nomination, while the Japanese yen is softer amid domestic political factors. Traders are also watching upcoming inflation data from the Eurozone and services sector data from the U.S. and UK for clues on central bank policy direction. Overall sentiment reflects a tug‑of‑war between dollar resilience and demand for yield‑sensitive currencies.
Previous Session Recap:
• USD steadied after rebounding from earlier weakness, supported by political clarity around the next Fed chair nominee.
• GBP held ground as markets continued to price in a likely BoE hold with delayed rate cuts, underpinned by solid UK economic data.
• Euro traders focused on CPI expectations ahead of official Eurozone inflation releases.
Top Overnight Global Forex Headlines:
• Dollar stable; yen weakens ahead of Japan’s election and policy commentary.
• Sterling steady near $1.37 as BoE expected to leave rates unchanged.
• Eurozone inflation in focus: preliminary data suggest a moderation in CPI, potentially supporting the ECB’s neutral stance.
Focus of the Day:
Today’s trading theme centers on Eurozone inflation data (HICP & core CPI) and services PMIs across Europe and the U.S. as well as the U.S. ADP employment report and ISM Services PMI. These fundamental releases will shape immediate currency moves and help clarify expectations for both the ECB and the Federal Reserve.
Key Economic Events: (All times UTC)
Europe / UK
- 08:50 France Services PMI (Jan Final)
- 08:55 Germany Services PMI (Jan Final)
- 09:00 Eurozone Services PMI (Jan Final)
- 09:30 UK Services PMI (Jan Final)
- 10:00 Eurozone CPI YoY & Core CPI (Prelim)
U.S.
- 13:15 ADP Employment Change (Jan)
- 14:45 US Services PMI (Jan Final)
- 15:00 ISM Services PMI (Jan)
- 15:30 Crude Oil Inventories
Asia / Other
- 00:30 Japan Services PMI (Jan Final)
- 21:45 NZD Employment Change (Q4) / Unemployment Rate
Major Currency Outlooks:
USD – Neutral to Bullish
The dollar’s tone has been supported by macro and political developments. Today’s ADP and ISM Services data will be critical for confirming or questioning the dollar’s near‑term strength. A stronger ISM print could reinforce USD upside.
EUR – Cautious / Data‑Driven
The euro is sensitive to the Eurozone CPI releases, with preliminary inflation forecasts slightly lower than prior readings. A softer inflation print could weigh EUR, while stronger data may stabilize it.
GBP – Stable / Supported
Sterling has been relatively steady, supported by robust UK data and delayed rate cut expectations. Today’s UK Services PMI will provide another view into the UK economic momentum.
JPY – Vulnerable / Reactionary
The Japanese yen has weakened amid political headlines and remains sensitive to U.S. risk sentiment. USD/JPY may react to broader dollar moves and risk flows rather than domestic fundamentals.
CNY – Watchful
Chinese services PMI earlier suggested moderate expansion, which could underpin EM sentiment and commodity FX bias.
Key Technical Zones:
(Indicative, subject to live prices)
Currencies:
• EUR/USD: Support ~1.1750 – 1.1720 | Resistance ~1.1850 – 1.1880
• USD/JPY: Support ~154.00 – 153.50 | Resistance ~156.00 – 156.80
• GBP/USD: Support ~1.3650 – 1.3600 | Resistance ~1.3800 – 1.3850
• AUD/USD: Support ~0.6900 – 0.6860 | Resistance ~0.7050 – 0.7100
• NZD/USD: Support ~0.6350 – 0.6320 | Resistance ~0.6450 – 0.6500
• USD/CAD: Support ~1.3400 – 1.3370 | Resistance ~1.3500 – 1.3550
• EUR/GBP: Support ~0.8600 – 0.8570 | Resistance ~0.8680 – 0.8720
• EUR/JPY: Support ~203.50 – 202.80 | Resistance ~205.50 – 206.20
• GBP/JPY: Support ~211.00 – 210.00 | Resistance ~214.00 – 215.50
• AUD/JPY: Support ~105.50 – 105.00 | Resistance ~107.00 – 107.50
Commodities:
• Gold (XAU/USD): Support ~$4,900 – $4,880 | Resistance ~$5,050 – $5,080
• Silver (XAG/USD): Support ~$65.50 – $64.80 | Resistance ~$67.50 – $68.20
• WTI Crude Oil: Support ~$63.50 – $62.80 | Resistance ~$66.00 – $66.80
• Brent Crude Oil: Support ~$67.50 – $66.80 | Resistance ~$70.50 – $71.20
• Copper (XCU/USD): Support ~$3.80 – $3.75 | Resistance ~$3.95 – $4.00
Commodities Watch:
• Crude Oil Inventories: Weekly supply data may underpin commodity currencies and impact USD/CAD or AUD.
• Gold & Metals: Sensitive to dollar strength and risk sentiment – softer dollar often supportive.
• Base Metals: China‑linked demand dynamics influence AUD and NZD.
Trader’s Takeaway:
✅ Watch Eurozone CPI prints: key driver for ECB outlook today.
✅ U.S. ADP & ISM Services: major catalysts for USD direction.
✅ Risk sentiment and JPY flows: remain volatile into data.
✅ Define risk with clear entry/exit around key data windows; volatility expected near releases.
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