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Daily Pivots: (S1) 1.3483; (P) 1.3500; (R1) 1.3531; More...

GBP/USD is still bounded in consolidations below 1.3533 and intraday bias stays neutral. Deeper retreat cannot be ruled out. But further rally is expected as long as 1.3356 support holds. Above 1.3533 will resume the rally from 1.3008 to retest 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.

Daily Pivots: (S1) 1.1752; (P) 1.1771; (R1) 1.1791; More….

EURUSD is extending consolidations below 1.1807 and intraday bias stays neutral. Further rally is in favor as long as 1.1702 support holds. Break of 1.1807 will resume the rise from 1.1467 to retest 1.1917 high. However, firm break of 1.1702 will turn bias back to the downside for 1.1467 support, to extend the corrective pattern form 1.19717 with another falling leg.

In the bigger picture, as long as 55 W EMA (now at 1.1386) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will carry larger bullish implication. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

Currency markets have entered deep holiday mode, with trading exceptionally subdued despite sharp swings elsewhere, notably in precious metals. In FX, volume and volatility have both contracted sharply. With liquidity thin and risk appetite selective, traders are choosing patience over positioning, especially with little fresh macro information to work with.

December minutes from the Fed due today may inject temporary noise, but expectations for a lasting impact are muted. The Fed has already signaled a higher bar for further easing, anchoring near-term expectations for a hold in January. Attention remains on March, but clarity is lacking. Whether rate cuts resume then will depend on multiple rounds of jobs and inflation data, leaving markets hesitant to commit either way.

Geopolitics continues to simmer in the background. In East Asia, China escalated military activity around Taiwan, firing rockets into surrounding waters today and deploying new amphibious assault vessels alongside air and naval forces. Elsewhere, diplomatic progress in Europe faced a setback after Russia accused Ukraine of targeting President Vladimir Putin’s residence, a claim rejected by Kyiv and seen by some as an attempt to derail fragile negotiations.

For the week so far, Kiwi underperforms, followed by Aussie and Loonie. Yen leads gains ahead of Sterling and Swiss Franc. Dollar and Euro sit mid-pack. Still, nearly all major pairs remain confined within last week’s ranges, reinforcing the view that markets are consolidating, without directional intent.

Swiss KOF barometer rises to 101.7, manufacturing outlook strengthens

Swiss KOF Economic Barometer rose from 101.7 to 103.4 in December, beating expectations of 101.4 and signaling improving momentum heading into early 2026. According to KOF Swiss Economic Institute, the outlook for the Swiss economy at the turn of the year is now above its long-term average.

The improvement is being driven primarily by the production side of the economy. Indicator bundles linked to output showed broad-based gains, with manufacturing standing out as a particular bright spot.

However, the picture was uneven. On the demand side, indicators tied to private consumption and foreign demand remain under pressure, highlighting lingering caution among households and external headwinds.

Structural Yen weakness to persist Into 2026, AUD/JPY accelerates, NZD/JPY follows

Yen’s inability to stage a meaningful rebound has become a defining feature of late-year trading. Even the BoJ’s December rate hike failed to generate sustained support, highlighting how entrenched the bearish forces have become.

Carry trade dynamics remain central. Nikkei has enjoyed a powerful uptrend this year, helped by optimism surrounding Prime Minister Sanae Takaichi’s new administration and ongoing enthusiasm for AI- and tech-linked stocks, despite persistent valuation concerns.

The scale of the rally has been striking. From levels around 30,000 in April, Nikkei surged to fresh record highs above 50,000 by early November, marking one of its strongest advances in decades. While some jitters have emerged since November, the index has so far held comfortably in a broad range around 50,000. That consolidation suggests underlying momentum remains intact, leaving scope for another leg higher early next year.

At the same time, fiscal concerns are quietly intensifying. Japan’s expansive budget stance has pushed long-dated yields higher. Thirty-year JGB yields remain close to record highs near 3.4%, while 10-year yields hover above the 2% mark, levels not seen in decades. Even so, yields remain artificially suppressed. The crucial context is that the BoJ is still a massive buyer of government bonds in gross terms, effectively capping long-term yields.

