Monday’s forex session began the week with muted volatility and cautious positioning, as traders entered a lighter macro calendar with limited conviction. Following the previous week’s data-driven fluctuations, markets transitioned into consolidation mode, awaiting clearer signals regarding inflation trends and the timing of policy adjustments from the Federal Reserve.
US Treasury yields traded narrowly, removing directional pressure from the dollar. Equity markets remained steady, reinforcing a neutral risk environment that discouraged aggressive currency positioning. As a result, most USD pairs traded inside established ranges, reflecting a market temporarily comfortable with existing macro assumptions.
EUR/USD
Technical Analysis
EUR/USD held within a tight consolidation band, forming a sequence of small-bodied candles across intraday timeframes, a classic sign of market equilibrium. Support levels remained intact, while upside attempts faded before testing prior highs. Momentum indicators flattened near neutral territory, signaling balance rather than trend continuation.
The pair’s structure suggested accumulation rather than reversal, though a sustained breakout required fresh macro input.
Fundamental Analysis
The euro lacked independent drivers, leaving price action dependent on dollar-side developments. With markets largely aligned around gradual US policy easing later in 2026, there was little urgency to reposition aggressively. Traders instead focused on upcoming US data releases expected later in the week.
GBP/USD
Technical Analysis
GBP/USD stabilized after earlier weakness, finding consistent support near recent lows. Price action showed decreasing downside momentum, with buyers stepping in on dips. The broader uptrend structure remained technically intact, though momentum indicators suggested fading bullish strength.
Fundamental Analysis
Sterling traded quietly amid limited UK data. Expectations surrounding the Bank of England remained largely unchanged, with markets pricing gradual policy adjustments rather than imminent moves. Without new domestic catalysts, GBP/USD remained tied to broader dollar sentiment.
USD/JPY
Technical Analysis
USD/JPY paused after its multi-week advance, forming a sideways consolidation below recent highs. The pair maintained higher lows, preserving bullish structure while allowing momentum indicators to reset from overbought conditions.
Fundamental Analysis
Yield differentials continued supporting USD/JPY, though traders displayed caution at elevated levels. The absence of fresh policy signals from Japan reduced volatility, leaving the pair driven primarily by US yield stability.
Market Outlook
Monday reinforced the idea that markets were waiting rather than deciding. Compression across majors increased the probability of volatility expansion once data catalysts emerged.