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Updated: 26.12.2025 | 10:14 a.m. EST
U.S. natural gas is ending the week with a familiar winter push-and-pull: colder early‑January forecasts and strong LNG demand on one side, near‑record production and still‑healthy storage on the other.
In holiday-thinned trade on Friday morning, NYMEX Henry Hub natural gas (January 2026) hovered around the mid‑$4.30s per MMBtu, extending a rebound that traders are tying to colder model runs and steady export pulls. Barchart showed NGF26 near $4.342/MMBtu mid‑morning, while market reporting also pegged the contract around $4.29/MMBtu earlier in the session. [1]
Below is what’s moving natural gas today (26.12.2025) across news, forecasts, and market analysis, including the next big catalysts traders are watching into year-end.
With many participants out for the holidays, liquidity is thinner than usual—and that can exaggerate moves in either direction.
This is also a notable moment on the calendar: Barchart lists expiration timing for NGF26 approaching at the end of December, which tends to accelerate position‑rolling and can add noise to day-to-day price action. [4]
Bottom line: Friday’s tape is being shaped not only by fundamentals, but also by holiday liquidity and the late‑month contract transition—a mix that often increases volatility.
The central driver in U.S. winter gas is still the same metric traders watch every day: heating demand.
Market reporting on Friday tied the bounce to forecasts pointing to colder conditions and higher demand into early January, particularly across the eastern half of the U.S. [5]
One way to translate that into market language is with Heating Degree Days (HDDs), a key proxy for heating demand:
This nuance matters. Natural gas can rally sharply on model runs that “turn colder,” but if temperatures remain below-normal vs. normal on the HDD scale, upside can be capped—especially with production running hot.
If weather is the spark, production is the wet blanket.
Friday’s reporting cited Lower 48 output at a record-high pace in December, around 109.8 bcfd, topping November’s record. [7] That level of supply matters because it reduces how quickly cold weather can tighten the market—unless demand spikes hard.
EIA’s latest Short‑Term Energy Outlook (released December 9) also frames the same story for 2026: rising production is expected to help moderate prices after winter, with U.S. dry gas output forecast around 109 Bcf/d in 2026. [8]
Translation: Even if early January turns colder, the market’s immediate question becomes: Is it cold enough to overwhelm record supply and strong LNG pulls?
LNG is a structural pillar under U.S. natural gas demand—and it has been especially important this year.
Friday market reporting said gas flows to the eight large U.S. LNG export plants averaged about 18.4 bcfd so far this month, near record territory. [9]
There’s also a plant‑specific note that traders watch because it can swing feedgas quickly:
From a macro perspective, EIA’s December STEO points to LNG exports staying elevated longer-term, projecting U.S. LNG exports at 14.9 Bcf/d in 2025 and 16.3 Bcf/d in 2026. [11]
And while U.S. LNG remains globally significant, Reuters data-driven analysis notes that Asia’s LNG imports from the U.S. fell in 2025 versus 2024, highlighting how trade policy and shifting demand patterns can influence where U.S. cargoes ultimately land. [12]
For U.S. natural gas, weekly storage is the scoreboard—and the schedule matters this week.
EIA’s official schedule shows the Weekly Natural Gas Storage Report was shifted to Monday, December 29, 2025 at 12:00 p.m. ET due to the Christmas holiday, with another holiday adjustment set for Wednesday, December 31 at 12:00 p.m. ET. [13]
Barchart also referenced the same holiday shift, underscoring how widely traders are focused on the Monday release. [14]
EIA’s Natural Gas Weekly Update (release date December 18, covering the week ending December 17) reported:
In the December STEO, EIA outlined why its winter price forecast moved higher: it assumed December would be colder than previously modeled and projected heavier withdrawals—expecting 580 Bcf of inventory withdrawals in December, notably above the five‑year average for the month. [16]
Why this matters for Monday: If the next storage figure shows a draw that surprises to the upside (bigger withdrawal), it can validate the “colder + tight balance” narrative. A softer draw would strengthen the argument that record production and comfortable inventories can absorb winter demand.
Supply isn’t only a function of the weather—it’s also a function of how aggressively producers drill.
The most recent Baker Hughes data (reported by Reuters) showed:
That headline number alone doesn’t guarantee higher output (productivity and associated gas matter), but it supports the broader theme seen across multiple sources: the U.S. system has been producing at exceptionally high levels—even as the market tries to price winter risk.
