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The dollar index – recovery leg from 98.70 daily higher base (the bottom of pullback from 100.32 peak) slows on Wednesday, as traders await the verdict from Fed at the end of two-day policy meeting.

Markets widely expect a 25-basis points rate cut, but focus will be on signals about the central bank’s rate path in coming months.

The Fed projected two rate cuts in 2026 (in September) with main question whether the policymakers will stick to existing agenda or will take more dovish stance and signal stronger policy easing, which is President Trump’s favored scenario, as he is in the process of choosing a successor for Jerome Powell, who is going step down in early 2026.

However, decision of 25-based points rate cut should not be the key market driver, but any surprise from the Fed could spark stronger market action.

More dovish than expected, Fed projections should add pressure on dollar and subsequently boost gold, while opposite effects could be expected in case the policymakers take more hawkish stance.

Technical picture is mixed on daily chart as rising thick daily cloud continues to underpin, but positive impact is countered by strengthening bearish momentum, while MAs are in mixed setup, with immediate action being capped by falling converged 10/200DMA’s for the second straight day.

Res: 99.30; 99.51; 99.70; 100.00.
Sup: 98.90; 98.70; 98.60; 98.31.

EUR/USD climbed higher and tested the 1.1680 resistance. USD/JPY managed to reclaim 156.00 and might aim for more gains.

Important Takeaways for EUR/USD and USD/JPY Analysis Today

• The Euro started a downside correction from the 1.1680 pivot zone.
• There is a key declining channel forming with resistance at 1.1640 on the hourly chart of EUR/USD at FXOpen.
• USD/JPY climbed higher above 155.50 and 156.00.
• There is a bullish trend line forming with support near 156.30 on the hourly chart at FXOpen.

EUR/USD Technical Analysis

On the hourly chart of EUR/USD at FXOpen, the pair started a fresh increase from 1.1550. The Euro cleared a few key hurdles near 1.1600 to move into a positive zone against the US Dollar.

The pair settled above 1.1600 and the 50-hour simple moving average. A high was formed at 1.1681, and the pair started a downside correction. There was a drop below 1.1650, and the pair tested the 50% Fib retracement level of the upward move from the 1.1555 swing low to the 1.1681 high.

However, the bulls are active above 1.1620. On the upside, the pair is now facing bears near 1.1640 and 1.1650. There is also a key declining channel forming with resistance at 1.1640.

The next breakout region sits at 1.1680. An upside break above 1.1680 could set the pace for another increase. In the stated case, the pair might rise toward 1.1750. Immediate support is 1.1620. The first major key area of interest on the EUR/USD chart is near the 76.4% Fib retracement at 1.1585.

If there is a downside break below 1.1585, the pair could drop toward 1.1555. The next key breakdown area sits at 1.1520, below which the pair could start a major decline.

USD/JPY Technical Analysis

On the hourly chart of USD/JPY at FXOpen, the pair started a decent increase from 154.35. The US Dollar gained bullish momentum above 155.00 against the Japanese Yen.

It settled above the 50-hour simple moving average and 156.00. The upward move was such that the pair even tested 156.90. A high was formed at 156.93 and the pair is now consolidating gains. There was a minor pullback below 156.75.

The current price action is positive, and the pair seems to be aiming for more gains. There is also a bullish trend line forming with support near 156.30 and the 23.6% Fib retracement level of the upward move from the 154.34 swing low to the 156.93 high.

Immediate resistance on the USD/JPY chart is near 156.90. The first key hurdle sits at 157.00. If there is a close above 157.00 and the RSI moves above 60, the pair could rise toward 157.50. The next stop for the bulls might be 157.80, above which the pair could test 158.40 in the coming days.

On the downside, the first major support is near the trend line at 156.30. The next area of interest could be near 155.65, below which the pair could test the 61.8% Fib retracement at 155.35. Any more losses could open the doors for a move toward 154.35.

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The USD/JPY pair is consolidating near 156.57 on Wednesday, pausing after three consecutive days of gains. This stability comes despite a notable shift in rhetoric from Bank of Japan (BoJ) Governor Kazuo Ueda, who stated the central bank is drawing closer to sustainably achieving its 2% inflation target – a strong signal that a policy tightening move could be imminent.

