The EURJPY pair remains affected by the dominance of the sideways bias, due to the contradiction between the main indicators, keeping their stability within the sideways track that is represented by 179.40 support, while 181.75 keeps forming strong barrier against bullish attempts.

The main stability within the bullish channel’s levels makes us wait to gather bullish momentum, motivating the bullish attempts by its rally towards 181.35, to attempt to breach the barrier to begin recording new gains by reaching 182.35 and 183.10.

The expected trading range for today is between 180.20 and 181.70

Trend forecast: Fluctuating

– Written by


Tim Boyer

STORY LINK Pound-to-Dollar Forecast: Will GBP/USD Rally on FED This Week?

The Pound to Dollar exchange rate (GBP/USD) stalled above 1.3350 after a strong run, with both the Fed and BoE poised to cut rates this month.

Long-term forecasts diverge sharply, with some banks expecting gains toward 1.45 while others see a slide back to 1.30 by 2026.

Direction now hinges on how aggressively the Fed eases next year and whether a new Chair injects political risk into US policy.

GBP/USD Forecasts: Rate cuts imminent

Credit Agricole forecasts that GBP/USD will retreat to 1.30 by the end of 2026, although it does see gains to 1.40 by the end of the following year.

In contrast, Bank of America forecasts that GBP/USD will strengthen to 1.45 at the end of 2026.

According to Bank of America; In reality, markets have been reluctant to price in good news, preferring to trade bearish GBP news into the budget.

GBP/USD posted net gains to 5-week highs above 1.3350 before stalling.

Federal Reserve policy will be a key element for currency markets. Traders are pricing around 86% odds of Fed cut this week, and potentially 2-3 more reductions next year.

There will also be a new Fed Chair from May which could trigger a notable shift in direction.

There has been increased speculation that President Trump will nominate Director of the National Economic Council Kevin Hassett to be the next Chair.

Such an appointment would increase concerns over increased political influence.

ING also noted potential risks to the US currency; “We are mildly bearish on the dollar into 2026 as the Fed brings the policy rate down to neutral. We see risks skewed to the dollar’s downside should a more politically minded Fed take US real rates a lot lower or even be dragged into a scheme to target longer-dated Treasury yields.”

Danske Bank has adjusted its forecast; “We expect the Fed to cut rates by 25bp in December, March and June (prev. January, April and July), and then maintain the terminal rate of 3.00-3.25% through the rest of 2026 and 2027.”

It noted a high degree of uncertainty; “Sudden slowdown in private consumption could tilt the Fed towards resuming more aggressive rate cuts, but the persistent fiscal easing could also force the Fed to maintain rates at a structurally higher level than we assume.”

Credit Agricole, however, expects no cuts in 2026; “Policy uncertainty to fade and dovish Fed market expectations to be put to the test by a resilient US economy and sticky inflation that would further render any fiscal dominance attempts costlier for the Trump administration ahead of the all-important US mid-term elections.”

There are also strong expectations that the Bank of England will cut rates in December while 2026 policy decisions will be a key element.

Barclays commented; “The BoE is expected to slow the pace of policy easing in 2026, this is contingent on inflation remaining contained and the labour market staying stable”

The bank did add; “some slack is starting to appear in the labour market. Should the unemployment rate surpass 5%, the central bank may ease more aggressively in a bid to support real disposable income and consumption.”

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While expectations of a BoJ rate hike are strengthening yen demand, key US data will fuel speculation about multiple Fed rate cuts.

US Inflation in Focus as the Fed Decision Looms

Later on Monday, US economic data will influence USD/JPY trends as the FOMC interest rate decision and projections loom. Economists expect Consumer Inflation Expectations to soften from 3.2% in October to 3.1% in November.

A drop in the NY Fed 1-Year Consumer Inflation Expectations would align with last week’s inflation data, supporting bets on a Fed rate cut. A more dovish Fed rate path would weaken demand for the US dollar, sending USD/JPY lower, aligning with my bearish short- to medium-term outlook.

For context, the US Core PCE Price Index rose 2.8% YoY in September, down from 2.9%, while Michigan Inflation Expectations fell from 4.5% in November to 4.1% in December.

The prospect of a December Fed rate cut, further easing in H1 2026, and BoJ rate hikes are key for USD/JPY trends.