EIA’s STEO also noted that updated assumptions about gas-to-oil ratios (GORs), especially in the Permian, contributed to a higher production outlook. [18]
U.S. natural gas is increasingly tied to global gas pricing—because global prices help determine how “sticky” U.S. LNG demand will be.
A Reuters global LNG market update (published Dec 24) put February-delivery LNG into Northeast Asia around $9.60/mmBtu, slightly higher on the week—but still reflecting a generally soft market, with prices down significantly year-to-date. [19]
That same reporting highlighted:
Europe remains the “balancing market” when LNG is abundant. An Investing.com market analysis (published Dec 25) cited Europe’s gas storage level around 66.1% as of Dec 24, below average and below last year. [21]
Meanwhile, the Reuters LNG market update noted that European gas prices ticked up in thin trade on cold-spell forecasts, and also described firm buying interest into early Q1 2026 in parts of Central and Eastern Europe, tied to concerns about pipeline flows and regional supply needs. [22]
Two Russia-linked developments are shaping longer-term supply expectations:
These shifts don’t directly set Henry Hub on any given day, but they do influence global LNG supply/demand expectations—which can feed back into U.S. LNG economics and, ultimately, U.S. gas balances.
A widely read Reuters Breakingviews column published today adds a longer-horizon angle: as major producers plan aggressive LNG capacity growth into 2030, the rapid cost declines and fast deployment of renewables (plus grid storage) could undercut future LNG demand growth—raising the risk of an oversupply cycle later in the decade. [25]
That matters even for today’s market because long-dated gas pricing and LNG contracting influence investment decisions, forward curves, and producer behavior—all of which shape how tight (or loose) the market can become in future winters.
Here are the near-term catalysts most likely to move U.S. natural gas into year-end:
EIA’s December STEO provides the clearest “official” baseline:
That forecast lines up with what Friday’s market is pricing in: winter risk still matters, but the ceiling is debated because supply is robust and the system entered winter with above-average inventories. [33]
Natural gas is trading like a winter market again—weather-led, headline-sensitive, and increasingly tied to LNG flows. The next test is whether the colder outlook translates into a storage draw strong enough to overcome the market’s most stubborn counterweight: record U.S. production. [34]
1. www.barchart.com, 2. www.barchart.com, 3. www.worldenergynews.com, 4. www.barchart.com, 5. www.worldenergynews.com, 6. www.worldenergynews.com, 7. www.worldenergynews.com, 8. www.eia.gov, 9. www.worldenergynews.com, 10. www.worldenergynews.com, 11. www.eia.gov, 12. www.reuters.com, 13. ir.eia.gov, 14. www.barchart.com, 15. www.eia.gov, 16. www.eia.gov, 17. www.reuters.com, 18. www.eia.gov, 19. www.brecorder.com, 20. www.brecorder.com, 21. www.investing.com, 22. www.brecorder.com, 23. www.reuters.com, 24. www.reuters.com, 25. www.reuters.com, 26. ir.eia.gov, 27. www.worldenergynews.com, 28. www.worldenergynews.com, 29. www.worldenergynews.com, 30. www.brecorder.com, 31. www.eia.gov, 32. www.eia.gov, 33. www.eia.gov, 34. www.worldenergynews.com
Gold and silver price today, prediction and forecast remained supported due to expectations of lower U.S. interest rates. Spot gold rose 0.8 percent to $4,516.50 per ounce at 0933 GMT. Gold touched a record of $4,530.60 earlier. U.S. gold futures for February delivery rose 1 percent to $4,547.70.
UBS analyst Giovanni Staunovo said demand for gold and silver remains strong due to expectations of lower U.S. interest rates. He also said low liquidity is increasing volatility in precious metals markets.
Gold and silver price today, prediction and forecast also reflects gold’s strongest yearly performance since 1979. Several factors supported this trend. These include Federal Reserve policy easing, central bank purchases, ETF inflows, and reduced reliance on the U.S. dollar.
Markets expect two interest rate cuts next year. These expectations are based on signals of a more flexible Federal Reserve approach. Gold remains supported as it does not offer yield but benefits from lower rates.
