Japan’s Services Sector in the Spotlight

On Tuesday, December 16, preliminary private sector PMI data will be in focus. The S&P Global Services PMI will be the focal point, given that services account for around 70% of the GDP. Economists forecast the S&P Global Services PMI to drop from 53.2 in November to 51.6 in December.

While slower services sector activity may signal a loss of economic momentum, holding above the 50 neutral level will be key. Furthermore, traders should focus on the employment and prices sub-components. A tighter labor market, higher wage growth (input prices), and hotter inflation (output prices) would signal a more hawkish BoJ rate path.

Will Trade Data Greenlight a December Rate Hike?

On Wednesday, December 17, Japanese trade data will provide insights into the effect of US tariffs on demand. Economists predict exports to rise 4.8% year-on-year (YoY) in November, up from 3.6% in October. Imports are expected to rise 2.5% YoY in November, up from 0.7% in October.

A sharp pickup in external demand and robust imports would support Governor Ueda’s view that US tariff risks have diminished. Given Japan’s trade-to-GDP ratio is roughly 45%, improving trade terms would boost the economy and demand for the yen.

For context, external demand fell 0.2% quarter-on-quarter in Q3, contributing to a 0.6% economic contraction. However, the US reduced tariffs on Japanese goods from 25% to 15% in Q3, boosting external demand early in Q4.

Japanese National Inflation in Focus Pre-BoJ Policy Decision

On Friday, December 19, national inflation figures will draw interest ahead of the BoJ’s monetary policy decision. Economists forecast the so-called core-core annual inflation rate to remain at 3.1% in November. Steady or rising core-core inflation would boost expectations of a more hawkish BoJ monetary policy outlook.

I wrote on the 7^th December that the best trades for the week would be:

1. Long of the S&P 500 Index following a daily close above 6,920. This did not set up.
2. Long of Silver with half the normal position size. This gave a win of 2.71%.

Overall, these trades gave a gain of 1.36% per asset.

A summary of last week’s most important data:

1. US Federal Funds Rate, Statement, and Projections – a rate cut of 0.25% was made, which was no surprise, although there was plenty of hidden dissent, making this widely perceived as a “hawkish cut”. However, this did not stop the US Dollar falling over the week.
2. Bank of Canada Overnight Rate and Rate Statement – as expected, the Bank kept its interest rate unchanged, and this had little effect on the Loonie.
3. Reserve Bank of Australia Cash Rate and Rate Statement – as expected, the Bank kept its interest rate unchanged, but signaled its discomfort with inflation, raising the prospect of rate hikes in 2026, which should give some tailwind to the Aussie going forward.
4. Swiss National Bank Monetary Policy Rate and Monetary Policy Assessment – the zero interest rate was kept unchanged as expected, despite the deflation that has been seen in recent months. This might boost the Swissie, which is already very strong, as the Bank does not want negative interest rates, so it has nowhere to go.
5. US JOLTS Job Openings – this was somewhat better than expected, which reduces the case for further rate cuts.
6. US Employment Cost Index – this was slightly lower than expected.
7. UK GDP – this unexpectedly showed a very small decrease, which is psychologically significant, as it would herald a technical recession if the decline persists over two quarters. This caused the Pound to weaken a bit.
8. US Unemployment Claims – this was roughly as expected.
9. Australian Unemployment Rate – this was slightly better than expected, at 4.3%, but won’t have any real effect on the interest rate outlook.

Last week’s data had a marginal impact, with the most important market outcome likely to be a continued strengthening of the Swiss Franc, which has been quietly gaining and gaining. This is a currency with a positive real rate of interest which is being allowed by its central bank to steadily strengthen. It is extremely attractive as a safe haven currency, with the Swiss National Bank’s machinations in 2015 mostly forgotten.

Most stock markets ended the week slightly lower. It was generally a week of little change in the financial markets, except precious metals, which look increasingly bullish.

The US Dollar had a bearish week, breaking down below key support and invalidating its former long-term bullish trend which had recently begun.

The coming week is the last full week of open markets before the Christmas holiday gets underway. This might mean a more active market than usual, because the week is full of important central bank policy meetings (including two widely expected rate cuts) and inflation data.

We are likely to see an increase in volatility this week.

