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• Strong jobs report allows the Fed to pause.
• The yen believes in capital repatriation, while the pound fears a double whammy.

The US economy is expanding not only because of artificial intelligence and the wealth-increasing rally in stock indices, but also thanks to increased life expectancy. Older people require care, and the surge in healthcare hiring contributed significantly to the 130K increase in employment in January. The chances of a Fed rate cut in April fell to 22%, and to 58% in June. And the EURUSD sank along with it.

The reduction in the unemployment rate to 4.3%, the number of Americans working part-time, and the number of people unemployed for more than six months complete the picture of labour market stabilisation. This is good news for the Federal Reserve, which has cut rates three times in 2025 to avoid putting undue pressure on the economy. The pause in the cycle of monetary expansion is likely to drag on, playing on the dollar’s side.

Meanwhile, Donald Trump is calling for cuts in borrowing costs to save trillions of dollars in debt servicing. The White House continues to push its line, but if the Fed’s independence is not threatened, EURUSD bears will remain in control.

The dollar’s strengthening gives USDJPY bulls a chance to find their footing. One of the factors behind the pair’s rally to January highs was the carry trade. However, BCA Research recalls three cases, in 2008, 2015 and 2020, when the unwinding of carry trades due to deteriorating global risk appetite or strengthening funding currencies led to a fall in USDJPY.

The yen is supported by confidence in the stabilisation of the financial system under Sanae Takaichi. This will accelerate the process of repatriating capital to Japan by residents of the country. Non-residents are attracted by the best start to the year for Asian indices this century. On the other hand, the spread between the Fed and BoJ rates remains wide, which helps USDJPY buyers.

One of the main losers from strong US employment statistics was GBPUSD. According to Citigroup, the pound’s decline will accelerate in the second quarter when it comes under the double blow of increased political risks and the Bank of England’s monetary policy easing.

The positive news from the US labour market prevented gold from consolidating above $5,100 per ounce. However, its stability indicates that speculative demand remains strong.

• GBP/JPY posts lower low, signaling more weakness ahead.
• Sellers will watch for a break below 205.75–207.00 to drive prices lower.

GBP/JPY slid to a two-month low of 207.62 early on Thursday after UK Q4 GDP data came in softer than expected. The British economy expanded by 1.0% y/y and 0.1% q/q, missing forecasts of 1.2% and 0.2%, respectively, as a mild growth in services failed to offset declines in other sectors.

The bearish extension below the 50-day simple moving average (SMA) has resulted in a lower low beneath the 210 mark, strengthening concerns that additional weakness could follow. The momentum indicators reinforce the bearish outlook, with the MACD falling into negative territory, and the RSI decelerating below its 50 neutral mark, though the stochastic oscillator is entering the oversold region below 20, suggesting a turning point might be in short distance.

The 23.6% Fibonacci retracement level of the April-February uptrend is currently providing support near 207.70, while key support trendlines drawn from April’s lows lie within close range and are intersecting the 205.75–207.00 zone. Therefore, the bears must break below this floor to activate fresh selling towards the 38.2% Fibonacci retracement at 203.25 and potentially down to the 200-day SMA near 202.00.

On the upside, if the 207.70 floor holds, the bulls may attempt to reclaim the 50-day SMA around 210.70. Then, a move above the 20-day SMA at 211.90 could strengthen buying interest towards the 18-year high of 214.99 and possibly up to the upper band of the broad bullish channel seen near 216.50.

In a nutshell, the short-term bias for GBP/JPY remains tilted to the downside, flagging more losses ahead unless the key support trendlines passing through 205.75 and 207.00 prove firm.

Market Overview

The crypto market cap regained 0.9% after an earlier collapse, recovering to $2.30 trillion. Heavyweights Bitcoin, Ethereum, BinanceCoin, and XRP have reached significant support levels. We can expect consolidation to begin here. At the same time, it should come as no surprise if optimists promote the idea of a return to a bull market.

Today’s sentiment index fell to 5, repeating the historical low for this indicator from August 2019. There are also similarities with June 2022, when we saw many values below 10 that month. In both periods, the lowest sentiment readings were far from the best entry points, though some pullback and consolidation followed.

Bitcoin is trading at $67K, extending a sequence of lower intraday highs and lows, albeit at a considerable distance from last week’s extreme lows. This dynamic suggests a return to last week’s lows, with a high probability of a trading range of $60-70K forming over the coming weeks.