Gold and silver price today, prediction and forecast also reflects physical market activity. Gold discounts in India widened to the highest level in more than six months. In China, discounts narrowed compared to last week. Earlier, China discounts had reached a five-year high.
These changes indicate varied demand conditions across major consumer markets. Pricing remains sensitive to local demand and currency movement.
Gold and silver price today, prediction and forecast highlights silver’s sharp rise. Spot silver rose 4 percent to $74.82 per ounce. It reached an all-time high of $75.14 earlier in the session. Silver prices have risen 158 percent so far this year.
The rise is linked to supply shortages, its classification as a U.S. critical mineral, and industrial demand. Silver continues to attract attention from investors seeking alternatives to gold.
Gold and silver price today, prediction and forecast also includes movement in platinum and palladium. Spot platinum rose 7.3 percent to $2,382.35 per ounce. It earlier reached a record high of $2,448.25. Palladium rose 8.3 percent to $1,823.76.
Both metals are used in automotive catalytic converters. Prices increased due to supply constraints, tariff uncertainty, and shifting investment interest. Platinum is up around 170 percent this year. Palladium is up more than 90 percent.
Gold and silver price today, prediction and forecast also reflects policy developments. Staunovo said platinum and palladium markets are smaller than the gold market. Limited investor activity can cause sharp price movement.
He also noted that the European Commission’s plan to ease the 2035 ban on combustion engines has supported prices. This policy change increased expectations for continued demand in automotive use.
Gold and silver price today, prediction and forecast shows all precious metals heading for weekly gains. Platinum recorded its strongest weekly rise on record. Market participants continue to track interest rate signals and supply conditions.
Precious metals remain sensitive to global economic signals. Investor focus remains on monetary policy, industrial demand, and geopolitical developments.
Q1: Why are gold and silver prices rising today?
Gold and silver price today, prediction and forecast shows prices rising due to rate cut expectations, global uncertainty, supply shortages, and increased investment demand across precious metals markets.
Q2: What is the outlook for gold and silver prices?
Gold and silver price today, prediction and forecast suggests prices may remain supported as long as rate cut expectations, central bank buying, and industrial demand continue.
With no true resistance, let’s face it, the only fear for the bulls is a sudden reversal to the downside with better-than-average volume. We could still get this today, but if it occurs, it will be driven by low volume, which will set up the next “buy the dip” opportunity.
As we move higher and more vertical, the definition of dip is going to change. Sticking with a 50% correction of a price swing, our “dip” level at current price levels is $4350.27. That’s nearly $200. Welcome to the “new norm”. During the old regime, we were lucky to see $200 over a few months, maybe a year. However, as we move higher the swings will get bigger, the corrections will be greater and it will become a big boys game and remember that gold isn’t going to “split” like a stock does.
Back to the fundamentals, the mixed trade in Treasury yields is having little impact on gold prices today. The benchmark U.S. 10-year Treasury yield is trading 4.12%, down 0.014.
We didn’t see much of an impact on yields from this week’s initial claims report, but the Commerce Department’s GDP report showed that the U.S. economy grew by 4.3% in the first quarter, which was the country’s fastest pace of expansion since 2023. This kind of growth is likely to keep inflation boosted, which will be supportive for gold prices.
It seems to me that the economy is getting comfortable with inflation and growth, which will keep gold underpinned and the “buy” the dip strategy intact.
Today’s weaker U.S. Dollar (DXY) is also providing support for gold. The greenback is sitting on support at 97.814. Up above, the 50-day moving average at 98.452 and the 200-day moving average at 100.209 are providing solid resistance and controlling the downtrend. We’re at a critical point for the dollar. Our charts indicate the possibility of a steep decline under 97.814 with 96.218 the first target. Gold could pop even higher on this move.
December 26, 2025 — Natural gas is closing out the week with a familiar end-of-year mood: thinner holiday trading, sharper day-to-day swings, and a market still trying to decide whether winter will be a slow burn or a sudden blaze.
