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Sterling continues to underperform today, though losses remain contained. The lack of aggressive selling suggests markets are already well positioned for near-term policy easing and are now grappling with uncertainty further along the curve rather than reacting to fresh surprises.

This week’s string of weaker UK employment data has erased any remaining doubt over a BoE rate cut tomorrow. The decision has become a formality, shifting attention to guidance and the sequencing of subsequent moves.

There is no consensus on what follows. Some analysts caution that November’s softer inflation reading was influenced by temporary discounting effects tied to early Black Friday promotions. If so, inflation could firm again in coming months.

Still, even a cut in February or March would not represent a shift in policy tempo. The BoE has clearly signaled a preference for a measured approach, and with inflation still far above target, there is little scope for a faster pace than one cut per quarter.

From a trading standpoint, the exact timing of the next cut is unlikely to be a major market driver. February may be marginally favored due to the release of new forecasts, but the broader message of gradual easing remains intact regardless.

The larger uncertainty lies in the terminal rate. How far policy ultimately moves into neutral territory is still an open question, and one that markets are in no position to answer with confidence given lingering inflation risks.

In FX markets today, Sterling is still the weakest performer, followed by Yen and Loonie. Dollar leads the pack, with Swiss Franc and Kiwi also firmer. Euro and Aussie sit in the middle.

Oil prices, meanwhile, are staging a notable rebound after hitting multi-year lows earlier this week. The move follows US President Donald Trump’s decision to label Venezuela’s government a terrorist organization and impose a full blockade on sanctioned oil tankers. That move injects fresh supply risk, while optimism around a Ukraine–Russia peace deal has yet to deliver concrete follow-through.

In Europe, at the time of writing, FTSE is up 1.49%. DAX is down -0.06%. CAC is down -0.27%. UK 10-year yield is down -0.056 at 4.467. Germany 10-year yield is up 0.013 at 2.859. Earlier in Asia, Nikkei rose 0.26%. Hong Kong HSI rose 0.92%. China Shanghai SSE rose 1.19%. Singapore Strait Times fell -0.09%. Japan 10-year JGB yield rose 0.029 to 1.985.

Silver outpaces sluggish Gold, pushes towards 70 as record run extends

Silver’s uptrend extended again today, pushing to fresh record highs above the 66 mark and reinforcing its status as the standout precious metal. Momentum remains firmly on the upside, with prospects growing for a move toward 70 psychological level and potentially beyond. By contrast, Gold continues to struggle near its recent highs, with momentum turning sluggish and risks skewed toward a near-term bearish extension of its medium-term corrective pattern.

One key advantage for Silver lies in its structural fundamentals. As of late 2025, the Silver market is in its fifth consecutive year of supply deficit, with mine production and recycling consistently falling short of global demand from both industry and investors. This persistent imbalance has tightened the market in a way gold has not experienced.

Silver has also benefited from a policy-driven tailwind. In November, the US officially added Silver to its Critical Minerals List for the first time, reflecting its essential role in modern technology and national security. Demand from solar energy, electric vehicles, defense, and high-tech manufacturing continues to accelerate, while supply growth remains constrained.

The US currently imports more than 70% of its Silver needs, highlighting a growing vulnerability as global demand outpaces mine supply. That backdrop strengthens the case for sustained investment demand and reinforces Silver’s appeal relative to Gold.

Technically, Silver has already met 100% projection of 36.93 to 54.44 from 48.60 at 66.11 and there is no clear sign of topping yet. Near term outlook will stay bullish as long as 62.13 support holds. The focus is on whether the next up leg of pull 4H MACD above its falling trend line to confirm revival of upside momentum. Sustained trading above 66.11 will pave the way 70 psychological level or even further to to 138.2% projection at 72.98.

Meanwhile, Gold's momentum as turned sluggish ahead of 4381.22 high. Break of 4257.10 support will turn bias to the downside for deeper pullback. Further break of the near term rising channel will argue that corrective pattern from 4381.22 has already started the third leg down. Nevertheless, decisive break of 4381.22 will confirm long term up trend resumption.