This week’s most important data points, in order of likely importance, are:

1. US CPI (inflation) – expected to show a month-on-month increase of 0.3%.
2. US Average Hourly Earnings – expected to show a month-on-month increase of 0.3%.
3. US Non-Farm Employment Change
4. European Central Bank Policy Meeting
5. Bank of Japan Policy Meeting – a rate hike of 0.25% is expected.
6. US Retail Sales
7. Bank of England Policy Meeting – a rate cut of 0.25% is expected.
8. Canadian CPI (inflation) – expected to show a month-on-month increase of 0.1%.
9. UK CPI (inflation) – expected to show an annualised rate of 3.5%.
10. US / UK / Germany PMI Flash Services & Manufacturing
11. New Zealand GDP – expected to show fairly strong quarterly growth of 0.8%.
12. US Unemployment Rate
13. UK Retail Sales
14. UK Claimant Count Change

Currency Price Changes and Interest Rates

For the month of December 2025, I made no forecast.

Last week, I made no forecast, as there were no recent excessive moves in currency crosses.

The Euro was the strongest major currency last week, while the Japanese Yen was the weakest. Directional volatility fell again last week, with only 19% of all major pairs and crosses changing in value by more than 1%.

Next week’s volatility could be large as there will be three major central bank policy meetings plus key inflation data.

You can trade these forecasts in a real or demo Forex brokerage account.

Key Support and Resistance Levels

Last week, the US Dollar Index printed another bearish candlestick with only a minor lower wick. The price is still above its level of 13 weeks ago, but below its level of 26 weeks ago, so by my preferred metric, I declare the long-term bullish trend has failed. The price has also broken below a cluster of key support levels which had held for a long time, which I see as a very bearish sign for the greenback.

The Fed is cut its interest rate last week by 0.25% as was widely expected. However, the outlook for further rate cuts over the coming two years looks very slight. It is interesting that the market is shaking that off, which would normally put a bid into the Dollar, and continuing to sell it – that is a bearish sign.

I think being short of the US Dollar will be a generally good approach now, so over the coming week I will look for trades which fit that bias.

US Dollar Index Weekly Price Chart

The CHF/JPY currency cross weekly chart printed a powerful bullish candlestick that reached an all-time high price. This alone is a notably bullish sign but just look at the orderly ascending trend we have seen here since March this year, shown by the linear regression price channel study in the price chart below.

I usually ignore trends in currency crosses, but this is a powerful one. There are also good fundamental reasons why the Swiss Franc has been the strongest major currency over the long term, and the Japanese Yen has been the weakest.

The Swiss Franc has a zero interest rate but deflation, so the currency is naturally appreciating, while the Japanese Yen has been declining for a long time due to an ultra-loose monetary policy. However, that might change for the Yen soon, as the Bank of Japan is expected to hike rates this week, and might even begin a more aggressive and continuous round of hikes in 2026.

I will not be going long here myself, but it is something other trades might want to investigate and consider.

CHF/JPY Weekly Price Chart

The weekly price chart below shows that this major US stock index fell last week, after coming very close to breaking its record high just a few weeks ago. It closed at a record high closing price on Thursday, and then opened high on Friday and then fell sharply to print a bearish near pin-bar candlestick.

This is a bearish sign, which could well be dangerous to act upon. I am not advocating going short, but bulls should be worried, although it is clearly still a bull market.

I wrote a week or two ago that I was becoming more convinced that we have already seen a medium-term high in this stock market index, and this confirms my opinion. I think we are seeing a topping out which is likely to start some kind of retracement.

The Fed seems less and likely to make significant rate cuts in the foreseeable future, and there are strong and realistic concerns about an AI bubble and a general over-valuation of the stock market, so a bearish retracement cannot be a big surprise if it happens.

However, if we get a daily close with no significant upper wick on that day’s candle above the record high at 6,930, I will enter a new long trade.

S&P 500 Index Weekly Price Chart

A few weeks / months ago, Silver was in a strong bullish trend which saw the price increase by about 50% in only two months. The rise peaked in October and saw quite a strong retracement, which is usually a sign that the price is not going to make new highs soon. This bearish outlook was reinforced by what seemed to be a bearish double top formed just four weeks ago. However, the price has come up again and then made a very strong bullish breakout with an unusually large move.

We saw a further gain last week as the bullish momentum continued. Volatility is high and the moves can be messy but it’s a bullish breakout that continues to advance.

Another bullish factor is that all the major precious metals rose in value last week, although there is no doubt the Silver is leading the way.

