EUR/USD & GBP/USD Forecast: Key Levels Ahead of US Jobs Data

What to Know

• Markets are focused on Federal Reserve rate-cut expectations for 2026
• EUR/USD struggles below key resistance at the 1.18 level
• A break below 1.16 could expose EUR/USD to deeper downside
• GBP/USD shows relative strength but remains capped near 1.35–1.36
• Friday’s US non-farm payrolls report could trigger a decisive move

The fundamental backdrop that we currently observe in the forex markets is based on a couple of moving pictures. One of the first things that we are looking at is the Federal Reserve and whether or not they are cutting rates.

The reality is they probably are in 2026, but there is a big question as to how many times, because, quite frankly, the US economy continues to do better than anticipated. Contrast that with Europe, which is currently fairly sluggish and basically right around the target level of inflation in Germany at least, which is a main driver of where we go. Great Britain is a little stickier as well.

As we start to look at these currencies, you start to think about their ranking. Right now, it could be the British pound, followed by the US dollar, followed by the Euro. I do not think there is a huge divergence between these three currencies, and with the jobs number coming out on Friday, that could change the way we look at things.

EUR/USD

For now, let’s look at the technical analysis of the Euro. You can see that the 1.18 level continues to be a major thorn in the side of Euro bulls, and we are sitting right at the 50-day EMA. A breakdown below the 1.16 level could accelerate selling, possibly down to the 200-day EMA and then the 1.14 level. Rallies at this point in time will continue to struggle to get above 1.1850, but if we do, that would be a very bullish sign.

GBP/USD

The British pound looks a little stronger against the US dollar, but let’s face it, it has its own issues right around the 1.35 level. This looks to me like an area that is doing everything it can to become consolidated, and as we head towards that non-farm payroll announcement, it makes a lot of sense.

I do think that if we can clear the 1.36 level, the British pound can truly take off, but if we start to sell off here and maybe drop down below 1.34, then we could have a resumption of most of autumn in this pair, perhaps trying to get down to 1.30 at that point. I do think we are on the precipice of making a decision, and right now I think it is very neutral. I do think Friday is probably your big tell, but as things stand right now, you can make an argument that back-and-forth sideways consolidation makes a lot of sense. If you are a short-term trader, you should be able to take advantage.

 

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