News Background

Bitcoin lost all its gains after Donald Trump’s victory in the US presidential election in November 2024, Wintermute notes. The drivers of the decline were pressure from US capital, a significant outflow of funds from spot ETFs and a shift of liquidity to the artificial intelligence sector.

Glassnode states that the cryptocurrency market now resembles the 2015-2017 cycle, marked by moderate drawdowns, and suggests Bitcoin’s October peak may have signalled the end of the bullish phase.

Bitcoin no longer correlates with gold, and its short-term movements are more dependent on technology stocks, Grayscale notes.

Goldman Sachs has significantly reduced its positions in spot ETFs based on Bitcoin and Ethereum in favour of new altcoin ETFs, according to its Q4 report. Bitcoin assets were reduced by 39.4% during the quarter, while Ethereum investments fell by 27.2%.

According to CoinDesk, the Arkham Exchange cryptocurrency trading platform, created by the Arkham Intelligence analytics service, will be closed due to low user adoption.

Silver is now pressing into a critical near-term resistance cluster around 85–86, a zone that could determine whether the sharp selloff from 121.82 has already bottomed at 63.98 or whether another leg lower is still ahead. The area combines 55 4H EMA (now at 85.27) and 38.2% retracement of 121.83 to 63.98 at 86.07, creating a technically dense barrier. Price reaction here is likely to set the tone for the next multi-week move.

Stepping back briefly, strong support emerged at 63.98, around 61.8% retracement of 28.28 to 121.83 at 64.04. That the decline from 121.82 is a correction to the up trend from 28.28 only. While the larger picture still points to prolonged medium-term consolidation, the immediate question is whether the next short-term upswing is about to unfold.

If Silver can sustain trading above the 85/86 zone, it would solidify the case that the first corrective leg completed at 63.98 and that a second leg higher is underway. In that scenario, further rise should be seen to 61.8% retracement of 121.83 to 63.98 at 99.73. However, the psychological 100 level sits just above that target and is likely to cap upside.

Conversely, rejection at 85/86 followed by a break below 78.68 support would shift the bias back to the downside. That would put 63.98 back in view and raise the probability that the correction is deeper than initially thought. In that case, the pullback could extend into a broader correction of the uptrend from 17.54 (2022 low), or even the larger advance from 11.69 (2020 low), before a durable base forms.

For now, the technical picture argues for patience rather than conviction. Silver is sitting at a clear decision point, and clarity should emerge within days. A confirmed break above 86 would favor positioning for a push toward 100, while failure at resistance would suggest waiting for another dip before considering fresh long positions.

As the chart shows, the Nikkei 225 index (Japan 225 on FXOpen) reached a historic high near 58,500 points on Monday. Bullish sentiment was driven primarily by political developments.

According to media reports, the rally followed the decisive victory of the Liberal Democratic Party (LDP) under Sanae Takaichi, who has signalled aggressive fiscal stimulus measures (a package exceeding $135 bn), food tax cuts, and the continuation of an accommodative monetary policy stance.

However, today the Nikkei 225 is showing signs of a pullback. It is possible that major market participants have begun taking profits amid the wave of optimism, as Takaichi’s victory had already been largely priced in, and official confirmation of a parliamentary supermajority may have acted as a trigger to close long positions.

From a technical perspective, a retracement also appears justified.

Technical Analysis of the Nikkei 225 Chart

It is worth noting that:

→ after the RSI moved into extreme overbought territory, it formed a bearish divergence with price;
→ price action itself produced a bearish triple top pattern.

As the decline unfolds, a local trendline (shown in purple) has shifted from acting as support to functioning as resistance.

In light of the above, it is reasonable to assume that an extended pullback could drive the Nikkei 225 towards the median of the long-term ascending channel.

In the event of a deeper correction, the support zone below the 56,000 level may come into play, where a previous bullish imbalance formed characteristics of a Fair Value Gap pattern.

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As the XTI/USD chart shows, the price per barrel moved above the 4 February peak yesterday, marking its highest level since the start of the month. The bullish sentiment has been driven by geopolitical uncertainty. According to media reports:

→ The Trump–Netanyahu meeting in Washington on 10–11 February failed to ease tensions. Despite Omani mediation and statements suggesting a “near compromise”, no formal agreement has yet been reached.