According to the CME FedWatch Tool, the probability of a December cut stood at 88.4% on December 8, up from 86.2% on December 5. Meanwhile, the chances of a March rate cut slipped from 46.5% to 46.1%.

With markets already pricing in a December cut, traders should closely monitor the chances of a March cut.

While key US inflation data will influence US dollar demand, there are no FOMC member speeches to overshadow the reports. The Fed’s Blackout Period is in effect until December 11, limiting Fed-driven volatility.

Technical Outlook: USD/JPY on a Downward Trajectory

Looking at the daily chart, USD/JPY remained above the 50-day and 200-day Exponential Moving Averages (EMAs), indicating a bullish bias. However, fundamentals have begun to shift from the technical trend, supporting a bearish outlook.

A drop below the 155 support level would pave the way toward the 50-day EMA. If breached, the 153 support level would be the next key support. Significantly, a break below the 50-day EMA would signal a bearish trend reversal, signaling a near-term drop toward 150.

In today’s Weekly Forex Forecast, I’m breaking down my exact trade plan for the DXY, EURUSD, GBPUSD, and XAUUSD.

Can the euro confirm last week’s bullish change of character on the 4-hour chart?

I explain that and more in today’s video.

US Dollar Index (DXY) Forecast

The DXY did what I was anticipating last week as the market rotated lower from the upper band of its distribution channel. It was a clean reaction using the same combination of channels and SMC structure concepts I always look for.

The key for next week is the 4-hour structure. The only low that matters for market structure is 98.60. That is the level that produced the last confirmed bullish break of structure (BoS).

We also have the September FVG sitting there, still unmitigated. I want to see price tag that level next week.

If buyers defend 98.60, the bullish structure remains intact, but only if the DXY then closes above 99.12. If we close below 98.60, that would shift momentum and give us a confirmed bearish Change of Character (CHoCH).

The focus next week is simple. DXY bulls must hold above 98.60 to keep the bullish narrative alive. A sustained break below on the high time frames would confirm a bearish CHoCH.

EURUSD Forecast

EURUSD is showing early signs of strength after confirming a CHoCH on the 4-hour chart. That happened when price broke above the 1.16668 high.

The level buyers need to defend is 1.1590. That is the low that produced the last valid break of structure.

As long as EURUSD stays above that low, the pair has room to continue higher.

But EURUSD still depends heavily on the DXY. Before I turn bullish on the euro, I need to see the dollar index below 98.60. Until then, I’ll take last week’s EURUSD bullish CHoCH with a grain of salt.

Admittedly, last week was a bit frustrating because the EURUSD came within a few pips of sweeping the equal lows I wanted. Still, we got the EURUSD rally, which was my base case last weekend.

The bigger picture remains bullish as long as 1.1590 holds. A confirmed break below that low would invalidate the CHoCH.

GBPUSD Forecast

GBPUSD hit the September FVG last week that I had my eye on. That level came from a clean three candle pattern on the monthly.

The pound came close to my ideal entry zone but didn’t quite reach it. I wanted a deeper move into the pocket that showed more confluence.

Even without that, the market reacted and pushed higher, so the short-term structure remains bullish.

The bigger question is whether this is the bottom for GBPUSD or simply a relief rally within the downtrend. Some recent highs only produced wicks and not closes.

That makes it difficult to confirm a true CHoCH on higher timeframes. The DXY holding above 98.60 adds to the uncertainty.

Several inefficiencies beneath GBPUSD still need to be filled, specifically near 1.3270. If the dollar bounces from 98.60, the pound could struggle.

For now, GBPUSD is bullish in the short term. The reaction from any pullback next week will tell us whether buyers remain in control.

XAUUSD (Gold) Forecast

Gold moved sideways last week, but the structure is unchanged. The 4-hour trend remains bullish, with a recent break of structure, confirming higher highs and lows.

I am watching a key pocket below current levels next week. It includes a weekly bullish FVG, a daily FVG, and a sell-side single print.

That entire area remains unmitigated. It would be a clean place for a pullback.

Last week I wanted to see gold trade into that pocket and print a lower timeframe bullish CHoCH. Instead, the market stalled and traded sideways.

The same setup is valid going into next week. As long as gold stays above the key lows just above $4,000, buyers remain in control.

