FX Remains Range-Bound, USD Cautious Ahead of New Policy Signals

Global financial markets on 05 February 2026 continue to operate in a cautious and headline-sensitive environment, as investors reassess the monetary policy outlook amid unresolved macroeconomic risks. In the foreign exchange market, the USD remains the central variable, but lacks sufficient momentum to establish a clear trend.
As a result, Forex continues to trade in a moderate-volatility, consolidation-driven environment, where price movements are largely technical adjustments rather than sustainable directional trends.

1) Main market driver: USD fluctuates with interest rate expectations

The USD is trading in a choppy manner today, reflecting a temporary balance among several factors:

• Monetary policy expectations have not shifted materially, prompting markets to remain cautious in repricing the USD.

• Risk sentiment remains neutral, neither fully defensive nor strong enough to trigger a clear risk-on move.

• A lack of market-moving headlines means price action is mainly driven by short-term position adjustments.

In this context, the USD is prone to alternating rebounds and pullbacks, creating unfavorable conditions for trend-following strategies.

2) Performance of major currency pairs

EURUSD

EURUSD continues to trade in a choppy manner, closely tracking USD movements.

• When the USD softens slightly, EURUSD tends to see a technical rebound.

• When the USD firms, EURUSD quickly comes under renewed corrective pressure.

➡️ This environment favors range-based trading, while early breakout expectations should be limited.

GBPUSD

GBPUSD shows wider price swings than EURUSD but lacks follow-through.
➡️ Price moves are typically short-lived, making this pair more suitable for pullback-based strategies with confirmation.

USDJPY

USDJPY remains a high-risk pair, influenced by opposing forces between USD movements and defensive flows into the Japanese yen.
➡️ Sharp intraday spikes are common, making it unsuitable for emotion-driven trading or overly short-term positioning.

AUDUSD / NZDUSD

Risk-sensitive currencies continue to trade cautiously.
➡️ Any rebounds that occur are largely technical and lack sufficient confirmation for a sustainable bullish trend.

3) Gold: Anchoring market risk sentiment

Alongside the consolidation in Forex, gold continues to hold at elevated levels, signaling that defensive capital has not fully exited the market.

Gold remains supported by:

• Prolonged macroeconomic and geopolitical uncertainty.

• An unpredictable policy outlook, which weakens short-term confidence in fiat currencies.

• Sustained long-term inflows, particularly from central banks and institutional investors.

Gold’s price action continues to serve as a key barometer of risk sentiment, indirectly influencing USD dynamics and the broader FX market.

4) Trader perspective: Consolidation phase favors scenario-based trading

In today’s market environment, traders should keep in mind:

• Forex lacks a clear one-directional trend.

• The risk of false breakouts and intraday reversals remains elevated.

• Emotion-driven trading during consolidation phases increases noise and stop-loss risk.

Preferred strategies:

• Trade based on predefined scenarios, focusing on key support and resistance zones.

• Reduce position size and strengthen risk management discipline.

• Closely monitor gold movements to assess shifts in overall market sentiment.

Conclusion

The 05 February 2026 session reflects a market that remains range-bound and cautious. The USD continues to fluctuate without a clear trend, while gold retains its role as the primary safe-haven asset, underscoring that defensive sentiment has not fully faded.

Key message for traders today:
Stay patient, trade selectively, prioritize confirmation, and maintain strict risk management in a market that lacks clear directional conviction.

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