Eurozone CPI finalized at 2.1% in November, services remain main inflation driver

Eurozone inflation was finalized unchanged in November, confirming a stable price environment heading into year-end. Headline CPI held at 2.1% yoy, the same as in October. Core CPI excluding energy, food, alcohol, and tobacco was also unchanged at 2.4%.

Services continued to dominate inflation dynamics, contributing 1.58 percentage points to the annual rate. Food, alcohol, and tobacco added 0.46 pp, while non-energy industrial goods contributed a modest 0.14 pp. Energy prices continued to exert a slight drag, subtracting -0.04 pp from the headline rate.

Across the wider EU, CPI was finalized at 2.4% yoy. Inflation was lowest in Cyprus (0.1%), France (0.8%), and Italy (1.1), while Romania (8.6%), Estonia (4.7%), and Croatia (4.3%) recorded the highest rates. Compared with October, inflation eased in twelve member states, was unchanged in five, and rose in ten.

German Ifo sentiment falls to 87.7, ends year on downbeat note

Germany’s Ifo survey delivered weaker-than-expected readings in December, confirming that business confidence remains under strain. The headline Business Climate index fell to 87.7 from 88.0, missing forecasts of 88.5. Current Assessment remained unchanged at a subdued 85.6. Expectations also softened to 89.7, pointing to a more cautious outlook.

Sector-level details showed little relief. Manufacturing confidence deteriorated further from -13.8 to -14.8. Services sentiment turned negative again fro 0.6 to -2.1. Trade conditions weakened from -22.6 to -24.6. Construction remained stuck at deeply negative levels of -15.2.

According to Ifo, the year is ending "without any sense of optimism". The combination of weak current conditions and declining expectations suggests Germany is struggling to build momentum heading into the new year.

UK CPI undershoots at 3.2% as disinflation broadens in November

UK inflation eased more than expected in November, reinforcing signs that price pressures are moderating. Headline CPI slowed from 3.6% yoy to 3.2%, undershooting expectations of 3.5% and marking a second consecutive monthly decline. On a month-on-month basis, CPI fell -0.2% mom, adding to the disinflationary signal.

Underlying inflation also cooled. Core CPI (excluding energy, food, alcohol and tobacco) slowed from 3.4% yoy to 3.2%, below forecasts of 3.4%, suggesting easing price pressures beyond volatile components.

The moderation was driven mainly by goods, where inflation eased from 2.6% yoy to 2.1% Services inflation edged slightly lower from 4.5% to 4.4%.

Japan posts first trade surplus in five months, US-bound shipments rebound

Japan’s trade data for November delivered a positive surprise, with exports rising 6.1% yoy to JPY 9.72 trillion, beating expectations of 4.8% yoy, and marking the third consecutive month of growth. The strength helped Japan record a JPY 322.2 billion trade surplus, the first in five months.

Exports to the US were a key driver, climbing 8.8% yoy. Auto shipments to the US rose 1.5%, marking the first increase since March and suggesting the drag from higher US tariffs is beginning to ease.

By contrast, exports to mainland China fell -2.4% yoy, weighed down by a sharp -5.9% decline in foodstuff shipments. That weakness came against a backdrop of renewed political tension, after Prime Minister Sanae Takaichi warned that a Chinese attempt to seize Taiwan could prompt Japanese military intervention, followed by Beijing restricting imports of Japanese seafood. Offsetting some of that drag, exports to Hong Kong surged 11.4%.

On the import side, growth was more subdued. Imports rose just 1.3% yoy to JPY 9.39 trillion, undershooting expectations of 2.5%.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3366; (P) 1.3411; (R1) 1.3467; More...