In early Friday pricing, NYMEX natural gas futures were trading around $4.345 per MMBtu, up about 2.4% on the session, with an indicated day range roughly $4.224–$4.382. [1]
Across the Atlantic, Europe’s benchmark Dutch TTF contract was holding near €28.095/MWh in the latest available quote shown by Investing.com (displayed as delayed data with a last date stamp of 24/12), underscoring how holiday calendars and liquidity can matter almost as much as weather models this week. [2]
Even when price action looks “simple” (up day / down day), natural gas rarely is. Right now, the market is juggling four overlapping storylines:
One of the cleanest clues about near-term direction is whether heating demand is ramping fast enough to overwhelm supply. The latest American Gas Association (AGA) market indicators showed total U.S. demand (including exports) fell 11.5% week over week, though it remained 1.2% higher than the same week a year earlier—a mixed picture consistent with a winter that has teased cold but hasn’t delivered it everywhere at once. AGA also noted forecasts pointing to milder patterns (including warmer-than-normal conditions in parts of the country). [3]
That matters because winter doesn’t need to be “record cold” to move gas prices—just cold enough, in the right regions, for long enough, to tighten daily balances.
Storage is the market’s shock absorber. When storage is comfortable, price spikes tend to fade; when storage gets tight, small surprises become big moves.
The last widely cited U.S. government storage snapshot available online this week showed working gas in storage at 3,579 Bcf as of Friday, Dec. 12, 2025, with a 167 Bcf weekly draw. [4]
With the next set of late-December numbers approaching, traders are leaning hard on expectations. Industry reporting has flagged that EIA data for the week ended Dec. 26 is scheduled for release on Wednesday, Dec. 31—a timing quirk that can amplify short-term volatility as the market trades “ahead of the print.” [5]
Even before today’s move higher, the market has been living through fast rotations. In EIA’s most recent weekly market update (earlier in December), the agency described a sharp drop in the Henry Hub spot price over the prior week and noted that front-month futures also moved down during that span—illustrating how quickly sentiment can change when weather forecasts shift. [6]
Those swings don’t just affect traders. They feed directly into global LNG competitiveness because the U.S. export model is tightly linked to Henry Hub pricing.
Early Friday, Reuters reported that a blaze at Russia’s Azov Sea port of Temryuk—sparked by what local officials described as a Ukrainian drone attack—was extinguished, with fuel reservoirs being cooled. Reuters also noted the port handles liquefied petroleum gas (LPG) among other products. [7]
While that incident is not a direct “natural gas supply outage” headline, it reinforces a broader reality for the entire gas-and-LNG complex: infrastructure risk tends to put a floor under risk premiums, especially when markets are already thin.
Beyond price screens, today’s natural gas news flow is being shaped by a set of region-specific stories—each different, but all pointing to the same theme: gas markets are becoming more policy-driven and logistics-constrained.
In Australia, the conversation is no longer about whether the east coast gas market needs intervention, but how fast reforms can translate into real supply and pricing outcomes.
A prominent analysis published today highlighted hurdles facing Australia’s push to prioritize domestic supply—particularly the reality that large LNG export contracts extend well into the 2030s, which can delay how quickly reforms bite. The same reporting flagged challenges around bringing on new upstream supply (including debates over regions such as the Beetaloo) and the political complexity of streamlining regulations across jurisdictions. [8]
This follows the Australian government’s own Gas Market Review messaging earlier this week, which recommended significant reforms, including a prospective domestic gas reservation policy, improvements to how gas is bought and sold, and streamlined reporting/governance. [9]
For global gas watchers, Australia matters because it’s a heavyweight LNG exporter. Any structural change that meaningfully shifts domestic vs. export allocation can ripple into LNG spot availability—though, as today’s coverage emphasizes, contract reality can slow the transmission mechanism.
Separate Reuters reporting carried into today’s news cycle said Gazprom supplied 38.8 bcm of gas to China via the Power of Siberia pipeline in 2025, exceeding the annual contractual target of 38 bcm. [10]
The strategic significance: incremental pipeline volumes to Asia can offset some pressures elsewhere in Russia’s gas system—while also reinforcing how Europe and Asia are increasingly distinct pricing and flow theaters in a post-2022 world.
Another Reuters item widely recirculating today said Russia has delayed its ambition of producing 100 million tons per year of LNG by several years, citing the effects of Western sanctions on projects and equipment. The report also referenced revised strategy forecasts of 90–105 million tons by 2030 and up to 130 million tons by 2036, alongside discussion of delays at major developments. [11]
For today’s spot pricing, that’s not an “immediate outage” story. But for medium-term LNG balance, it’s highly relevant: when expected supply growth shifts rightward on the calendar, future winter risk premia can reappear.