→ Reports of a possible deployment of additional US carrier strike groups to the Middle East have added to market nerves. Any escalation could threaten supplies through the Strait of Hormuz, which accounts for around 20% of global oil consumption.

While the fundamental backdrop remains tense and continues to support higher oil prices, the chart simultaneously points to vulnerability to a pullback.

Technical Analysis of the XTI/USD Chart

When analysing the WTI oil chart on 5 February, we:

→ used recent price swings to construct a broad ascending channel (shown in purple), noting that its lower boundary was acting as support;

→ suggested that the $65 level would become a key obstacle for bulls attempting to maintain upward momentum.

Recent price action supports this view, as:

→ if yesterday’s move above the 4 February high is treated as a bullish breakout, it appears to have failed — a potential bull trap;

→ a bearish engulfing reversal pattern has formed on the chart (indicated by the arrow).

It is noteworthy that many investment bank analysts consider current WTI prices to be overstretched, forecasting a decline towards the $57–59 range due to oversupply. However, such a scenario would likely require a reduction in geopolitical risk.

In light of the above, it is reasonable to assume that the initiative may now be shifting to the bears, who could attempt to push prices towards the lower boundary of the channel. The $64.40 level — which acted as resistance last week — now appears to offer local support.

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Markets

The January jobs report blew past some of the most optimistic estimates, ending a sequence of disappointing (labour market) data since last week. While the 130k employment growth isn’t exactly stellar, it was double the 65k expected and negatively skewed by continued job cuts at the government level (42k). Signs of labour market fragility were there, though. January employment was almost exclusively driven by the health care sector while the annual revision resulted in an average monthly job growth last year of just 15k instead of 49k. But combined with an unexpected drop in the unemployment rate to 4.3% even as the participation rate rose, it forced a wrongfooted market into pushing back the next Fed rate cut to July from June again. Kansas City Fed Schmid later offered counterweight to the recent string of mostly dovish Fed policymaker comments. He thinks the central bank should hold rates at a “somewhat restrictive” level, citing growth momentum and still-hot inflation. US yields rose but finished off the intraday highs. Net daily changes varied between 2.3-5.8 bps in a bear flattening move with a tailed 10-yr auction weighing on Treasuries too. German bunds outperformed. Rates initially rose in sympathy with the US but forfeited all (limited) gains later in the session to close -0.3 (2-yr) and -3.4 (30-yr) bps lower. Dollar gains were unconvincing. EUR/USD barely fell to close at 1.1872. DXY treaded water around 96.83. The Japanese yen extended this week’s rebound to USD/JPY 153.26. Sterling’s attempt to find some footing back below EUR/GBP 0.87 was in vein. Today’s data won’t help GBP either with sub-par Q4 growth of a meagre 0.1% q/q (1% y/y). Government spending did the heavy lifting. Private consumption was tepid, fixed capital formation fell and net exports contributed negatively (export drop, import rise).The remainder of the economic calendar has little to offer although a 30-yr Treasury auction and the US weekly jobless claims could offer some intraday volatility. They at least did so last week after an unexpectedly sharp jump. The real focus of US markets lies on tomorrow’s CPI though. European investors are zooming in on the informal European summit in Belgium. Discussions center around the single (capital) market, increasing the bloc’s competitiveness amongst others through deregulation and how to achieve that when you have 27, often conflicting, views (coalition of the willing?). Prior to the meeting, the likes of French president Macron and even BuBa chief Nagel steered towards joint EU debt to address some of the challenges.

News & Views

The US Congressional Budget Office yesterday released new forecasts for the budget and economic outlook for the period 2026-2035. The budget deficit would rise from $1.9tn in fiscal year 2025 to $2.7tn by 2035. It temporarily drops from 6.2% of GDP in 2025 to 5.2% by 2027. In later years, outlays increase faster than revenues, on average, resulting in a 6.1% of GDP deficit in 2035. This is significantly more than the 3.8% average deficit over the past 50 years. Trump’s tariffs – under the uncertain assumption of remaining in place through the coming decade – would reduce deficits by $3tn. This offsets some of the $4.7tn increase coming from his Big Beautiful Bill. Debt over the period swells as increases in mandatory spending and interest costs outpace revenue growth. The debt ratio is forecast to rise from 100% of GDP this year to 118% in 2035, surpassing its previous high of 106% in 1946. By 2035, net interest payments will grow to 4.1% of GDP, about one-sixth of all federal spending. The CBO’s sees economic growth cooling from an estimated 2.3% in 2024 to 1.9% in 2025 and 1.8% in 2026 amid higher unemployment and lower inflation. Real GDP then grows by 1.8% per year, on average, through 2035. Roughly four-fifths of the growth over that period is due to increases in the productivity. The CBO sees the Fed reducing interest rates though 2026 (level set at 3.3% for 2027). It anticipates the 10-y US yield to ease towards 3.8%/3.9% over the forecasting period, with inflation (PCE) seen holding near the 2% level from 2027.

