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Daily Pivots: (S1) 154.71; (P) 155.43; (R1) 156.21; More...

Intraday bias is turned neutral first with current recovery. With near term channel floor intact, further rally is expected. Above 156.57 minor resistance will bring retest of 157.88. Further break there will resume the whole rally from 139.87. Next target is 158.86 structural resistance, and then 161.94 high. However, sustained break of the channel support will bring deeper correction to 55 D EMA (now at 152.86), and raise the chance of near term trend reversal.

In the bigger picture, current development suggests that corrective pattern from 161.94 (2024 high) has completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94 high. Decisive break of 158.85 structural resistance will solidify this bullish case and target 161.94 for confirmation. On the downside, break of 150.90 resistance turned support will dampen this bullish view and extend the corrective range pattern with another falling leg.

Daily Pivots: (S1) 1.3188; (P) 1.3232; (R1) 1.3257; More...

GBP/USD's break of 1.3199 minor support argues that recovery from 1.3008 might have completed as a three-wave corrective move to 1.3274. That came after touching 55 D EMA (now at 1.3265). Intraday bias is back on the downside for retesting 1.3008 low. On the upside, however, sustained trading above 55 D EMA should confirm that fall from 1.3787 has completed. Further rise should then be seen to 1.3725/3787 resistance zone.

In the bigger picture, the break of 55 W EMA (now at 1.3184) is taken as the first sign that corrective rise from 1.0351 (2022 low) has completed. Decisive break of trend line support (now at 1.2760) will solidify this case and target 38.2% retracement of 1.0351 to 1.3787 at 1.2474 next. Meanwhile, in case of another rise, strong resistance should emerge below 1.4248 (2021 high) to cap upside to preserve the long term down trend.

Sterling weakened slightly today as markets digested last night’s abrupt resignation of OBR Chair Richard Hughes, who stepped down following the premature release of budget documents last week. Investors viewed the episode as destabilizing for an institution designed to promote fiscal transparency and market confidence.

There was also a delayed reaction to UK Prime Minister Keir Starmer’s remarks, in which he reiterated his goal of driving inflation lower to enable further rate cuts and reduce business-investment costs.

In contrast, Yen is the worst performer of the day, unwinding much of its earlier gains. Markets initially bid up the currency early in the week on speculation of a possible BoJ rate hike, but enthusiasm has faded quickly. Risk-on sentiment has returned across global markets, removing the defensive bid that had supported JPY.

The re-pricing has shifted the day’s FX rankings, with Aussie on top, followed by Euro and Swiss Franc. Sterling and Kiwi sit near the bottom, while Dollar and Loonie hold middle ground.

The distribution of moves suggests no strong singular narrative is driving markets. Instead, today’s flows reflect a combination of UK political noise, unwinding of BoJ-related bets, and a cautious return of risk-taking in global markets—all contributing to a fragmented and directionless environment across major FX pairs.

In Europe, at the time of writing, FTSE is up 0.15%. DAX is up 0.39%. CAC is up 0.08%. UK 10-year JGB yield is up 0.012 at 4.498. Germany 10-year yield is up 0.009 at 2.765. Earlier in Asia, Nikkei closed flat. Hong Kong HSI rose 0.24%. China Shanghai SSE fell -0.42%. Singapore Strait Times rose 0.26%. Japan 10-year JGB yield fell -0.017 to 1.862.

OECD: Tariffs to weigh on 2026 global growth; inflation to ease

OECD’s latest economic outlook points to a cooling global economy over the next two years as higher effective tariff rates and persistent geopolitical uncertainty weigh on activity.

Global growth is projected to slow from 3.2% in 2025 to 2.9% in 2026 before recovering modestly to 3.1% in 2027. The US is expected to decelerate from 2.0% growth in 2025 to 1.7% in 2026, while the Eurozone will hover near 1.2%–1.4% through 2027. China’s growth is seen easing from 5.0% in 2025 to 4.3% by 2027 as structural and external pressures build.

Near-term momentum is expected to soften as global trade and investment absorb the impact of higher tariffs, weaker confidence, and ongoing policy uncertainty. OECD expects conditions to improve toward late 2026 as the drag from tariffs fades, financial conditions ease, and lower inflation supports demand.