As a result, risks that would normally push yields much higher—such as fiscal sustainability concerns—are instead being priced into Yen. That dynamic leaves the currency vulnerable to further downside in the months ahead. Even direct government intervention, should it move beyond verbal warnings, is unlikely to offer lasting relief

Among Yen crosses, AUD/JPY and NZD/JPY are particularly constructive, supported by emerging speculation that RBA and RBNZ could return to rate hikes in early 2027, or even in late 2026.

Technically, AUD/JPY's up trend from 86.03 is still in progress. The strong bounce from prior medium term channel ceiling is a clear bullish signal, which solidifies that it's in upside acceleration. Outlook will continue to stay bullish as long as 102.30 support holds. Next target is 161.8% projection of 94.38 to 100.93 from 96.24 at 106.83. There is prospect of retesting 109.36 (2024 high) next year if momentum continues.

NZD/JPY is underperforming AUD/JPY primarily because RBNZ out-eased RBA much this year. Still, the up trend from 79.79 remains intact and healthy. Near term outlook in NZD/JPY will stay bullish as long as 89.05 resistance turned support holds. Sustained trading above 61.8% projection of 79.79 to 89.05 from 85.33 at 91.05 would likely prompt upside acceleration towards 100% projection at 94.59 next.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.1752; (P) 1.1771; (R1) 1.1791; More….

EURUSD is extending consolidations below 1.1807 and intraday bias stays neutral. Further rally is in favor as long as 1.1702 support holds. Break of 1.1807 will resume the rise from 1.1467 to retest 1.1917 high. However, firm break of 1.1702 will turn bias back to the downside for 1.1467 support, to extend the corrective pattern form 1.19717 with another falling leg.

In the bigger picture, as long as 55 W EMA (now at 1.1386) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will carry larger bullish implication. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.

The US dollar has entered a consolidation phase following last week’s sharp decline. The pace of dollar weakness has slowed noticeably, while trading activity remains subdued amid the holiday period and limited market participation. Against the backdrop of low liquidity, the market is showing caution: new positions are being opened reluctantly, and price action in major currency pairs is increasingly driven by short-term flows and local impulses rather than by sustainable fundamental trends.

The fundamental backdrop remains mixed. On the one hand, the current week is relatively light in terms of major news, which in itself supports range-bound trading. On the other hand, today and tomorrow a series of US macroeconomic releases is due, including data on the housing market, business activity and retail sales, as well as reports from the energy sector. These releases may temporarily increase intraday volatility; however, in conditions of low liquidity, market reactions could be fragmented and not always consistent.

USD/JPY

Last week, USD/JPY fell sharply after rebounding from the 157.70 area. Technical analysis of USD/JPY points to the potential for further downside, as a bearish harami pattern has formed on the daily chart. Nevertheless, amid reduced liquidity, the price has found short-term support near 155.60. A rebound from this level could trigger a corrective move towards 156.70.

Key events for USD/JPY:

• today at 16:00 (GMT+2): U.S. S&P/CS HPI Composite-20, seasonally adjusted;
• today at 16:45 (GMT+2): Chicago PMI;
• today at 21:00 (GMT+2): FOMC Meeting Minutes.

USD/CAD

The decline in USD/CAD has slowed just above the 1.3600 level. Yesterday, a bullish engulfing pattern was formed on the daily timeframe, the completion of which could support a recovery towards the 1.3700–1.3750 range. Failure to move above 1.3700 over the next few trading sessions may result in a renewed test of the recent low near 1.3640.

Key events for USD/CAD:

• today at 18:30 (GMT+2): US crude oil inventories;
• tomorrow at 15:30 (GMT+2): US initial jobless claims;
• tomorrow at 20:00 (GMT+2): U.S. Baker Hughes Total Rig Count.

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Swiss KOF Economic Barometer rose from 101.7 to 103.4 in December, beating expectations of 101.4 and signaling improving momentum heading into early 2026. According to KOF Swiss Economic Institute, the outlook for the Swiss economy at the turn of the year is now above its long-term average.

The improvement is being driven primarily by the production side of the economy. Indicator bundles linked to output showed broad-based gains, with manufacturing standing out as a particular bright spot.

However, the picture was uneven. On the demand side, indicators tied to private consumption and foreign demand remain under pressure, highlighting lingering caution among households and external headwinds.

Full Swiss KOF release here.

Yen’s inability to stage a meaningful rebound has become a defining feature of late-year trading. Even the BoJ’s December rate hike failed to generate sustained support, highlighting how entrenched the bearish forces have become.