The market is now actively pricing in the possibility of a rate hike as early as next week’s BoJ meeting. Investors’ primary focus will be on Governor Ueda’s post-meeting comments, which are expected to shape the policy outlook for 2025.

The yen’s broader weakness is being fuelled by growing concerns over Japan’s public finances, exacerbated by expanded fiscal spending under Prime Minister Sanae Takaichi’s administration. Furthermore, the yawning interest rate differential between Japan and other major economies continues to incentivise short positions against the yen, which remains one of the world’s lowest-yielding currencies.

Technical Analysis: USD/JPY

H4 Chart:

On the H4 chart, USD/JPY maintains its bullish structure following a strong impulse that propelled the price from 154.30 to the key resistance zone of 157.20–157.90. The pair is currently consolidating just below the 157.20 level, where selling pressure has previously emerged.

The price holding above the middle Bollinger Band confirms buyers retain overall control. The expansion of the upper band indicates elevated volatility and suggests the market is gathering strength for another attempt to breach resistance.

A decisive breakout and consolidation above 157.20 would open the path towards the 157.90–158.00 area. Should a correction unfold, the nearest significant support sits at 155.60. A break below this level would signal a deeper pullback, potentially targeting the major demand zone and the lower Bollinger Band near 154.30.

H1 Chart:

On the H1 chart, USD/JPY is undergoing a pullback after its recent surge to 157.20. The decline has found tentative support near the middle Bollinger Band, with the pair attempting to stabilise around 156.50.

The near-term structure remains bullish, supported by the price’s position above the middle Bollinger Band. Dynamic support is forming in the 156.00–156.10 zone, aligned with the indicator’s lower band. The Stochastic oscillator has turned down from overbought territory, confirming the current short-term corrective phase.

For the uptrend to resume, buyers must reclaim the 157.20 level, which would pave the way for a test of 157.90. Conversely, a sustained break below 156.00 would be the first clear sign of bullish exhaustion, increasing the probability of a deeper decline towards 155.60.

Conclusion

USD/JPY is at a critical juncture, caught between bullish technical momentum and a shifting fundamental backdrop for the yen. While the pair’s uptrend remains technically intact, the impending BoJ decision introduces significant event risk. A hawkish shift from the central bank could catalyse a sharp correction. In the near term, the 157.20 resistance and 156.00 support levels are pivotal; a breakout from this range will determine the next directional move.

On 2 December, we noted that the final month of the year is traditionally favourable for the S&P 500 index (US SPX 500 mini on FXOpen), as:

→ since around the 1950s, December has been positive in more than 70% of cases;

→ the average monthly gain is approximately +1.0%.

Today, with traders worldwide focused on the Federal Reserve’s interest rate decision and Chair Powell’s subsequent press conference, there is reason to highlight another statistic. According to media reports, in 20 out of 20 instances when equity markets were near record highs and the Fed cut rates, the S&P 500 rose over the following 12 months.

Given the current backdrop — proximity to all-time highs and expectations of rate cuts — it is possible that this could become the 21st such case.

An analysis of price action on the 4-hour chart of the S&P 500 (US SPX 500 mini on FXOpen) suggests that the stock market is reflecting nervous anticipation of the news, as the index is trading at roughly the same levels as at the start of December.

Technical Analysis of the S&P 500 Chart

From the demand side:

→ the price has managed to hold firmly above the 6785 level (which may act as support going forward) and has broken above a previously formed descending channel (shown in red);

→ an ascending channel formed in early December, which can be interpreted as cautious optimism ahead of the news.

From the supply side:

→ the late-October record high may act as psychological resistance;

→ yesterday’s decline (indicated by the arrow) suggests that bears are ready to act more aggressively if given a catalyst.

Overall, taking the above into account, it is reasonable to suggest that the S&P 500 market (US SPX 500 mini on FXOpen) is in a “calm before the storm” phase. Be prepared for volatility spikes later today, starting from 22:00 GMT+3.

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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) 207.84; (P) 208.39; (R1) 209.20; More...

GBP/JPY's break of 208.09 high confirms long term up trend resumption. Intraday bias stays on the upside for next near term target at 61.8% projection of 184.35 to 205.30 from 199.04 at 211.98. Outlook will stay bullish as long as 205.17 support holds, in case of retreat.

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 be the first sign of medium term topping. Otherwise, outlook will stay bullish even in case of deep pullback.

