EUR/USD Price Forecast: US Dollar collapses as JPY intervention sounds loud

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1848

News that the US and Japan may intervene to halt JPY weakness triggered a US Dollar sell-off at the weekly opening.
The Federal Reserve will announce its monetary policy decision on Wednesday.
EUR/USD reached fresh 2026 highs, could extend rally towards 1.1920.

The US Dollar (USD) accelerated its bearish route at the weekly opening, gaping lower against most major rivals. The EUR/USD pair peaked at 1.1876, its highest since last September, on the back of headlines indicating a bilateral intervention of the Japanese Yen (JPY).

The US Federal Reserve (Fed) had conducted what market analysts considered a rate check. A rate check is a specific action where currency authorities contact financial institutions to ask for the exchange rate they would quote if an intervention were to occur. The Fed asked banks in New York about their position sizes in USD/JPY, leading to speculation that the US may be preparing to work with Japan on the Japanese Yen’s (JPY) ongoing weakness.

Meanwhile, Japan Prime Minister (PM) Sanae Takaichi said that the government will take necessary steps against speculative and abnormal market moves, on Sunday, further escalating intervention bets.

The USD retains its broad weakness across the FX board, with EUR/USD consolidating at around 1.1850 early in the American session. At the same time, the EUR is unable to extend gains amid softer-than-anticipated local data. Germany published the January IFO survey, which showed that the Business Climate held at 87.6, worse than the 88.1 anticipated by market participants.

The US will release November Durable Goods Orders, the Chicago Fed National Activity Index for the same month, and the January Dallas Fed Manufacturing Business Index. The data is likely to have a limited impact on financial markets ahead of the Fed’s monetary policy decision scheduled for Wednesday.

EUR/USD short-term technical outlook

The EUR/USD pair stabilized near its intraday peak, and the 4-hour chart shows it has run above all its moving averages. Even further, the 20-period Simple Moving Average (SMA) accelerated north above the 100 and 200 SMAs, with the longer averages also edging higher, reinforcing a bullish backdrop. The 20 SMA at 1.1755 offers nearby dynamic support. Meanwhile, the Momentum indicator pared its advance after reaching overbought readings, while the Relative Strength Index (RSI) indicator also retreated but stands at 72. There is no technical sign of an upcoming bearish correction, but rather market players awaiting the next bullish catalyst.

In the daily chart, EUR/USD trades above a sharply bullish 20-day SMA that remains above the 100- and 200-day SMAs, whichcontinue to trend higher, reinforcing a positive bias. Technical indicators head firmly north near overbought readings, without signs of upward exhaustion. Continued momentum improvement would favour further upside, with market players eyeing 1.1918, the September 2025 monthly high.

(The technical analysis of this story was written with the help of an AI tool.)

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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