According to a monthly survey on the economy by the Bank de France, economic activity strengthened in January in all three sectors - industry, market services and construction - at a faster pace than the expectations expressed last month. Industrial activity exceeded its long-term average for the eighth consecutive month, driven by the defence and aerospace sectors. In February, business leaders expect their activity to increase at a sustained rate in industry, and more moderately in services and construction. The monthly uncertainty indicator continues to fall in services and construction, but remains at a high level. It rose very slightly in manufacturing, reflecting the international climate and persistent geopolitical and trade tensions. The cash flow situation is still judged to be slightly worse than normal in industry, but is improving in the services sector. Based on the survey and other evidence, BdF estimates GDP to rise in 0.2%-0.3% in Q1.

RBA Assistant Governor Sarah Hunter signalled that Australia’s labour market remains tight despite signs of moderation elsewhere in the economy. In a speech today, she said the RBA’s full employment and NAIRU frameworks indicate that conditions have stabilized and remain “a bit tight,” consistent with "some inflationary pressure in the economy."

She described the relationship between labour tightness and inflation as “like the entwined double helix,” arguing that persistent capacity constraints continue to underpin price pressures. Recent data support that view, with unemployment unexpectedly falling to a seven-month low of 4.1% in December, raising the possibility that the labor market may be tightening again.

Hunter noted that the slowdown over the past few years has occurred primarily through fewer vacancies, reduced job switching, and slower hiring rather than a material rise in unemployment.

Full speech of RBA's Hunter here.

UK GDP rose just 0.1% mom in December, undershooting expectations for a 0.2% gain and pointing to a subdued end to 2025. While services output expanded by 0.3% on the month, weakness in production, which fell -0.9%, and construction, down -0.5%, capped overall growth.

For the fourth quarter as a whole, GDP grew 0.1% quarter-on-quarter compared with Q3. Production output provided the largest positive contribution, rising 1.2%, while services showed no growth and construction contracted sharply by -2.1%.

On a broader basis, GDP expanded 1.0% in the three months to December 2025 compared with a year earlier, with services and production both up 1.0%. Annual GDP growth for 2025 came in at 1.3%, driven primarily by 1.4% growth in services, while production posted its first annual increase since 2021 at 0.2%. Construction grew 1.8%.

Full UK GDP release here.

USDJPY has concluded the cycle from the April 22, 2025 low and is now entering a corrective phase of larger magnitude. From the January 14, 2026 peak, the pair has begun to retrace with internal subdivision unfolding as a zigzag Elliott Wave structure. The initial decline from the January 14 high saw wave (A) finish at 152.08, as shown on the one‑hour chart. Following this, the pair advanced in wave (B), which itself developed as a zigzag of lesser degree. Within this move, wave A ended at 155.51, wave B pulled back to 154.53, and wave C extended higher to 157.7. This completed wave (B) in the larger sequence.

From that point, the pair turned lower in wave (C), which is unfolding as a five‑wave impulse. The initial leg, wave ((i)), ended at 155.51. The corrective rally in wave ((ii)) reached 156.29. Subsequent decline in wave ((iii)) terminated at 152.79. A modest recovery in wave ((iv)) followed, ending at 154.65. The structure suggests that wave ((v)) of 1 remains in progress, with further downside expected before completion. Once wave 1 concludes, a corrective rally in wave 2 should emerge, correcting the cycle from the February 9 high before the broader decline resumes.

In the near term, as long as the pivot at 157.7 remains intact, rallies are expected to fail within the framework of 3, 7, or 11 swings. This reinforces the bearish outlook and highlights the importance of respecting the structural integrity of the Elliott Wave count. The pair continues to navigate its corrective path with measured precision, offering traders a clear framework for anticipating near‑term moves.

USDJPY 60 minute chart

USDJPY Elliott Wave Video

https://www.youtube.com/watch?v=Q9Pj53lZhUo