GBP/USD is staying in consolidations below 1.3455 and intraday bias remains neutral. On the upside, above 1.3455 will resume the rebound from 1.3008. Firm break of 1.3470 resistance will pave the way to retest 1.3787 high. However, sustained break of 55 D EMA (now at 1.3293) will argue that the rebound has completed. Deeper fall would be seen back to 1.3008 support to resume the whole corrective pattern from 1.3787 high.

In the bigger picture, current development suggests that fall from 1.3787 is merely a corrective move, and larger rise from 1.0351 (2022 low) is still in progress. Firm break of 1.3787 will target 1.4248 (2021 high) key structural resistance. This will remain the favored case as long as target 38.2% retracement of 1.0351 to 1.3787 at 1.2474 holds, in case of another fall.

Silver advanced over 4% and hit new record high ($66.51) on Wednesday, as demand for precious metals gained impetus after US data pointed to further softening in the US labor market that revived expectations for more dovish Fed’s stance on monetary policy.

Fresh gains broke through two round-figure barriers ($65 and $66) and signaled continuation of larger after a three-day consolidation.

Bulls eye targets at $67.23 and $69.36 (Fibo projections 238.2% & 261.8% respectively) with psychological $70 barrier coming in focus.

Meanwhile, overbought daily studies suggest that bulls may take a breather for consolidation / limited correction and position for fresh push higher as all key drivers (geopolitical / monetary policy / industrial demand) remain firmly in play

Dips should be ideally contained at $64.50/00 zone to keep bullish structure intact.

Res: 66.00; 66.51; 67.23; 68.00.
Sup: 64.64; 64.30; 64.00; 63.75.

Silver’s uptrend extended again today, pushing to fresh record highs above the 66 mark and reinforcing its status as the standout precious metal. Momentum remains firmly on the upside, with prospects growing for a move toward 70 psychological level and potentially beyond. By contrast, Gold continues to struggle near its recent highs, with momentum turning sluggish and risks skewed toward a near-term bearish extension of its medium-term corrective pattern.

One key advantage for Silver lies in its structural fundamentals. As of late 2025, the Silver market is in its fifth consecutive year of supply deficit, with mine production and recycling consistently falling short of global demand from both industry and investors. This persistent imbalance has tightened the market in a way gold has not experienced.

Silver has also benefited from a policy-driven tailwind. In November, the US officially added Silver to its Critical Minerals List for the first time, reflecting its essential role in modern technology and national security. Demand from solar energy, electric vehicles, defense, and high-tech manufacturing continues to accelerate, while supply growth remains constrained.

The US currently imports more than 70% of its Silver needs, highlighting a growing vulnerability as global demand outpaces mine supply. That backdrop strengthens the case for sustained investment demand and reinforces Silver’s appeal relative to Gold.

Technically, Silver has already met 100% projection of 36.93 to 54.44 from 48.60 at 66.11 and there is no clear sign of topping yet. Near term outlook will stay bullish as long as 62.13 support holds. The focus is on whether the next up leg of pull 4H MACD above its falling trend line to confirm revival of upside momentum. Sustained trading above 66.11 will pave the way 70 psychological level or even further to to 138.2% projection at 72.98.

Meanwhile, Gold's momentum as turned sluggish ahead of 4381.22 high. Break of 4257.10 support will turn bias to the downside for deeper pullback. Further break of the near term rising channel will argue that corrective pattern from 4381.22 has already started the third leg down. Nevertheless, decisive break of 4381.22 will confirm long term up trend resumption.

Eurozone inflation was finalized unchanged in November, confirming a stable price environment heading into year-end. Headline CPI held at 2.1% yoy, the same as in October. Core CPI excluding energy, food, alcohol, and tobacco was also unchanged at 2.4%.

Services continued to dominate inflation dynamics, contributing 1.58 percentage points to the annual rate. Food, alcohol, and tobacco added 0.46 pp, while non-energy industrial goods contributed a modest 0.14 pp. Energy prices continued to exert a slight drag, subtracting -0.04 pp from the headline rate.

