However, the weaker yen has pushed import prices higher, dampening households’ purchasing power and curbing private consumption. The effects of higher import prices on private consumption have been a key concern for the BoJ and the Japanese government, leading to yen intervention warnings.

An upward revision to the October LEI would align with improving sentiment toward the Japanese economy and strengthen the yen.  However, USD/JPY losses will likely be limited, considering the ongoing fiscal concerns and the BoJ’s cautious policy outlook and fading bets on a March Fed rate cut.

US Jobless Claims and Fed Rate Expectations

An unexpected surge in US GDP growth and a hotter-than-expected US price deflator tempered expectations of a March rate cut on Tuesday. A sharp increase in PCE prices signaled a sticky inflation outlook, while concerns mount about a decoupling of the labor market from GDP growth.

Later on Wednesday, initial jobless claims will come under scrutiny after last week’s weak US jobs report. Economists forecast initial jobless claims to slip from 224k (week ending December 13) to 223k (week ending December 20).

A lower claims reading would ease immediate concerns about the labor market, while supporting a more hawkish Fed policy stance. However, an unexpected spike in claims could revive Fed rate cut bets, supporting a bearish USD/JPY price outlook.

According to the CME FedWatch Tool, the chances of a March Fed rate cut dropped from 52.9% on December 22 to 45.1% on December 23. The sharp drop reflected the impact of the Q3 US GDP report on sentiment toward the Fed policy stance.

Yen Carry Trade Risks and Key Price Levels

While US data will influence US dollar demand and USD/JPY trends, risks of a yen carry trade unwind linger ahead of the holidays.

Elevated JGB and rising US Treasury yields will likely shift focus back to USD/JPY trends for early warning signs of an unwind. However, economists have mixed views on the USD/JPY’s breaking point. 10-year JGB yields could boost demand from domestic investors. The prospect of a stronger yen on repatriations and higher yields reinforces the constructive short- to medium-term bias.

A drop below 155 could be crucial for the negative short- to medium-term bias, given Tuesday’s low of 155.649.

Technical Outlook: USD/JPY on a Downward Trajectory

With markets monitoring technical indicators and fundamentals, they will offer crucial signals into potential USD/JPY price trends.

Looking at the daily chart, USD/JPY remained above the 50-day and 200-day Exponential Moving Averages (EMAs), indicating a bullish bias. While technicals remained bullish, fundamentals are increasingly outweighing the technical structure, indicating a bearish outlook.

A drop below the 155 support level would bring the 50-day EMA into play. If breached, 150 would be the next key support level. Importantly, a sustained break below the 50-day EMA would signal a bearish near-term trend reversal, paving the way to the 200-day EMA and 150. A break below the 200-day EMA would reinforce the bearish medium- to longer-term USD/JPY price outlook.

– Written by


Tim Boyer

STORY LINK Pound Sterling to Dollar Forecast: Festive Mood Lifts GBP/USD Toward 2026

The Pound to US Dollar exchange rate (GBP/USD) pushed past the $1.35 mark on Tuesday, rising to its strongest level since the end of September.

At the time of writing, GBP/USD was trading near $1.3501, up around 0.3% from Tuesday’s opening levels.

The US Dollar (USD) softened broadly on Tuesday, even after US GDP data surprised sharply to the upside.

Markets had expected growth to cool in the third quarter, with forecasts pointing to a slowdown from 3.8% to 3.3% amid concerns that President Donald Trump’s tariff policies were beginning to weigh on activity.

Instead, figures from the Bureau of Economic Analysis showed the US economy expanded by a robust 4.3% between July and September, driven by stronger consumer spending as well as renewed momentum in exports and government outlays.

Rather than lifting the Dollar, the data reinforced a risk-on market backdrop, prompting investors to rotate away from safe-haven assets.

The release also failed to shift expectations for US monetary policy, with markets continuing to price in multiple Federal Reserve interest rate cuts over the course of 2026.

The Pound (GBP) also advanced on Tuesday, benefiting from the typically upbeat sentiment associated with the year-end ‘Santa rally’.

Thin liquidity conditions during the holiday period appeared to amplify Sterling’s gains, as an optimistic market mood favoured risk-sensitive currencies.

Beyond seasonal effects, the Pound drew modest support from tentative optimism around the UK’s medium-term outlook. While recent inflation and growth data point to near-term challenges, some investors are increasingly hopeful that conditions could improve into 2026 as global growth steadies and policy uncertainty eases.

GBP/USD Exchange Rate Forecast: Can Festive Risk Appetite Keep Sterling Supported?