In Vietnam, today’s gas story is less about international geopolitics and more about “will the fuel arrive, and at what price?”
Tuoi Tre News reported that PV GAS D said it would continue supplying natural gas to customers, after concerns circulated that supply for CNG production to a trading company could be halted from January 1, 2026—a disruption that businesses warned could impact hundreds of operations and up to 500 CNG buses in Ho Chi Minh City. The report also described industrial customer concerns about potentially having to shift to LNG at higher cost and noted PV GAS D’s comments about declining domestic reserves, priority for power generation when needed, and expanded import/logistics options to stabilize supply. [12]
This kind of local supply anxiety is an underappreciated driver of long-term gas demand: if end users lose confidence in price stability or continuity, they start planning fuel-switching—even when gas is technically available.
India’s gas market continues to be defined by infrastructure buildout—especially at the distribution and transportation layer.
Indian Infrastructure reported today that THINK Gas commissioned an LNG station in Rapthadu, Andhra Pradesh, and described the company’s footprint across multiple states and districts under the “Think Gas” brand. [13]
In a global context, these smaller commissioning announcements matter because they are the slow, cumulative mechanism by which LNG import volumes translate into actual end-use demand.
As the calendar flips toward year-end, three near-term catalysts stand out:
Natural gas is, as always, a market where physics (weather, molecules, pipelines) meets politics (policy, sanctions, domestic priorities). On December 26, that collision is visible everywhere—from Henry Hub screens to Vietnamese bus depots to Australia’s LNG contract math.
1. www.investing.com, 2. www.investing.com, 3. www.aga.org, 4. www.eia.gov, 5. www.naturalgasintel.com, 6. www.eia.gov, 7. www.reuters.com, 8. www.theaustralian.com.au, 9. www.dcceew.gov.au, 10. www.reuters.com, 11. www.reuters.com, 12. news.tuoitre.vn, 13. indianinfrastructure.com, 14. www.naturalgasintel.com, 15. www.aga.org, 16. www.dcceew.gov.au
All things being equal, this is consolidation, but it is also a very high level of pricing that we haven’t seen since the beginning of 2025. So, the question now is, are we bumping into a ceiling? I think it is a little early to suggest that at the moment, but it is a possibility so I will be watching.
The 158-yen level is an area that offers significant resistance, but again, the 155-yen region offers significant support. The 50-day EMA, of course, is an indicator that a lot of people watch, and it sits at 154.50 yen, so that all ties together quite nicely.
The Japanese yen had seen a little bit of volatility after the Bank of Japan raised rates last week, but the reality is, I don’t think most of the market likes that, and they may punish Japan for that. I don’t think the market believes that the Japanese can aggressively raise rates anytime soon, while the Federal Reserve at least could make an argument that some of the most recent data have suggested that maybe they have to be very measured in their rate-cutting cycle.
All things being equal, this is a very noisy market, but I believe that it eventually goes looking to the upside. Even if it doesn’t, I would reset somewhere near the 152-yen level and start to look for support there as the 200-day EMA is in that neighborhood.
Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.
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.
Gold and silver price today, prediction and forecast remained supported due to expectations of lower U.S. interest rates. Spot gold rose 0.8 percent to $4,516.50 per ounce at 0933 GMT. Gold touched a record of $4,530.60 earlier. U.S. gold futures for February delivery rose 1 percent to $4,547.70.
UBS analyst Giovanni Staunovo said demand for gold and silver remains strong due to expectations of lower U.S. interest rates. He also said low liquidity is increasing volatility in precious metals markets.
Gold and silver price today, prediction and forecast also reflects gold’s strongest yearly performance since 1979. Several factors supported this trend. These include Federal Reserve policy easing, central bank purchases, ETF inflows, and reduced reliance on the U.S. dollar.
Markets expect two interest rate cuts next year. These expectations are based on signals of a more flexible Federal Reserve approach. Gold remains supported as it does not offer yield but benefits from lower rates.
Gold and silver price today, prediction and forecast also reflects physical market activity. Gold discounts in India widened to the highest level in more than six months. In China, discounts narrowed compared to last week. Earlier, China discounts had reached a five-year high.