The trend line below also supports the idea of continuation. I would never use a trend line on its own, but it does intersect with the $4,130 support area.

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– GBP/EUR seen closer to 1.19 in 2026
– JPY faces notable structural headwinds
– USD to see a gradual decline

Image © Bank of England

Bank of America Global Research swims against the consensus and backs the pound.

The consensus prediction amongst investment bank analysts is that 2026 will be characterised by further underperformance of pound sterling.

“We’re happy to take the other side of that,” says Adarsh Sinha, FX and Rates Strategist at Bank of America, in a media briefing Thursday, in which he introduced his team’s key themes and forecasts for the coming year.

He opined that consensus year-ahead views tend to get burned out pretty early in any given year. Given this, ideas previously seen as contrarian can be adopted quickly as traders look for a new anchor.

The pound is down 5% against the euro this year, and the consensus is extrapolating that trend into another year.

To be sure, BofA is also bullish on the euro’s prospects, but the single currency won’t outperform a pound that can shake off recent worries over the UK’s budget.

A sizeable premium was demanded of sterling heading into the November budget, with investors concerned the government would announce policies that would upset the bond markets.

Image is courtesy of Bank of America Global Research.

GBP/EUR Year-End 2025

Built from leading bank forecasts.

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Now, with the budget having passed without drama, the pound is at a fork in the road: does that risk premium dissipate or does it become entrenched?

Bank of America thinks the former is the most likely: that premium can continue to lift, and the pound will recover as a result.

“This Budget has the buy-in from the OBR (who prepare macro forecasts for the Government) and the Chancellor has reinforced the commitment to keep the Fiscal Rule and raise the Fiscal Headroom. These are important anchors which should lead to a relief rally in GBP as the release valve of event risk has passed,” reads Bank of America’s year-ahead outlook.

BofA forecasts EUR/GBP at 0.84 by year-end, which gives a pound to euro conversion of 1.19.

Following on from the dollar’s largest annual decline since 2017, more weakness is in store next year, which makes for a GBP/USD year-end forecast of 1.45.

Of the Dollar, BofA says:

“We expect this trend to continue into 2026, albeit at a more moderate pace. Heading into next year, many of the same themes/conflicts in markets remain unresolved.”

Speaking to the media alongside Sinha was FX strategist Alex Cohen, who said a potential risk for the greenback is a building risk premium surrounding the role of the Federal Reserve and its independence.

“The administration is clearly discussing affordability,” Cohen said, adding that it’s looking at addressing the issue “through the lens of lower rates.”

Above: File image of Kevin Hassett. He’s a Trump ally, heavily favoured to replace Jerome Powell as Fed Chair. Copyright: U.S. Government Work.

Lower real rates, thanks to Fed rate reductions, and potential concerns over Fed functionality under a new Chair tied to White House policy, would pose headwinds to the dollar.

Another anti-consensus view adopted by BofA concerns the yen.

Yen upside is a strong consensus view for next year, largely on account of the Bank of Japan raising interest rates. However, BofA thinks the structural headwinds are too significant and they’re also happy to swim against the flow here.

“Japan is seeing structural outflows… Japan has been a cash-rich society for many years,” Sinha told journalists. “Inflation is no longer zero, and when inflation is no longer zero that’s a problem.”

Households and corporates are diversifying as cash is put to work, and most of that diversification is ex-Japan.

“As long as that continues, the yen will remain structurally weak,” says Sinha.

USD/JPY is forecast to end the year at 155.

The EURJPY pair provided a new negative close below 181.70 barrier, to confirm delaying the bullish rally, activating with stochastic negativity by forming corrective waves and its stability near 180.10.

This corrective decline will not threaten the main bullish scenario, depending on the continuation of forming current support at 179.40 level, therefore, we will keep waiting for gathering bullish momentum to help it to form new bullish waves, to renew the pressure on the barrier and find an exit for achieving new gains in the upcoming period.

The expected trading range for today is between 179.65 and 181.70

Trend forecast: Bullish

The Pound Sterling (GBP) recovery gathered steam against the US Dollar (USD), driving GBP/USD to fresh five-week highs above the 1.3350 level.