Inflation is expected to continue moderating. Headline CPI across the G20 is projected to fall from 3.4% this year to 2.9% in 2026 and 2.5% in 2027. By mid-2027, inflation is expected to be back to target in most major economies, allowing central banks additional flexibility to support growth if needed.

Eurozone CPI edges higher to 2.2% in November; services rise to 3.5%

Eurozone headline inflation ticked up slightly in November, rising to 2.2% yoy from 2.1% and coming in just above expectations of 2.1%. Core CPI (ex energy, food, alcohol & tobacco) held unchanged at 2.4%, matching forecasts.

Looking at the details, services were the main driver of inflation, climbing to 3.5% from 3.4%. Food, alcohol and tobacco inflation stayed steady at 2.5%. Non-energy industrial goods were unchanged at 0.6%, and energy inflation remained negative at –0.5% but improved from –0.9%.

Labor-market data painted a slightly softer picture. Eurozone unemployment rose to 6.4% in October from 6.3%, missing expectations of 6.3%.

RBNZ's Breman sets tone for Leadership: Mandate discipline and public trust

New RBNZ Governor Anna Breman used her first appearance before a parliamentary committee to underline a back-to-basics approach for the central bank. She said her leadership will be “laser focused” on the core mandate of keeping inflation low and stable, ensuring financial system resilience, and maintaining a safe and efficient payments framework.

Her comments signal an intention to anchor policy discussions firmly around credibility and discipline after a period of volatility in inflation and rate expectations. By highlighting the fundamentals of price stability and financial stability, Breman appears set to build continuity with the bank’s existing stance while strengthening its emphasis on execution and institutional reliability.

Looking into 2026, Breman said "transparency, accountability, and clear communication" will be central pillars of her leadership. She noted that maintaining public trust is critical for the next phase of policy.

GBP/USD Mid-Day Outlook

Daily Pivots: (S1) 1.3188; (P) 1.3232; (R1) 1.3257; More...

GBP/USD's break of 1.3199 minor support argues that recovery from 1.3008 might have completed as a three-wave corrective move to 1.3274. That came after touching 55 D EMA (now at 1.3265). Intraday bias is back on the downside for retesting 1.3008 low. On the upside, however, sustained trading above 55 D EMA should confirm that fall from 1.3787 has completed. Further rise should then be seen to 1.3725/3787 resistance zone.

In the bigger picture, the break of 55 W EMA (now at 1.3184) is taken as the first sign that corrective rise from 1.0351 (2022 low) has completed. Decisive break of trend line support (now at 1.2760) will solidify this case and target 38.2% retracement of 1.0351 to 1.3787 at 1.2474 next. Meanwhile, in case of another rise, strong resistance should emerge below 1.4248 (2021 high) to cap upside to preserve the long term down trend.

OECD’s latest economic outlook points to a cooling global economy over the next two years as higher effective tariff rates and persistent geopolitical uncertainty weigh on activity.

Global growth is projected to slow from 3.2% in 2025 to 2.9% in 2026 before recovering modestly to 3.1% in 2027. The US is expected to decelerate from 2.0% growth in 2025 to 1.7% in 2026, while the Eurozone will hover near 1.2%–1.4% through 2027. China’s growth is seen easing from 5.0% in 2025 to 4.3% by 2027 as structural and external pressures build.

Near-term momentum is expected to soften as global trade and investment absorb the impact of higher tariffs, weaker confidence, and ongoing policy uncertainty. OECD expects conditions to improve toward late 2026 as the drag from tariffs fades, financial conditions ease, and lower inflation supports demand.

Inflation is expected to continue moderating. Headline CPI across the G20 is projected to fall from 3.4% this year to 2.9% in 2026 and 2.5% in 2027. By mid-2027, inflation is expected to be back to target in most major economies, allowing central banks additional flexibility to support growth if needed.

Full OECD Economic Outlook here.

• Hassett’s chances of becoming Fed chair are growing, and the FOMC may cut rates to 3% in 2026.
• Europe is losing out to the US due to AI, while the BoJ’s rate hike is raising concerns.