These changes indicate varied demand conditions across major consumer markets. Pricing remains sensitive to local demand and currency movement.
Gold and silver price today, prediction and forecast highlights silver’s sharp rise. Spot silver rose 4 percent to $74.82 per ounce. It reached an all-time high of $75.14 earlier in the session. Silver prices have risen 158 percent so far this year.
The rise is linked to supply shortages, its classification as a U.S. critical mineral, and industrial demand. Silver continues to attract attention from investors seeking alternatives to gold.
Gold and silver price today, prediction and forecast also includes movement in platinum and palladium. Spot platinum rose 7.3 percent to $2,382.35 per ounce. It earlier reached a record high of $2,448.25. Palladium rose 8.3 percent to $1,823.76.
Both metals are used in automotive catalytic converters. Prices increased due to supply constraints, tariff uncertainty, and shifting investment interest. Platinum is up around 170 percent this year. Palladium is up more than 90 percent.
Gold and silver price today, prediction and forecast also reflects policy developments. Staunovo said platinum and palladium markets are smaller than the gold market. Limited investor activity can cause sharp price movement.He also noted that the European Commission’s plan to ease the 2035 ban on combustion engines has supported prices. This policy change increased expectations for continued demand in automotive use.
Gold and silver price today, prediction and forecast shows all precious metals heading for weekly gains. Platinum recorded its strongest weekly rise on record. Market participants continue to track interest rate signals and supply conditions.
Precious metals remain sensitive to global economic signals. Investor focus remains on monetary policy, industrial demand, and geopolitical developments.
Q1: Why are gold and silver prices rising today?
Gold and silver price today, prediction and forecast shows prices rising due to rate cut expectations, global uncertainty, supply shortages, and increased investment demand across precious metals markets.
Q2: What is the outlook for gold and silver prices?
Gold and silver price today, prediction and forecast suggests prices may remain supported as long as rate cut expectations, central bank buying, and industrial demand continue.
Any pullback at this point in time will more likely than not be interesting for those willing to take advantage of the overall trend, and I do think that it’s only a matter of time before we bounce and go looking to the 185 yen level for a longer-term move.
Ultimately, the interest rate differential still favors the European currency over the Japanese one, and therefore I think we’ve got a situation where a lot of traders are hanging on to this and collecting that swap at the end of every day. I have no interest in shorting anytime soon, but if we did break down below the 175 yen level, then we would have to think about that.
All things being equal, this is a market that I think remains one that is probably going to move mainly based on the Japanese yen itself, as the Bank of Japan has found itself in a little bit of trouble suggesting that they were going to tighten monetary policy because it appears that the financial markets think that will do nasty things to the Japanese economy, especially considering all of the debt that the Japanese currently hold.
With this and the fact that we’ve been in a nice 45-degree uptrending angle for what seems like a lifetime, I have no interest in shorting, and I do think that we eventually not only hit 185 yen but probably higher.
Begin trading our daily forecasts and analysis. Here is a list of Forex brokers in Japan to work with.
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 USDJPY exchange rate pulled back after the latest macro data from Japan. It was trading at 156.25, down from this month’s high of 157.83. It has also formed the risky double-top pattern, pointing to more downside in the coming days.
Weak Japanese data raises doubts for BoJ rate hikes
The USDJPY exchange rate was in a tight range after Japan published mixed macro data on Friday.
A report by the statistics agency showed that the unemployment rate remained at 2.6%, while the jobs/applications ratio was unchanged at 1.18.
Another report showed that the Tokyo headline Consumer Price Index (CPI) dropped from 2.7% in November to 2.0% this month.
The core consumer inflation, which excludes the volatile food and energy prices, moved from 2.8% to 2.3%, moving closer to the BoJ’s target of 2.0%.
More data showed that the country’s retail sales dropped from 1.6% in October to 0.6% in November, a sign that demand is falling.
At the same time, the country’s industrial production dropped to minus 2.6% in November after expanding by 1.6% in the previous month.
Therefore, there are signs that Japan’s economy is moderating, a move that may limit the central bank’s hawkish tone.
These numbers came a week after the BoJ delivered its final interest rate decision of the year. It hiked interest rates by 0.25% to a three-decade high of 0.75% and hinted that it will deliver more hikes in 2026 if the economic growth accelerates.
