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.

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.

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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The EURJPY pair reached the main target at 184.90, forming a strong barrier to begin forming bearish corrective waves, to settle near 183.75, announcing the beginning of gathering some gains in the current period trading.

Stochastic is approaching 20 level, to increase the negative pressure, which makes us prefer more corrective trading that might target 183.30 level, reaching key support at 182.80, while stepping above 184.10 again and providing positive close will reinforce the chances of forming new bullish waves, to repeat the pressure on the mentioned barrier.

The expected trading range for today is between 183.30 and 184.10

Trend forecast: Bearish

Created on December 23, 2025

• Ultimately, this is a market that looks like it has somewhere to be, and that somewhere is much higher.
• The Euro initially fell against the Japanese Yen in early trading on Monday, which would make a certain amount of sense considering just how explosive and bullish the candlestick was from Friday.
• Traders would have taken some profit, but ultimately, this is a market that looks like it has somewhere to be, and that somewhere is much higher.

I had suspected that the Euro was going to reach the 185 Yen level sometime in the near future, but I didn’t expect it to happen as quickly as it did. That being said, this is the end of the year, and liquidity could end up being an issue, but that could also cause quite vicious moves in the currency markets as well. It doesn’t mean that it has to be stagnant.

MARKET LIQUIDITY AND BANK OF JAPAN IMPACT

Don’t be overly surprised if we get fireworks. There have been a few years in the last 20 years that I’ve been doing this and that we’ve seen massive moves, perhaps due to everybody being on the wrong side of a trade or, better yet, everybody being on the right side of the trade and taking their profit. Liquidity does strange things to the market when it’s disappearing, and we may see that here in a bit.

Clearly, there’s only one direction to trade this pair at the moment and probably going forward, and that’s to the upside. Despite the fact that the Bank of Japan has raised rates, the reality is that they are getting punished in the bond market, and Japan does not have the capacity to hold on to high rates for any significant amount of time because, quite frankly, they don’t have the demographics to do it.

They also have far too much debt. So this will continue to be a problem for the Japanese Yen, and I look at each dip as a buying opportunity. In fact, I don’t worry about the trend at all until we break below the 180 Yen level at the very minimum. So on a pullback and a bounce, I want to start buying on the right-hand side of the V, and so far, that seems to be playing out on the short-term chart.

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 EURJPY pair reached the main target at 184.90, forming a strong barrier to begin forming bearish corrective waves, to settle near 183.75, announcing the beginning of gathering some gains in the current period trading.

Stochastic is approaching 20 level, to increase the negative pressure, which makes us prefer more corrective trading that might target 183.30 level, reaching key support at 182.80, while stepping above 184.10 again and providing positive close will reinforce the chances of forming new bullish waves, to repeat the pressure on the mentioned barrier.

The expected trading range for today is between 183.30 and 184.10

Trend forecast: Bearish

Created on December 22, 2025

• The U.S. dollar continues to surge against the Japanese yen despite a Bank of Japan rate hike, as markets dismiss policy tightening, yen selling accelerates, and momentum remains firmly bullish with buyers pressing higher levels.
• The US dollar has skyrocketed against the Japanese yen despite the fact that the Bank of Japan raised interest rates by 25 basis points.
• This was an expected move, but the bond market in Japan really took off to the upside as yields jumped due to the Japanese suggesting that maybe they would tighten further.
• This tells you that the market doesn’t appreciate what the Japanese are doing, and they are getting rid of their yen as a vote of no confidence.

There is an argument that there is an intervention zone near the 158 yen level, and that might be true, but typically speaking, that is a short-lived phenomenon. And I do think that the market is starting to call the bluff of the Bank of Japan.

Despite the fact that they raised rates, you still get paid at the end of every day to hold this pair. And the US dollar has been strengthening against most things. It’s not just the Japanese yen early in the session. The 155 yen level is a support level. The 158 yen level is a resistance area. We are hanging around in a 300-point range, but this candlestick on Friday is no joke.