Across the wider EU, CPI was finalized at 2.4% yoy. Inflation was lowest in Cyprus (0.1%), France (0.8%), and Italy (1.1), while Romania (8.6%), Estonia (4.7%), and Croatia (4.3%) recorded the highest rates. Compared with October, inflation eased in twelve member states, was unchanged in five, and rose in ten.

Full Eurozone CPI final release here.

Germany’s Ifo survey delivered weaker-than-expected readings in December, confirming that business confidence remains under strain. The headline Business Climate index fell to 87.7 from 88.0, missing forecasts of 88.5. Current Assessment remained unchanged at a subdued 85.6. Expectations also softened to 89.7, pointing to a more cautious outlook.

Sector-level details showed little relief. Manufacturing confidence deteriorated further from -13.8 to -14.8. Services sentiment turned negative again fro 0.6 to -2.1. Trade conditions weakened from -22.6 to -24.6. Construction remained stuck at deeply negative levels of -15.2.

According to Ifo, the year is ending "without any sense of optimism". The combination of weak current conditions and declining expectations suggests Germany is struggling to build momentum heading into the new year.

Full German Ifo release here.

Key elements

BoJ hike is fully priced, normalization to continue: Markets assign a ~94% probability to a 25bp BoJ hike to 0.75%, backed by firm wage growth, improving consumer confidence, and strong Tankan sentiment—pointing to further gradual tightening into 2026.

Policy divergence favours JPY structurally: A December hike would underscore the BoJ as the lone major central bank tightening while the Fed eases, reinforcing medium-term appreciation bias for the yen.

USD/JPY near-term bias turns bearish: Technicals signal fading upside momentum; below 156.10, risks skew toward a pullback toward 154.40 and lower, with rallies vulnerable unless resistance is decisively cleared.

The short-term overnight interest rate swap market in Japan has already priced in a high chance of 94% chance that the Bank of Japan (BoJ) will hike for the second time this year (within its current gradual normalization monetary policy stance) by 25 basis points this Friday, 19 December to bring the overnight policy rate to 0.75%, the highest level in 30 years.

A move on Friday would cement the BOJ’s status as the only major central bank raising rates this year. It would also mark the first instance since the BOJ adopted its two-day meeting format in 1998 that it and the Federal Reserve move policy rates in opposite directions within the same month.

Rising wages, consumer confidence, and Tankan business sentiment

Fig. 1: Key Japan economic data that BoJ watches as of 15 Dec 2025 (Source: MacroMicro)

Fig. 2: Japan overnight indexed swap rates as of 16 Dec 2025 (Source: MacroMicro)

On top of BoJ Governor Ueda’s recent hawkish remarks on the justification to maintain the BoJ’s stance of gradual interest rate rises, several key economic data points other than the core-core CPI trend (excluding fresh food and energy) that the BoJ monitors have flashed out “all clear” signs to enact another rate hike after an 11-month pause since January’s hike.

The latest Q4 Tankan business sentiment survey for large manufacturing companies operating in Japan has risen to almost a 3-year high at 15.0. The mood of Japanese consumers has also improved since April 2025, when consumer sentiment rose to a 19-month high of 37.50 in November 2025 (see Fig. 1).

In addition, the latest BoJ’s report on wages published on Monday, 15 December 2025, has indicated that a firm wage growth momentum is likely to continue into the new fiscal year of 2026 at the same average growth rate of 5.25% in fiscal year 2025 as secured by Rengo, the largest trade union confederation in Japan.

Hence, the BoJ is likely to continue its gradual interest rate hike cycle into 2026, as priced in by the interest rate swap market. The 1-year overnight-indexed swap rate has increased to 0.84% as of 16 December 2025 (see Fig. 2).

Let’s now uncover the potential short-term directional movement of the USD/JPY from a technical analysis perspective.

Preferred trend bias (1-3 days) of USD/JPY – Bearish below 156.10

Fig. 3: USD/JPY minor trend as of 17 Dec 2025 (Source: TradingView)

Fig. 4: USD/JPY medium-term & major trends as of 17 Dec 2025 (Source: TradingView)

The USD/JPY has continued to oscillate within a minor descending channel that has been in place since reaching a 10-month high of 157.90 on 20 November 2025.