Pound Sterling cheered renewed USD weakness

GBP/USD witnessed the extension of the UK Budget-inspired relief rally amid a sustained bearish sentiment around the US Dollar, which bolstered its recovery momentum.

Last week, British Chancellor of the Exchequer Rachel Reeves announced a tax hike amounting to an annual £26 billion to fund the fiscal hole. The UK’s Office for Budget Responsibility (OBR) raised the country’s GDP forecast for 2025 to 1.5% from the previous forecast of 1%.

Pound Sterling, however, capitalized on the absence of any major tax burden on households, as the Labour Party stuck to its self-imposed rule of avoiding fresh borrowings for day-to-day spending, as explained by FXStreet’s Analyst Sagar Dua.

Across the Atlantic, the USD faced headwinds from persistent dovish expectations for the US Federal Reserve’s (Fed) December monetary policy meeting and beyond.

A flurry of unimpressive US data releases kept the bets for a 25 basis points (bps) December Fed rate cut elevated around 90%, according to the CME Group’s FedWatch Tool.

Earlier in the week, the Institute for Supply Management (ISM) Services PMI showed little improvement in November at 52.6 versus 52.4 in October, while the Automatic Data Processing (ADP) said that US private payrolls unexpectedly declined by 32K in November, following a revised 47K increase. Analysts estimated a job gain of 5K.

Data on Thursday showed that the Initial Claims for state unemployment benefits fell 27,000 to a seasonally adjusted 191,000 for the week ended November 29, the lowest level since September 2022.

However, data published by Challenger, Gray & Christmas showed that employers reported 71,321 job cuts in November, its highest level for that month since 2022. Mixed US economic data did little to alter markets’ expectations of a Fed rate cut this month.

Further weighing on the USD were US President Trump’s repeated comments that he has “already decided” who will replace Fed Chairman Jerome Powell in May 2026. 

Following his recent references and media reports, markets considered White House Economic Adviser Kevin Hassett as Trump’s top pick for the next Fed Chair.

Hassett has endorsed Trump’s calls for lower rates on several occasions as the head of the National Economic Council (NEC).

Heading toward the weekend, the pair held its bullish streak after the delayed September US annual core Personal Consumption Expenditures (PCE) Price Index rose 2.8%, against the expected increase of 2.9% in the same period. 

Meanwhile,  the University of Michigan (UoM) preliminary Consumer Sentiment climbed to 53.3 in December, compared to November’s 51 and 52 forecast. The one-year Consumer Inflation Expectations declined to 4.1% in December after reporting 4.5% in November.

Focus on Fed policy announcements and UK GDP

It’s a relatively busy week, in terms of economic events, with the Fed policy announcements on Wednesday likely to stand out.

A 25 bps rate cut by the Fed is almost certain, and hence, all eyes will be on the US central bank’s Summary of Economic Projections (SEP), the so-called Dot Plot chart, for fresh insights on the interest rate path for 2026.

Fed Chairman Jerome Powell’s words at the post-policy meeting press conference will also hold weight, having a significant impact on the USD and the GBP/USD pair.

Ahead of the Fed event risk, Tuesday’s US JOLTS Job Openings and the ADP Weekly Employment Change data will be eagerly awaited.

Later in the week, the monthly Gross Domestic Product (GDP) from the United Kingdom (UK), due on Friday, could offer some incentives to Pound Sterling traders.

Apart from the data releases, markets will closely scrutinize speeches from BoE and Fed policymakers and any developments on the US-Russia discussions on the potential Ukraine peace deal.

GBP/USD Technical Analysis

In the daily chart, the 21-day Simple Moving Average (SMA) has turned higher and price holds above it, with the pair also above the 50-day SMA but still beneath the declining 100-day SMA. The rising 200-day SMA sits just below price, hinting at a gradual improvement in the medium-term tone, while the 100-day SMA at 1.3368 caps the topside. The Relative Strength Index (RSI) is at 62, supportive without entering overbought territory.

Short-term posture improves as the 21-day SMA rises beneath price, while the 50-day SMA continues to drift lower, underscoring an ongoing transition. Risk stays skewed higher while above the rising 200-day SMA, with support concentrated between 1.3329–1.3267. A daily close north of moving-average resistance would add traction to the recovery, whereas a break back into that support band would stall momentum.

(The technical analysis of this story was written with the help of an AI tool)