Created on January 02, 2026

• The Canadian dollar has rallied on Wednesday, only to continue to see a bit of selling pressure near the 114.60 yen level.
• The Canadian dollar has rallied quite nicely during the trading session against the Japanese yen, only to find selling pressure again at 114.60 yen.
• This is an area that has been difficult to overcome for the last week or two, but ultimately, I do think we are going to make a serious play at the 115 yen level.

Short-term pullbacks should be buying opportunities, with the 113.50 yen level being a bit of a floor. After that, you have the 112 yen level, which is also attracting the 50-day EMA.

Market Outlook and Potential Targets

Breaking above the 115 yen level would, of course, be very positive, and a lot of people would look at that through the prism of a sign that we are going much higher, and therefore that is what I am waiting for as well.

I still like the idea of buying dips because I do not like the yen. It isn’t so much about Canadian dollar strength, although it is worth noting that the Canadian dollar has held its own against the US dollar as of late. The reality is, this is all about Japan.

If oil starts to pick up, that will send the Canadian dollar much higher against the Japanese yen because, unlike against the US dollar, Japan is not a producer of crude oil. That makes this more of a pure play on the petroleum markets. When you look at longer-term charts, it is very possible we could be going as high as 119 yen, but I don’t think that is something that happens very quickly or easily. I think that is just a potential destination in what has been a very strong uptrend.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

The 1.18 level continues to be a very difficult ceiling to break, and I think that’s your theme going forward. I’m not looking for big moves. I just recognize that there is a bit of a ceiling above that the market can’t seem to rise above, and as a result, I think we probably drift a little bit lower in the short term, but again, not a big move.

GBP/USD Technical Analysis

The British pound continues to see the 1.35 level offer quite a bit of resistance, and as a result, I think we’re getting to the top of a potential range as well. Again, keep in mind Monday is going to be a lot more realistic read on the environment than Friday, but it does look a bit like the British pound is trying to do everything it can to top out here.

If we were to break above the 1.36 level, that would open up the floodgates to a move to 1.3750, which is possible, but probably not immediately. As things stand right now, I look at this as a market that is in danger of at least rolling over a little bit. I don’t think we fall apart to the downside either, I just think it’s more likely of two scenarios.

EUR/GBP Technical Analysis

The euro is slightly negative against the British pound, but we’re in a very tight range, have been for five or six days now. Quite frankly, this is a market that continues to look at the 0.8750 level as a bit of a ceiling. The 50-day EMA sits there as well and of course, the pound has been stronger than the euro in general, so this is not a huge surprise. I do think we will eventually go lower here and therefore look at short-term rallies as potential selling opportunities in this particular pair.

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Created on January 02, 2026

• The US dollar rose against the Japanese yen to close out 2025 as we continue to see a lot of back-and-forth action here.
• Ultimately, this is a market that I think continues to see a lot of noise and choppy behavior, but I also recognize that the interest rate differential continues to favor the United States dollar.

The Bank of Japan is in a situation where it simply cannot tighten monetary policy too much because of the massive amount of debt that the Japanese are currently suffering from. With this being the case, I think you’ve got a situation where you remain buy on the dip as far as your attitude is concerned.

Technical Levels and Outlook

The 50-day EMA reaching the 155 yen level is likely to see quite a bit of support, just as the 158 yen level above is significant resistance. If we can break above there, then it could open up the possibility of a move to the 160 yen level, and I do think that happens sooner or later.

Ultimately, this is a market that I think will continue to be very noisy, but again, as you get paid at the end of every day to hang on to the US dollar against the Japanese yen, I think you need to keep that in the back of your mind.

The market breaking down below the 50-day EMA opens up the possibility of a move down to the 153 yen level, but I don’t think that is the most likely of outcomes. Ultimately, I look at this as a market that continues to favor quite a bit of momentum, but in the meantime, we are just simply working off some of that momentum that we had built up over the last couple of months. I continue to favor the US dollar over the Japanese yen despite the fact that the Federal Reserve is likely to cut rates again.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

Created on January 02, 2026

• The Euro fell again as we continue to see quite a bit of negative pressure near the 1.18 level.
• The 1.18 level is an area that I think will continue to be a bit of a ceiling in this market, extending all the way to the 1.1875 level.

If we could break above the 1.1875 level, then it would be a very bullish sign for the Euro. While I’m not necessarily super bullish on the Euro itself, I can make an argument about how that would happen. Currently, traders around the world are anticipating that the Federal Reserve is going to continue to cut this year, and if that’s going to be the case, they will likely try to punish the US dollar.

Choppy Range-Bound Trading

That being said, it should also be thought that if we do in fact see aggressive cuts, that’s not a good look for the world economy. After all, loose money does help, but if it’s a bit of a panic, that will have people quite concerned and often will have them running to the US dollar for safety. Ultimately, I think we are still range-bound and I don’t really see anything pushing the Euro higher significantly at the moment, but I can also say that I don’t see anything pushing it a lot lower at the moment either.

The 50-day EMA currently sits at the 1.1672 level and is rising, and I think that makes a nice target for any pullback. Anything below there opens up 1.16, possibly even 1.15, but I think ultimately, we’ve got a scenario where you’re probably looking at choppy and back-and-forth range-bound trading on not only short-term charts but long-term charts. In other words, if you wait long enough, the market will move in your direction. It looks like a market that has nowhere to be.

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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.