Traders still believe that the bank will deliver either one or two more hikes in 2026 if inflation continues rising because of the recently announced stimulus package.
Federal Reserve interest rate cuts in 2026
Meanwhile, the Federal Reserve delivered the third interest rate cut in its December meeting. It moved the benchmark rate to between 3.50% and 3.75%.
A Polymarket poll with over $1.2 million in assets, has more traders betting than the bank will deliver two cuts in 2026. 19% of the users expect the bank to cut rates three times, while 16% see four cuts.
The main reason to predict more cuts is that Donald Trump has pledged to appoint a Fed Chair who will be more comfortable delivering more cuts.
However, the new Fed Chair will face the challenge of convincing more officials to cut rates, especially now that the recent US GDP data showed that the economy was doing well. The report showed that the economy expanded by 4.3% in the third quarter, much higher than what analysts were expecting.
Fed officials have started to deviate from the Federal Reserve officials. For example, two officials voted for leaving interest rates unchanged in the last meeting, while one voted for a 0.50% cut.
USDJPY forecast: technical analysis
USDJPY chart by TradingView
The daily timeframe chart shows that the USDJPY exchange rate has pulled back in the past few days, moving from the year-to-date high of 157.83 to the current 156.28.
It has formed a double-top pattern whose neckline is at 154.42. Also, the Relative Strength Index and the Percentage Price Oscillator have formed a bearish divergence pattern.
Therefore, the pair will likely continue falling, with the next key support level to watch being the neckline at 154.42. More downside will be confirmed if it moves below the 50-day moving average at 154.60.
In my view, intervention threats will continue to cap USD/JPY upside at 158. Meanwhile, JGB yields would likely bolster yen demand, indicating a negative price outlook. However, the BoJ’s neutral interest rate will be pivotal, given recent concerns about sticky US inflation.
A higher neutral interest rate level, neither accommodative nor restrictive, would indicate a more hawkish BoJ rate path and a narrower US-Japan rate differential. A narrower rate differential would make yen carry trades into US assets less profitable, reversing yen carry trades, sending USD/JPY toward 140 over the longer term.
However, upside risks to the bearish outlook include:
These scenarios would weaken the yen and boost demand for the US dollar, sending USD/JPY higher. However, yen intervention warnings are likely to cap the upside at around the 158 level, based on the latest communication.
Read the full USD/JPY forecast, including chart setups and trade ideas.
In summary, USD/JPY trends reflect the Japanese government’s focus on forex markets and changing sentiment toward narrowing rate differentials. Market focus will remain on BoJ Governor Ueda and the Fed’s outlook on monetary policy and the BoJ’s view on the neutral interest rate.
A 1.5% to 2.5% neutral rate would indicate more aggressive BoJ rate hikes, supporting the bearish short- to medium-term outlook for USD/JPY. Furthermore, dovish Fed rhetoric will likely send USD/JPY toward 140 in the 6-12 month time horizon.
For more in-depth analysis, review today’s USD/JPY trading setups in our latest reports and consult the economic calendar.
In the short-term, however, a pullback to test prior resistance as support – the first pullback after the breakout – is a risk. A first, more significant upside target at 127.2.% extension of the prior pullback is at $4,516. That is essentially a match to the high for the week to date, especially given a mild bearish reaction that followed Wednesday’s high. The prior high of $4,381, along with the 10-day average, now at $4,360 and rising, presents a first more significant potential support zone. A bullish reversal ending a pullback higher than $4,381, would suggest sustained strong support.
When considering prior upswings in the price of gold, the current eight-week advance may still be early in the current leg up that began from the October swing low, given gains seen since then. Out of the four prior new trend highs sustained since 2024, time ranges are indicated at 5 and 6 weeks, and then at 11 and 12 weeks. Keep in mind that the first week of a new high breakout has yet to complete. This leaves potential in time and price.
In addition to the rising slope of the bull trend, strong bullish momentum is indicated by a successful second breakout through the top of a rising trend channel. This confirms strength in the current advance. At the same time, it shows the price becoming further extended. Nevertheless, the potential for a continuation of the trend with a higher rate of change is suggested by the pattern. The next upside target for gold is at the 161.8% projection of a rising ABCD pattern. Further up is a large confluence zone starting at $4,664 and up to $4,713.
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