Risk Aversion Weighs on Majors as Policy Signals Diverge | 6th February, 2026

Risk Aversion Dominates

Global markets trade on the back foot as risk aversion dominates sentiment, weighing on major currencies amid diverging central bank signals. Sterling slides to multi-week lows following a dovish Bank of England tone, while the Australian and New Zealand Dollars weaken as investors trim exposure to risk-sensitive assets. In contrast, the Euro attempts a modest rebound on improving prospects of a more dovish Federal Reserve, while the Canadian Dollar finds support as oil prices recover.

GBP/USD Forecast

Current Price and Context

GBP/USD has dropped to a two-week low near the 1.3500 level as a dovish Bank of England outlook weighs on Sterling, while broader risk aversion limits appetite for the Pound despite easing Fed cut expectations.

Key Drivers

Geopolitical Risks: Global uncertainty continues to dampen risk appetite.

US Economic Data: Stable US data keeps Dollar demand resilient.

FOMC Outcome: Expectations of a more cautious Fed offer limited relief to GBP.

Trade Policy: Trade concerns remain a secondary factor for Sterling.

Monetary Policy: Dovish BoE signals reinforce downside pressure.

Technical Outlook

Trend: Bearish continuation.

Resistance: 1.3600

Support: 1.3450

Forecast: GBP/USD may remain under pressure unless BoE expectations shift.

Sentiment and Catalysts

Market Sentiment: Cautiously bearish.

Catalysts: UK data releases, BoE commentary, global risk tone.

NZD/USD Forecast

Current Price and Context

NZD/USD has softened below the 0.6000 handle as renewed risk aversion weighs on the New Zealand Dollar, with investors reducing exposure to high-beta currencies.

Key Drivers

Geopolitical Risks: Risk-off sentiment limits demand for growth-sensitive assets.

US Economic Data: Resilient US data supports defensive positioning.

FOMC Outcome: Slower Fed easing expectations cap upside.

Trade Policy: External trade risks continue to cloud outlook.

Monetary Policy: RBNZ policy remains cautious amid slowing momentum.

Technical Outlook

Trend: Bearish bias.

Resistance: 0.6050

Support: 0.5950

Forecast: NZD/USD may remain vulnerable while risk aversion persists.

Sentiment and Catalysts

Market Sentiment: Bearish.

Catalysts: Risk sentiment shifts, US data, Asia-Pacific developments.

USD/CAD Forecast

Current Price and Context

USD/CAD has pulled back toward the 1.3700 level as rebounding oil prices provide support to the Canadian Dollar, offsetting broader cautious market conditions.

Key Drivers

Geopolitical Risks: Energy-related geopolitical developments influence oil prices.

US Economic Data: Stable US data limits sharp downside.

FOMC Outcome: Expectations of Fed easing offer mixed signals.

Trade Policy: Trade dynamics remain a background influence.

Monetary Policy: Oil-price sensitivity continues to drive CAD performance.

Technical Outlook

Trend: Mild corrective pullback.

Resistance: 1.3780

Support: 1.3650

Forecast: USD/CAD may consolidate while oil prices remain supported.

Sentiment and Catalysts

Market Sentiment: Neutral to mildly bearish.

Catalysts: Oil price movements, US and Canadian data.

EUR/USD Forecast

Current Price and Context

EUR/USD is attempting to regain ground near 1.1770 as improving prospects for a more dovish Federal Reserve provide modest support, though risk aversion caps upside momentum.

Key Drivers

Geopolitical Risks: Persistent uncertainty limits bullish positioning.

US Economic Data: Data resilience tempers expectations for aggressive Fed cuts.

FOMC Outcome: Growing dovish expectations support the Euro at the margin.

Trade Policy: Trade-related concerns weigh on Eurozone growth sentiment.

Monetary Policy: Policy divergence between the Fed and ECB remains in focus.

Technical Outlook

Trend: Sideways with mild recovery attempts.

Resistance: 1.1820

Support: 1.1700

Forecast: EUR/USD may struggle to sustain gains without clearer Fed signals.

Sentiment and Catalysts

Market Sentiment: Neutral.

Catalysts: Fed commentary, Eurozone data, risk sentiment shifts.

AUD/USD Forecast

Current Price and Context

AUD/USD remains subdued as increased risk aversion weighs on the Australian Dollar, with investors cautious following recent RBA commentary and broader global uncertainty.

Key Drivers

Geopolitical Risks: Risk-off conditions pressure commodity-linked currencies.

US Economic Data: Stable data supports defensive positioning.

FOMC Outcome: Fed uncertainty limits directional clarity.

Trade Policy: China-linked trade dynamics remain a key sensitivity.

Monetary Policy: RBA’s cautious tone caps AUD upside.

Technical Outlook

Trend: Bearish to sideways.

Resistance: 0.6620

Support: 0.6500

Forecast: AUD/USD may remain pressured while risk sentiment stays fragile.

Sentiment and Catalysts

Market Sentiment: Bearish.

Catalysts: Risk sentiment, RBA communication, China-related news.

Wrap-Up

Overall, risk-off conditions continue to shape near-term market direction as investors navigate mixed central bank messaging and fragile confidence. While selective support emerges from commodities and shifting Fed expectations, broader uncertainty keeps pressure on high-beta currencies. With policy signals, energy prices, and global risk sentiment in focus, markets are likely to remain cautious and reactive in the sessions ahead.

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