Momentum Signals Buyers Are in Control

And it does suggest that perhaps we have further upside to go. I think momentum in and of itself is an obvious thing, and I have no interest whatsoever in shorting this pair. If the market were to break down below the 155 yen level and perhaps the 50-day EMA, then we could fall to the 153 yen level, but the size of the candlestick tells me that the buyers are here to stay. This is a big move right in the face of the Bank of Japan.

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.

Created on December 22, 2025

EUR/USD Analysis Summary Today

• Overall Trend: Still in an upward trend.
• Support Levels for EUR/USD Today: 1.1680 – 1.1600 – 1.1550
• Resistance Levels for EUR/USD Today: : 1.1770 – 1.1830 – 1.1900

EUR/USD Trading Signals:

• Buy EUR/USD from the support level of 1.1630 with a target of 1.1820 and a stop-loss at 1.1560.
• Sell EUR/USD from the resistance level of 1.1810 with a target of 1.1500 and a stop-loss at 1.1900.

Technical Analysis of EUR/USD Today:

The EUR/USD continues to trade within a rebound zone despite recent selling pressure. The pair closed last week stable around the 1.1707 level after bulls failed to capitalize on a test of the 1.1800 psychological resistance. This followed market reactions to policy announcements from both the European Central Bank (ECB) and the Federal Reserve, alongside a batch of US economic releases that had been delayed by the longest government shutdown in US history.

According to reliable trading platforms, the EUR/USD will remain supported as long as bulls can push toward the 1.1800 resistance again. The RSI (Relative Strength Index) is currently reading around 59, supporting a bullish outlook while awaiting strong positive momentum to confirm the upward trend. Quiet and limited movement is expected as the annual holiday season approaches. Conversely, a bearish scenario on the daily chart would require a return to the 1.1500 support area. No major economic data is expected today from either the Eurozone or the US; therefore, the pair will move based on recent drivers amid low liquidity and reduced risk appetite ahead of the holidays.

The Impact of Inflation Figures on the US Dollar

According to recent Forex market data, the US Dollar retreated after US inflation was announced at 2.7% year-on-year for November, down from 3% in October. this decline contradicted analyst expectations, which had predicted an increase to 3.1%. This suggests the Federal Reserve will feel more comfortable cutting US interest rates again in the coming months.

Influenced by the data release, the US dollar index, which measures the dollar’s performance against other major currencies, fell to 98.20. The euro rose against the dollar to a high of 1.1750, while the British pound also reached a high of 1.3440.

According to the official announcement, the core inflation rate of the US Consumer Price Index (CPI) fell to 2.6% from 3.0% in October, a level that was expected to remain unchanged last month. Economists are treating lower-than-expected inflation with some skepticism, which may explain the dollar’s recovery from some of its earlier losses. Fawad Razaqzadeh, an analyst at City Index, commented that there was some skepticism surrounding this particular inflation report, given the impact of the government shutdown on data collection. He added, “Therefore, it might be best for markets not to overreact to one month’s data and to wait for the December report, which is due in January.” However, markets are accepting today’s figures as they are, buying stocks and selling “safe havens” as investors grow more confident that the Federal Reserve will cut interest rates further.

Meanhwile, the Federal Reserve remains committed to a sustainable 2.0% inflation target while protecting the labor market. If the Fed believes inflation is under control, it will lower rates to support businesses and households. Typically, Expectations of lower rates lead to a weaker US Dollar.

Trading Advice:

Traders advise monitoring the EUR/USD’s rise toward the 1.18 resistance to consider potential sell positions, provided risk management is strictly applied.

Ready to trade our EUR/USD daily forecast? Here’s a list of some of the top forex brokers in Europe to check out.

The GBPJPY pair took advantage of the repeated positive pressures to confirm the continuation of the bullish scenario, surpassing the target at 209.85 on Friday forming 261%Fibonacc extension level, to open the way for recording big extra gains by hitting 211.05 level.

Noticing that stochastic reaches the overbought level, which allows it to settle within the minor bullish channel levels, depending on forming extra support at 209.80 level, to expect forming new gains by its rally towards 211.60 reaching the resistance of the bullish channel at 212.25.

The expected trading range for today is between 210.00 and 211.60.

Trend forecast: Bullish