Kevin Hassett’s growing chances of becoming Fed chair and weak manufacturing activity statistics have dragged down the US dollar. However, the rally in Treasury yields amid expectations of monetary policy tightening by the Bank of Japan has cooled the enthusiasm of EURUSD bulls. Investors fear that the repatriation of capital to the Land of the Rising Sun, as local assets become more attractive, will lead to a sell-off of US Treasury bonds.

The director of the National Economic Council is closest to Donald Trump and has the best chance of becoming Fed chair. Kalshi gives Kevin Hassett an 82% chance of winning. Kevin Warsh and Christopher Waller are estimated to have a 10% and 4% chance, respectively. As a result of the FOMC being flooded with doves, the risks of aggressive monetary expansion are increasing. The futures market gives a 74% and 45% probability that by the end of 2026, the federal funds rate will fall to 3.25% and 3%, respectively.

The US ISM manufacturing PMI published on Monday went below 50 for the ninth month in a row, indicating a decline in activity, which is a reminder of the negative impact of tariffs on the economy. The damage was less than expected due to large-scale investments in artificial intelligence technology. Europe is unable to compete with the United States in this area. The cost of electricity required for AI in the Old World is approximately twice as high as in the New World. Only a dramatic reduction in this gap could radically change the outlook and encourage EURUSD buyers.

The retreat of the main currency pair from two-week highs is attributed to the rally in 10-year US Treasury yields, which have risen above 4%. Investors fear that Japan, which holds $1.2 trillion in Treasuries, will begin to dump them as local assets become more attractive and capital repatriates to its home country. The growing likelihood of a rate hike by the Bank of Japan in December amid hawkish comments from Kazuo Ueda supports this. As a result, yields on 10-year Japanese bonds have soared to their highest level since 2008.

Rising US Treasury yields and renewed selling of cryptocurrencies have cooled demand in the S&P 500. The broad stock index took a step back after a five-day rally, but its outlook remains bullish. JP Morgan sees it rising to 7’500, while RBC Capital Markets forecasts growth to 7’750 by the end of 2026, driven by the strength of the US economy, corporate earnings, artificial intelligence, and further easing of the Fed’s monetary policy.

At the end of the year, seasonal factors could play in favour of the S&P 500. According to CFRA research, since 1990, the market has most often grown in December, while average returns have been second, and volatility has been the second lowest. After Thanksgiving, it tends to grow. That’s the good news. The bad news is that the scale of this growth is decelerating over time.

When the market is preparing for the Christmas rally and expecting a cut in the federal funds rate, it is difficult to stop the bulls. According to Bank of America, the Fed is expected to ease monetary policy once in 2025 and twice more in 2026. This forecast is based on changes in the composition of the FOMC, rather than the state of the US economy. Until now, the health of the economy has been supportive of the S&P 500. The state of the economy allows for lower rates, but does not yet raise fears of a recession.

Tariffs are putting pressure on GDP, as evidenced by the ninth consecutive month of decline in manufacturing activity. However, investments in artificial intelligence are helping to keep the economy afloat and supporting the S&P 500.

Concerns about an AI bubble led to a pullback in stocks in November. However, as soon as fears subsided, they made a sharp recovery, further supported by news from the technology sector. For example, news of NVIDIA’s $2 billion investment in chip development boosted the shares of software manufacturer Synopsys.

Eurozone headline inflation ticked up slightly in November, rising to 2.2% yoy from 2.1% and coming in just above expectations of 2.1%. Core CPI (ex energy, food, alcohol & tobacco) held unchanged at 2.4%, matching forecasts.

Looking at the details, services were the main driver of inflation, climbing to 3.5% from 3.4%. Food, alcohol and tobacco inflation stayed steady at 2.5%. Non-energy industrial goods were unchanged at 0.6%, and energy inflation remained negative at –0.5% but improved from –0.9%.

Labor-market data painted a slightly softer picture. Eurozone unemployment rose to 6.4% in October from 6.3%, missing expectations of 6.3%.

Full Eurozone CPI flash and unemployment release.

The EUR/USD pair retreated to 1.1612 on Tuesday, pulling back from a recent two-week high. The catalyst for the move was a significant repricing of US interest rate expectations following weak manufacturing data. The ISM Manufacturing Index confirmed a ninth consecutive month of contraction, with the pace of decline the fastest in four months.