Bearish bias below 156.10 key short-term pivotal resistance, and a break below 154.40 near-term support resumes the minor bearish impulsive down move sequence to expose the next intermediate supports at 153.70 and 152.95 (see Fig. 3).

Key elements

• The daily MACD trend indicator of the USD/JPY has staged a bearish breakdown below a key ascending support on 4 December 2025 and is trending downwards steadily towards its centre line (see Fig. 4).
• These observations from the daily MACD trend indicator suggest the multi-month up move of the USD/JPY from April 2025 low to November 2025 high is at a rising risk of a trend change towards a bearish bias (see Fig. 4).
• The hourly RSI on USD/JPY is rapidly approaching overbought territory (above 70), signalling that the rebound seen during the Asia session on Wednesday, 17 December 2025, is likely to lose bullish momentum in the near term (see Fig. 3).

Alternative trend bias (1 to 3 days)

A clearance above 156.10 invalidates the bearish bias on the USD/JPY to see a further potential squeeze up to retest the next intermediate resistances at 156.60 and 157.00/157.15.

On Wednesday, silver surged past 66 USD per ounce, setting a new all-time high. The rally was driven by a mixed US employment report, which sparked investor interest in alternative high-return assets for portfolio diversification.

The November labour market data revealed the unemployment rate climbing to 4.6% – its highest level since 2021 – even as job creation exceeded expectations.

Silver’s year-to-date gain of nearly 130% is further supported by declining inventories and robust demand from both retail investors and industrial users. In particular, expanding sectors such as solar energy, electric vehicles, and data centres are driving increased industrial consumption.

Technical Analysis: XAG/USD

H4 Chart:

On the H4 chart, XAG/USD established a consolidation range around 57.65 USD. Following an upward breakout, the market has extended to 66.72 USD, with scope for further gains towards 69.79 USD. Having completed a growth impulse to 66.51 USD, a minor correction towards 64.64 USD appears possible before the uptrend resumes.

The MACD indicator supports the bullish outlook, with its signal line firmly above zero, indicating sustained upward momentum.

H1 Chart:

On the H1 chart, silver completed a growth wave to 65.30 USD and has since formed a consolidation range around this level. An upward breakout has extended the move to 66.51 USD. A technical pullback towards 65.65 USD may occur; a break below this level could extend the correction towards 60.85 USD. Conversely, a rebound from 65.65 USD would favour a continuation of the uptrend toward 66.72 USD.

The Stochastic oscillator aligns with this view, with its signal line above 80 and trending upward, though nearing overbought territory.

Conclusion

Silver’s record rally reflects strong fundamentals – tightening supply, robust industrial demand, and its appeal as a hedge amid economic uncertainty. While the near-term trend remains bullish, the market is approaching overextended levels, increasing the likelihood of a short-term correction. Key support lies around 65.65 USD, with a break below potentially signalling a deeper pullback. Until then, the momentum favours further tests towards 66.72 USD and possibly 69.79 USD.

GBP/USD started a fresh increase above 1.3350 and 1.3400. USD/CAD declined and is now consolidating losses below 1.3800.

Important Takeaways for GBP/USD and USD/CAD Analysis Today

• The British Pound is eyeing more gains above 1.3430.
• There is a key bullish trend line forming with support at 1.3390 on the hourly chart of GBP/USD at FXOpen.
• USD/CAD started a fresh decline after it failed to stay above 1.3800.
• There is a connecting bearish trend line with resistance at 1.3780 on the hourly chart at FXOpen.

GBP/USD Technical Analysis

On the hourly chart of GBP/USD at FXOpen, the pair formed a base above the 1.3300 level. The British Pound started a steady increase above 1.3350 against the US Dollar, as discussed in the previous analysis.