Due to the high volatility and “second bite” breakout, as well as the significant upper wick on the weekly candlestick, I think a half-sized long position is best here, and only after we see a new record high daily close at or above $63.57.

Silver Weekly Price Chart

All precious metals have been rising as an asset class, partly fueled by Fed policies and the declining Dollar, partly due to safe haven inflow.

Silver has clearly been leading the way, but this past week has seen Gold start to catch up with a minor bullish breakout beyond the $4,270 area.

The record high above $4,300 is now in sight, but Gold formed a pin bar on Friday which puts some doubt into whether it will retest or even exceed its record high which it made in October.

I will keep a close eye on Gold and enter a new long trade if we get a daily close above the record high, at or above $4,355.80.

If this long trade sets up, as the progress upwards has been steadier and more orderly than what we have seen in Silver, you might keep a normal position size. I will prefer to use half my normal position size.

Gold Weekly Price Chart

I see the best trades this week as:

1. Long of the S&P 500 Index following a daily close above 6,920.
2. Long of Silver with half the normal position size following a daily close above $63.57.
3. Long of Gold with half the normal position size following a daily close above $4,355.80.

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• The GBP/USD weekly forecast remains elevated despite a pullback from the weekly highs above 1.3400.
• Fed rate cut, dismal jobless claims, and dovish tone lent fair support to the pound.
• Next week’s BoE rate decision and US CPI and NFP remain the key events to watch.

The GBP/USD price traded in a positive zone, briefly challenging the levels around 1.3400 as markets reacted to shifting monetary policy expectations and economic data. The British pound remains bid against the US dollar, despite softer UK economic data, mainly due to renewed expectations of rate cuts by the Fed in 2026.

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Sterling remained resilient as the markets broadly positioned rate differentials, favoring the GBP over a subdued USD. The GBP/USD marked multi-week highs near 1.3430 before correcting lower to 1.3360 by the end of the week. However, the pair stays underpinned amid the Fed-BoE rate differential.

The Fed rate cut and dovish signals to cut rates further into 2026 gave the pound a decisive push above key levels. Meanwhile, Thursday’s US Jobless Claims figures reflected an increase of 44k claims, adding more weight to the “labor market cooling” narrative. However, the UK GDP data on Friday surprisingly showed a contraction of 0.1%. The weak print intensified the odds of a BoE rate cut in the December meeting. However, the pound briefly dipped without sabotaging the uptrend.

Moving ahead to the next week, the GBP/USD will remain sensitive to the Bank of England’s interest rate decision, the MPC vote split, and its accompanying statement. The markets are pricing in a 90% probability of a 25 bps rate cut.

From the US, NFP and US inflation will be key events to watch, as strong US jobs or elevated inflation figures could boost the US dollar, weighing on the GBP/USD. Meanwhile, softer data could offset the BoE’s rate cut pressure on the pound.

Major Releases to Watch Next Week:

• UK PMIs
• BoE Interest Rate Decision & Monetary Policy Summary
• UK Average Earnings / Unemployment data
• US Nonfarm Payrolls and Unemployment Rate
• US Retail Sales and PMI data

GBP/USD Weekly Technical Forecast: Bullish Above 1.3350

The GBP/USD daily chart shows a strong uptrend, supported by the confluence of 100- and 200-day MAs around 1.3350. Meanwhile, the RSI remains near the 60.0 level, suggesting further room for an upside. However, a doji candle presents a mild selling pressure, attributed to profit-taking, which could resist further upside beyond the weekly highs of 1.3438. A clear breakout of this level could gather enough strength to test 1.3470.

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On the flip side, immediate support emerges at 100- and 200-day MAs near 1.3350 ahead of a demand zone near 1.3280, and then the 20- and 50-day MAs confluence near 1.3200.

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The GBPJPY pair didn’t move anything by forming sideways trading due to its stability continuously below the resistance at 208.80, forming an obstacle for resuming the bullish trend.

The price might form temporary corrective trading, but the stability within the bullish channel levels and the continuation of forming extra support at 206.90 level, these factors support the chances of renewing the bullish attack, to expect surpassing the current resistance by recording new gains that might extend 209.30 and 209.75.