Daily Pivots: (S1) 181.54; (P) 182.10; (R1) 182.96; More...

EUR/JPY's up trend resumed by breaking through 181.98 and intraday bias is back on the upside. Next target is 100% projection of 161.06 to 173.87 from 171.09 at 183.90. For now, outlook will remain bullish as long as 180.07 support holds, in case of retreat.

In the bigger picture, up trend from 114.42 (2020 low) is in progress and should target 61.8% projection of 124.37 to 175.41 from 154.77 at 186.31. However, considering bearish divergence condition in D MACD, upside should be capped by 186.31 on first attempt. Outlook will continue to stay bullish as long as 55 W EMA (now at 170.25) holds, even in case of deep pullback.

Daily Pivots: (S1) 0.8725; (P) 0.8737; (R1) 0.8753; More…

EUR/GBP is staying in consolidations above 0.8720 temporary low and intraday bias stays neutral. Further decline is expected with 0.8800 resistance intact. Fall from 0.8863 should at least be a correction to the up trend from 0.8221, with risk of bearish reversal. Below 0.8720 will target 0.8631 cluster (38.2% retracement of 0.8221 to 0.8663 at 0.8618).

In the bigger picture, rise from 0.8221 medium term bottom is still seen as a corrective move. Upside should be limited by 61.8% retracement of 0.9267 to 0.8221 at 0.8867. Sustained trading below 55 W EMA (now at 0.8600) should confirm that this corrective bounce has completed. However, decisive break of 0.8867 will suggest that EUR/GBP is already reversing whole decline from 0.9267 (2022 high). That should pave the way back to 0.9267.

Daily Pivots: (S1) 1.7499; (P) 1.7565; (R1) 1.7599; More...

Intraday bias in EUR/AUD remains mildly on the downside for the moment. Fall from 1.8160 is seen as the third leg of the pattern from 1.8554. Deeper decline should be seen to 100% projection of 1.8160 to 1.7561 from 1.7976 at 1.7377. Firm break there will pave the way to 138.2% projection at 17148. On the upside, above 1.7627 minor resistance will turn intraday bias neutral and bring consolidations first, before staging another fall.

In the bigger picture, as long as 55 W EMA (now at 1.7456) holds, price actions from 1.8554 could still be a correction to rise from 1.5963 only. However, sustained break of the EMA will argue that it's already correcting the whole up trend from 1.4281 (2022 low). In this case, deeper decline would be seen to 38.2% retracement of 1.4281 to 1.8554 at 1.6922.

Daily Pivots: (S1) 0.9362; (P) 0.9380; (R1) 0.9390; More....

Intraday bias in EUR/CHF is turned neutral with current retreat and some consolidations could be seen below 0.9394 temporary top. Further rise is expected as long as 0.9325 support holds. Above 0.9394 will resume the rebound from 0.9178 to 0.9452 key structural resistance. Decisive break there will carry larger bullish implications.

In the bigger picture, EUR/CHF has breached long term falling channel resistance as the rebound from 0.9278 extends. Considering bullish convergence condition in W MACD, sustained trading above 55 W EMA (now at 0.9372) will indicate medium term bottoming, and suggests that it's already in larger scale rebound. Further break of 0.9452 resistance will bring stronger medium term rally towards 0.9228 resistance next. Nevertheless, rejection by 55 W EMA will retain bearishness for another fall through 0.9278 at a later stage.

Daily Pivots: (S1) 1.3826; (P) 1.3844; (R1) 1.3863; More...

Intraday bias in USD/CAD stays neutral and more consolidations would be seen above 1.3798 temporary low. Upside of recovery should be limited below 1.3936 support turned resistance. on the downside, break of 1.3798 will resume the fall from 1.4139 to 61.8% retracement of 1.3538 to 1.4139 at 1.3768. Firm break there will argue that whole decline form 1.4791 might be ready to resume through 1.3538 low.

In the bigger picture, current development suggests that price actions from 1.4791 is developing into a deeper, larger scale correction. In the less bearish case, it's just correcting the rise from 1.2005 (2021 low). But even so, break of 1.3538 will pave the way to 61.8% projection of 1.4791 to 1.3538 from 1.4139 at 1.3365. This will remain the favored case as long as 1.4139 resistance holds, in case of rebound.