The pair gained strength above 1.3380 and the 50-hour simple moving average. It even cleared the 1.3400 handle and tested 1.3450. It is now consolidating gains below 1.3430. There was a minor pullback below the 50% Fib retracement level of the upward move from the 1.3354 swing low to the 1.3456 high, and the RSI dipped below 50.

However, there is a key bullish trend line forming with support at 1.3390. On the upside, the bulls face resistance near 1.3405 on the GBP/USD chart. The first major hurdle could be 1.3430.

An upside break above 1.3430 could send the pair toward 1.3455. Any more gains might open the doors for a test of 1.3500. If there is a downside correction, immediate support is near the 1.3390 level, the trend line, the 61.8% Fib retracement, and the 50-hour simple moving average.

The first major area of interest for the bulls could be near 1.3355. The next pivot level sits near 1.3330. If there is a break below 1.3330, the pair could extend the decline. In the stated case, the pair could drop and test 1.3290. Any more losses might call for a move toward 1.3250.

USD/CAD Technical Analysis

On the hourly chart of USD/CAD at FXOpen, the pair climbed toward 1.3880 before the bears appeared. The US Dollar formed a swing high near 1.3872 and recently declined below 1.3800 against the Canadian Dollar.

There was also a close below the 50-hour simple moving average and 1.3780. The bulls are now active near 1.3730, but they might fail to protect more losses. If there is an upside correction, the pair could face resistance near 1.3780 and a connecting bearish trend line.

An upside break above the trend line might send the pair toward the 50% Fib retracement level of the downward move from the 1.3872 swing high to the 1.3730 low.

The next key hurdle on the USD/CAD chart is near the 61.8% Fib retracement at 1.3815. If there is a close above 1.3815, the pair could rise toward 1.3870. The next major sell zone is 1.3900, above which it could rise steadily toward the 1.4000 handle.

Immediate support is near the 1.3750 level. The first major area of interest for the bulls could be 1.3730. A close below the 1.3730 level might trigger a strong decline. In the stated case, USD/CAD might test 1.3650. Any more losses may possibly open the doors for a drop toward 1.3600.

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A week ago, we:

→ updated a system of two trend channels;

→ identified signs of selling pressure dominance;

→ outlined a scenario in which price could slide towards the lower boundary of the blue channel, potentially acting as key support.

As the arrow on the chart shows, this scenario largely played out:

→ The US dollar index fell to a two-month low yesterday. The decline was driven by economic news, including weak US housing data. Both housing starts and building permits came in below expectations, reinforcing the view that the US economy is losing momentum.

→ Today, the DXY is rebounding sharply amid sterling weakness, after UK consumer price index (CPI) data revealed a sharp slowdown in inflation to 3.2%, versus a 3.5% forecast.

From a technical perspective, the price action points to a fairly aggressive bullish reversal from the lower boundary of the ascending channel. In particular:

→ the brief dip below the key October low appears to be a bear trap, showing characteristics of a Liquidity Grab in Smart Money Concept terminology;

→ several indicators (including the RSI) are likely to display signs of bullish divergence between lows A and B.

Taking all of the above into account, there are grounds to suggest that the US dollar may regain attractiveness towards year-end. It cannot be ruled out that the DXY will recover towards the median of the red channel and potentially move on to test its upper boundary.

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This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Daily Pivots: (S1) 206.94; (P) 207.47; (R1) 208.16; More...

GBP/JPY is still extending the consolidations from 208.92 and intraday bias remains neutral. Further rally is expected as long as 205.17 support holds. On the upside, break of 208.92 will resume larger up trend and target 61.8% projection of 184.35 to 205.30 from 199.04 at 211.98 next.

In the bigger picture, up trend from 123.94 (2020 low) is resuming. Next target is 61.8% projection of 148.93 to 208.09 from 184.35 at 220.90. On the downside, break of 199.04 support is needed to indicate medium term topping. Otherwise, outlook will stay bullish even in case of deep pullback.