The expected trading range for today is between 207.40 and 208.90

Trend forecast: Fluctuated within the bullish trend

– Written by


Tim Boyer

STORY LINK British Pound to Dollar Forecast: GBP/USD Holds 1.34 Despite UK Recession Fears

The British Pound to Dollar exchange rate (GBP/USD) eased to around 1.338 as markets digested a shock 0.1% contraction in UK GDP for October, marking a second straight monthly decline.

The data undercut recent Pound Sterling optimism and reinforced expectations of a BoE rate cut next week.

Sterling’s ability to stabilise now hinges on whether continued US Dollar weakness can offset deepening UK growth concerns.

GBP/USD Forecasts: 7-Week Best

The dollar lost ground following Wednesday’s Federal Reserve policy rate cut with the Pound to Dollar (GBP/USD) exchange rate jumping to 7-week highs just below 1.3400 before settling around 1.3360.

A sustained move above 1.3400 would boost market confidence in the Pound.

The Pound is likely to remain dependent on dollar weakness to make gains.

From a medium-term view, SocGen forecasts a GBP/USD retreat to 1.27 at the end of 2026 as the dollar rebounds.

The next domestic hurdle for the Pound will be Friday’s GDP data with consensus forecasts of 0.1% growth for October after a 0.1% decline the previous month. Stronger than expected data would help support the Pound.

The Fed met strong market expectations with a further 25 basis-point cut to 3.75%.

There was further evidence of a divided Fed with two members voting against the latest cut while Miran voted for a larger 50 basis-point cut.

As far as 2026 is concerned, the median projection is for one cut, but there were wide divisions with seven members backing no cut.

MUFG commented; “The soft dissents reinforce our view that it will become even harder to cut rates further at the start of next year.

Chair Powell noted that the bank would be data dependent and did not rule out a further move early in 2026.

Danske Bank commented; “Powell made it clear that the Fed is in no hurry to ease its policy further. At the same time, he also refrained from clearly pushing back against the market pricing, which currently sees slightly more than 50bp of additional cuts for the coming year.”

There will be a greater focus on the Bank of England ahead of next week’s policy decision.

There are strong expectations that there will be a 25 basis-point cut to 3.75% and, following the latest Federal Reserve cut, markets are pricing in a slightly more aggressive BoE stance next year.

According to ANZ; “As the inflation rate moderates, the policy rate needs to be cut to prevent the real rate from rising. The dynamics of a sluggish labour market and a disinflationary budget indicate that price pressures will cool over the coming months.”

It added; “However, both household and business inflation expectations remain elevated. It is, therefore, likely that the MPC eases the policy rate gradually to anchor inflation expectations at lower levels. Following the expected 25bp rate at next week’s meeting, we forecast three additional 25bp cuts in 2026.”

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TAGS: Pound Dollar Forecasts

Created on December 12, 2025

• USD/JPY fell sharply on Thursday before rebounding from the 155 level, which continues to act as a strong floor.
• With the Bank of Japan avoiding tightening and the Fed signaling uncertainty, the pair remains a buy-on-dips market amid choppy consolidation.

The US dollar has fallen pretty significantly against the Japanese yen during trading here on Thursday, but the 155 yen level has been like a floor, and we’ve bounced quite nicely. So to me, it looks like we’re at least trying to consolidate after all. There are a lot of questions out there about what’s going to happen next with the Federal Reserve, because we had suggested previously that there were going to be multiple interest rate cuts, but now the data-dependent phrase keeps getting kicked around.

Key Floors and Pullback Strategy

With that being said, and the fact that the Bank of Japan has no real intention of tightening up monetary policy if they can avoid it, that makes sense that we will eventually go higher. And even if we do break down from here, I see the 50-day EMA at the 153.88 level offer in support, followed by the 153 yen level.

All things being equal, you know, I’ve been pretty obvious about it that I’m a buyer here of this pair, and I like these pullbacks for a little bit of value. I look for short-term pullbacks that show signs of bounces like we have had on Thursday as a potential entry. I build on a position, I collect swaps at the end of the day, and my account grows as a result. If we were to break down below the 152.80 yen level, then it’s possible that the market could drop to the 200-day EMA.

That being said, I think we’re going to see a lot of choppy and volatile trading as we more likely than not probably try to stabilize. The question is, what’s the floor? Is it 155 yen or is it 153? We’ll know in a few days.

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.

• The EUR/USD forecast remains bullish, with a recent pullback triggered due to profit-taking.
• The Fed’s dovish path limits the euro’s losses, supporting a dip-buying trend in the EUR/USD.
• FedSpeak and next week’s US NFP could provide more clarity to the markets.