Looking ahead, with no major UK or US economic releases scheduled, movement in GBP/USD is likely to remain closely tied to broader market sentiment.

If festive optimism continues to underpin risk appetite, the Pound to US Dollar exchange rate may be able to extend its upward momentum into the Christmas period.

However, any sudden shift in mood or external geopolitical headlines could quickly reintroduce volatility.

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TAGS: Pound Dollar Forecasts

– Written by


Tim Boyer

STORY LINK Pound-to-Dollar Forecast: GBP/USD Higher as Rate Outlooks Diverge

The Pound to Dollar exchange rate (GBP/USD) edged higher as a softer US currency offset lingering concerns over the UK growth outlook.

Markets are increasingly focused on Fed policy and political pressure for looser monetary conditions in the US.

Any further gains in GBP/USD are likely to depend on continued dollar losses rather than renewed confidence in the UK economy.

GBP/USD Forecasts: Close to 2-Month Highs

The Pound to Dollar (GBP/USD) exchange rate has secured net gains to around 1.3440 on Monday with pair within touching distance of 2-month highs just above 1.3450.

The Pound has secured a limited net gain in global markets while there was a generally soft dollar.

The main focus was a fresh surge in precious metals prices with gold and silver both surging to fresh record highs.

US equity markets held firm, although the FTSE 100 index posted a decline of just over 0.5%.

There is the risk of choppy trading in the very short term as trading volumes dip ahead of the Christmas holiday period.

Federal Reserve policy and personnel will remain a key element over the next few months.

At this stage, markets are pricing in close to a 20% chance of a further cut in January with a round a 50% chance of a cut by March.

Danske Bank commented; “We expect the Fed to pause in January and deliver two additional 25bp cuts in 2026, in March and June.”

The policy outlook is complicated by the fact that a new Fed Chair will be nominated while the Administration is continuing to lobby for faster and further rate cuts.

According to MUFG; “Whether Hassett, Waller, or Warsh is chosen, the likelihood is that the new Chair will be more aligned with Trump’s views and will push more forcefully for fundamental change at the Fed that will inevitably shape investor expectations that the Fed will align more toward policies to fuel growth over price stability rather than the current symmetric policy approach.

It added; “This would give momentum to the US yield curve steepening which tends to coincide with a weaker dollar.”

Markets will also be monitoring any developments surrounding the Supreme Court with two crucial cases surrounding the dismissal of Fed Governor Cook and Trump’s reciprocal tariffs.

Domestically, the final GDP data for the third quarter confirmed GDP growth of 0.1%, although there was a slight downward revision to 0.1% for the second quarter from the previous estimate of 0.2%.

The year-on-year growth rate was unchanged at 1.3% due to a small upward revision to 2024 data.

AJ Bell head of financial analysis Danni Hewson remains uneasy over the outlook; “With the Bank of England expecting growth to come to a standstill in the last few months of the year, thanks in part to the impact of the Budget on overall confidence, it’s clear there are huge challenges to overcome if the UK’s growth story is going to become more compelling.”

Elsewhere, the current account deficit was estimated at £12.1bn for the third quarter of 2025 from a revised £21.2bn the previous quarter.

Danske Bank is still concerned over balance of payments risks; “The UK runs a large current-account deficit, which makes GBP vulnerable when capital inflows fade.”

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Created on December 23, 2025

• Despite the fact that the Bank of Japan just raised rates and the Federal Reserve cut rates, you could still drive a truck through the interest rate differential between the two.
• The US dollar has pulled back a bit against the Japanese yen during trading on Monday, which is not a huge surprise, as we were threatening the 158 yen level.
• The 158 yen level is a large, round, psychologically significant figure and an area that I think continues to see a lot of noisy behavior.

If we can break above the 158 yen level, then it’s likely that the market will eventually break out to the 160 yen level. I do believe that happens given enough time, but the US dollar itself is giving back some of its strength during the day against multiple currencies, so I think this is more or less an indictment on the US dollar during the session than it is saying anything about the Japanese yen.

Interest Rate Differentials

The 154.50 yen level is where we had seen quite a bit of support previously, and I think ultimately the fact that the 50-day EMA is approaching that level as well opens up the possibility of it being a short-term floor. We are heading into the holiday week, and therefore, I think it’s probably a market that’s going to be choppy and sideways more than anything else, but we’ll have to wait and see how that plays out.