This data solidified market expectations for a Federal Reserve rate cut. Futures markets now imply an 88% probability of a 25-basis-point reduction at next week's FOMC meeting.

In related news, President Donald Trump announced he has selected a candidate for the next Fed Chair. Media reports suggest the leading contender is Kevin Hassett, the current head of the White House National Economic Council.

Investor attention is now focused on an upcoming speech by current Chair Jerome Powell later today, which may offer further clues on the Fed's policy trajectory.

Technical Analysis: EUR/USD

H4 Chart:

On the H4 chart, EUR/USD continues to trade within an established ascending channel. The pair is currently testing a key resistance zone at 1.1655, where buying momentum has met significant selling pressure. A decisive breakout above this level would open the path towards the next major resistance at 1.1730.

The Stochastic Oscillator is rising from the middle zone, indicating sustained bullish momentum without overbought conditions. The MACD remains above its zero line, maintaining a stable, albeit weak, buy signal. Conversely, a break and close below the key support at 1.1545 would signal a deeper correction, likely targeting the lower boundary of the current range near 1.1468.

H1 Chart:

On the H1 chart, the pair is undergoing a correction after being rejected from local resistance at 1.1652. Buyers are currently defending the price above the middle Bollinger Band, suggesting short-term bullish control remains intact.

The Stochastic Oscillator is in overbought territory (above 80) and is turning down, pointing to a near-term corrective pullback. However, the MACD remains in positive territory, supporting the broader upward bias. This technical picture suggests a brief downward pause is likely, with a potential retest of support in the 1.1600–1.1585 zone. A successful hold above this area would increase the probability of a fresh upward impulse, targeting a renewed test of 1.1652 and an eventual push towards 1.1700.

Conclusion

EUR/USD remains confidently bid, supported by growing expectations of Fed easing. While a short-term technical correction is underway, the broader structure on both the H4 and H1 charts remains constructive. The key for continued upside is a successful defence of the 1.1600–1.1585 support zone. A break above 1.1655 would be a significant bullish confirmation, while a failure to hold support could trigger a deeper pullback towards 1.1545.

December is traditionally a favourable month for the S&P 500 (US SPX 500 mini on FXOpen):

→ Since the 1950s, December has ended higher in over 70% of years.

→ Average monthly gain is around +1.0%.

Will the index rise in 2025? Much depends on the Federal Reserve meeting on 10 December, as well as other factors, including geopolitical developments. Interest is also piqued by an upcoming statement from Trump at the White House (today, 22:00 GMT+3), though the topic remains undisclosed.

Technical Analysis of the S&P 500 Chart

Demand-side perspective:

→ The rebound from November’s low was aggressive, rising roughly +5% in 10 days.

→ Price climbed above the blue trendline that has acted as support since summer.

→ The recent dip (marked by the red trajectory) could be a temporary correction, forming a Bull Flag pattern.

Supply-side perspective:

→ The red trajectory has not yet been breached.

→ Recent price movements show a strong bearish Head and Shoulders pattern, along with signs of a Quasimodo formation, emerging around the attempt to break the upper boundary.

In the short term, the former resistance at 6785 may now act as support. Overall, the S&P 500 (US SPX 500 mini on FXOpen) is likely to adopt a wait-and-see stance, adjusting as economic news, delayed by the government shutdown, is released.

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Daily Pivots: (S1) 204.83; (P) 205.80; (R1) 206.40; More...

Intraday bias in GBP/JPY stays neutral and more consolidations could be seen below 207.18. Further rally is expected as long as 204.26 support holds. Above 207.18 will resume larger rise to retest 208.09 high. Firm break there will confirm long term up trend resumption. However, decisive break of 204.26 will bring deeper pullback to 55 D EMA (now at 202.81).

In the bigger picture, price actions from 208.09 (2024 high) are seen as a corrective pattern which might have completed at 184.35. Firm break of 208.09 high will resume the up trend from 123.94 (2020 low). Next target is 61.8% projection of 148.93 to 208.09 from 184.35 at 220.90. However, decisive break of 199.04 support will dampen this view and extend the corrective pattern with another fall.