The EUR/USD marked a 10-week high near 1.1750 on Thursday before retreating mildly in today’s Asian session as the US dollar staged a rebound. The pullback came after two solid sessions for the pair, which followed the Fed rate cut and dismal US jobless claims data, reinforcing dollar weakness.

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The immediate correction suggests profit-taking and stabilization of the greenback, but the broader perspective remains euro-supportive, as the Fed is expected to continue easing next year.

The Federal Reserve delivered its third 25 bps rate cut of 2025 on Wednesday, lowering the benchmark range to 3.50% – 3.75%. Although the committee remained split, the statement tempered expectations of further easing. However, the market participants viewed Powell’s tone as less hawkish, acknowledging the downside risks in the labor market. This, combined with Thursday’s downbeat US jobless claims data with a rise of 44,000, reinforced the view that labor markets are cooling. The Fed’s dovish tilt seems justified, pushing the Dollar Index (DXY) towards a 7-week low near the 98.00 area.

Political noise is also keeping the dollar on the back foot, as renewed speculation about Fed independence has unsettled investors. The White House officials’ insistence on further rate cuts continues to weigh on the greenback. This has drawn the market’s attention to Kevin Hassett, widely seen as a potential new Fed Chair, who is considered rate-friendly. According to the CME FedWatch Tool, the markets are pricing in a 58% probability of two rate cuts by October 2026, well above the Fed’s dot plot.

From the Eurozone, the ECB is expected to hold in the December meeting, pointing to the potential end of the easing cycle. ECB President Lagarde and other policymakers have reiterated that the current situation seems reasonable and requires no further cuts in the near term. This ECB-Fed divergence continued to favor dip buying in EUR/USD.

EUR/USD Key Events Ahead

The near-term direction of the pair will depend on US data. Traders will keep an eye on comments from Fed Cleveland’s President Beth Hammack and Chicago’s President Goolsbee later today. However, the key catalyst will be the NFP data due next week.

EUR/USD Technical Forecast: Bulls in the Overbought Zone

The EUR/USD 4-hour chart displays two significant spikes, indicating intense buying pressure. Though the RSI is now in the overbought zone, the bias remains tilted to the upside. The key moving averages, stacking one above the other, also support the upside.

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The key resistance for the pair emerges at 1.1800, while the immediate support lies at 1.1700, ahead of 1.1650 and 1.1600. The prices could consolidate here and might correct lower to attract more buying.

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With the markets betting on a December BoJ rate hike, USD/JPY volatility could intensify on US economic data and Fed rhetoric. On the one hand, markets are speculating on how far the BoJ needs to go to reach normalization. On the other hand, incoming US data will fill the US government shutdown-induced data void, which may materially alter the Fed’s rate path.

Fed Speakers to Spotlight the Greenback

Later on Friday, traders should closely monitor FOMC members’ speeches as the dust settles from Wednesday’s monetary policy decision. FOMC members Beth Hammack and Austan Goolsbee are due to speak. Notably, Cleveland Fed President Hammack will become a voting member in 2026, while Chicago Fed President Goolsbee will be an alternative after being a voting member in 2025.

Cleveland Fed President Hammack’s views on inflation, the labor market, and the timeline for a rate cut will influence US dollar demand. The FOMC’s Dot Plot signaled a single rate cut in 2026. Growing calls for a Q1 2026 rate cut would signal a more dovish Fed rate path. A more dovish Fed policy stance would support a bearish short- to medium-term USD/JPY outlook.

For context, the CME FedWatch Tool gives a 24.4% chance of a January 2026 Fed rate cut, while the probability of a March 2026 cut rose from 42.2% to 49.6% on Thursday, December 11. Traders should closely monitor sentiment toward a Q1 2026 Fed rate cut, which are likely to influence USD/JPY trends.

Technical Outlook: USD/JPY on a Downward Trajectory

With markets focused on rate differentials, technical indicators, and fundamentals will give crucial insights 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), signaling a bullish bias. While technicals remain bullish, fundamentals are increasingly outweighing the technical structure.

A drop below the 155 support level would open the door to testing the 50-day EMA. If breached, 153 would be the next key support. A sustained break below the 50-day EMA would signal a bearish near-term trend reversal. A near-term bearish trend reversal would expose the 200-day EMA and 150.