I do think this is a situation where you are looking for value, and you are taking advantage of it because despite the fact that the Bank of Japan just raised rates and the Federal Reserve cut rates, you could still drive a truck through the interest rate differential between the two, and that spread pays you at the end of every day. This is what I’ve been taking advantage of since July, and I don’t plan on changing that anytime soon. So with that being said, I think this is just a little bit of give back from that massive move on Friday, but I wouldn’t read much more into it than that, being the case. I think it’s just a little bit of a pullback, a little bit of profit-taking as we are reaching a resistance barrier. I remain bullish.

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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 December 23, 2025

EUR/USD Analysis Summary Today

• Overall Trend: In an upward technical correction.
• Support Levels for EUR/USD Today: 1.1710 – 1.1650 – 1.1580
• Resistance Levels for EUR/USD Today: : 1.1800 – 1.1860 – 1.2000

EUR/USD Trading Signals:

• Buy EUR/USD from the support level of 1.1660 with a target of 1.1820 and a stop-loss at 1.1590.
• Sell EUR/USD from the resistance level of 1.1830 with a target of 1.1500 and a stop-loss at 1.1900.

Technical Analysis of EUR/USD Today:

The EUR/USD began the penultimate trading week of 2025 on a positive note, rebounding toward the 1.1769 resistance level. Bulls are attempting to return to the 1.1800 psychological resistance area, a level critical for preparing for stronger upward breakouts. According to reliable trading platforms, the Euro is currently capitalising on the market’s primary focus on Federal Reserve expectations rather than Eurozone policy.

Expectations for further monetary easing by the Fed in 2026 continue to weigh on the US Dollar, even as the European Central Bank (ECB) signals no urgent need for interest rate adjustments. Risks remain tied to US economic growth, inflation, and political pressure on the Federal Reserve.

Currently, technical indicators confirm a shift in the EUR/USD trend, with the 14-day Relative Strength Index (RSI) hovering around 65, close to the overbought level, and the MACD indicator also trending upwards. The strong buying pressure from technical indicators is prompting bulls to push quickly towards the psychological resistance level of 1.2000. Today’s EUR/USD trading will be influenced by the release of US economic growth figures and durable goods orders data, both at 3:30 PM Egypt time, followed by the US consumer confidence index from Michigan at 5:00 PM Egypt time.

Trading Advice:

Traders are advised to wait for market and investor reactions to the important US economic announcements, as this reaction will determine the direction of currency prices for the remainder of 2025 trading. Therefore, it is not recommended to keep positions open during the holiday season.

Expectations of Banks and Global Institutions for EUR/USD in the Coming Months:

In this context, Nordea Bank expects the EUR/USD exchange rate to rise to 1.24 by the end of 2026. HSBC expects EUR/USD to rise to 1.20 at the beginning of 2026 before retreating to 1.18 by the end of the same year.

Similarly, Société Générale commented on the short-term outlook for the EUR/USD pair, stating: “A slight pullback is currently forming; maintaining the 50-day moving average near 1.1610 will be crucial for the continuation of the upward trend. If the pair breaks above the 1.1800/1.1830 resistance levels, it is likely to experience further upward movement. The next targets could be the September high of 1.1920 and the psychological resistance at 1.2000.”

The Future of European Central Bank Policies

In this regard, the European Central Bank made no changes to interest rates at its latest meeting, keeping the deposit rate at 2.00%. Eurozone growth expectations have seen a slight improvement, while inflation is expected to remain around 2.00% over the medium term. ECB President Lagarde stated that there is no pre-determined path for interest rates.

In this regard, MUFG Bank commented on the European Central Bank’s policies, stating: “We have scrapped our forecast of a final 25 basis point interest rate cut by the ECB in 2026. However, it is still too early for the Eurozone interest rate market to expect an early rate hike next year, given that inflation is still expected to remain below the ECB’s target.” They added: “With the Bank of England and the Federal Reserve still expected to cut interest rates further next year, we anticipate continued strength in the euro in 2026, while the ECB maintains its current monetary policy stance.”

Future of US Federal Reserve Policy:

As for the United States, financial markets continue to expect further US interest rate cuts by the Federal Reserve in 2026 following the decline in inflation. The unemployment rate has reached a four-year high of 4.6%, while US jobs data overall has been mixed.

According to Nordea Bank; We expect the US dollar to weaken by 2026, as growth differentials and political uncertainty turn against it. We are particularly concerned about the Trump administration’s focus on influencing the Federal Reserve. Rabobank also commented: “We expect the US economy to enter a cyclical recession next year. While many G10 central banks have completed their interest rate-cutting cycles, the Fed is likely to continue its monetary easing until 2026.”

The bank added in its outlook: “Additional risks to the US dollar include a new round of tariffs, persistently high inflation coupled with negative real interest rates, or a sharp correction in AI-related stocks.”

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