Carry trade dynamics remain central. Nikkei has enjoyed a powerful uptrend this year, helped by optimism surrounding Prime Minister Sanae Takaichi’s new administration and ongoing enthusiasm for AI- and tech-linked stocks, despite persistent valuation concerns.

The scale of the rally has been striking. From levels around 30,000 in April, Nikkei surged to fresh record highs above 50,000 by early November, marking one of its strongest advances in decades. While some jitters have emerged since November, the index has so far held comfortably in a broad range around 50,000. That consolidation suggests underlying momentum remains intact, leaving scope for another leg higher early next year.

At the same time, fiscal concerns are quietly intensifying. Japan’s expansive budget stance has pushed long-dated yields higher. Thirty-year JGB yields remain close to record highs near 3.4%, while 10-year yields hover above the 2% mark, levels not seen in decades. Even so, yields remain artificially suppressed. The crucial context is that the BoJ is still a massive buyer of government bonds in gross terms, effectively capping long-term yields.

As a result, risks that would normally push yields much higher—such as fiscal sustainability concerns—are instead being priced into Yen. That dynamic leaves the currency vulnerable to further downside in the months ahead. Even direct government intervention, should it move beyond verbal warnings, is unlikely to offer lasting relief

Among Yen crosses, AUD/JPY and NZD/JPY are particularly constructive, supported by emerging speculation that RBA and RBNZ could return to rate hikes in early 2027, or even in late 2026.

Technically, AUD/JPY's up trend from 86.03 is still in progress. The strong bounce from prior medium term channel ceiling is a clear bullish signal, which solidifies that it's in upside acceleration. Outlook will continue to stay bullish as long as 102.30 support holds. Next target is 161.8% projection of 94.38 to 100.93 from 96.24 at 106.83. There is prospect of retesting 109.36 (2024 high) next year if momentum continues.

NZD/JPY is underperforming AUD/JPY primarily because RBNZ out-eased RBA much this year. Still, the up trend from 79.79 remains intact and healthy. Near term outlook in NZD/JPY will stay bullish as long as 89.05 resistance turned support holds. Sustained trading above 61.8% projection of 79.79 to 89.05 from 85.33 at 91.05 would likely prompt upside acceleration towards 100% projection at 94.59 next.

Key Highlights

• GBP/USD started a steady increase above the 1.3450 zone.
• A short-term bullish trend line is forming with support at 1.3480 on the 4-hour chart.
• EUR/USD is currently consolidating gains above 1.1750.
• Gold dipped sharply and corrected gains after it traded to a new all-time high at $4,549.

GBP/USD Technical Analysis

The British Pound started a fresh increase above 1.3400 against the US Dollar. GBP/USD climbed higher above 1.3450 to enter a positive zone.

Looking at the 4-hour chart, the pair settled above 1.3450, the 200 simple moving average (green, 4-hour), and the 100 simple moving average (red, 4-hour). A high was formed at 1.3532 before the pair started a consolidation phase.

The pair tested the 23.6% Fib retracement level of the upward move from the 1.3311 swing low to the 1.3532 high. On the downside, there is key support at 1.3480. There is also a short-term bullish trend line forming with support at 1.3480. A downside break below the trend line might spark bearish moves.

The first major support is 1.3450. The next support could be 1.3400 and the 100 simple moving average (red, 4-hour), below which the pair might dive and test the 200 simple moving average (green, 4-hour) at 1.3300.

Immediate resistance sits near 1.3520. The first key hurdle is seen near 1.3550. A close above 1.3550 could open the doors for a move toward 1.3620. Any more gains could set the pace for a steady increase toward 1.3700.

Looking at Gold, the price rallied toward the $4,550 level before the bears appeared and sparked a sharp downside correction.

Upcoming Key Economic Events:

• US House Price Index for Oct 2025 (MoM) - Forecast +0.1%, versus 0% previous.
• Chicago Purchasing Manager’s Index for Dec 2025 – Forecast 39.5, versus 36.3 previous.

Gold is experiencing its first major pullback since mid-November as the precious metal is down 4.5% on the day. How far will the current pullback go and what are the key levels to watch?

Precious metals and commodities are falling across the board as profit taking and portfolio rebalancing ahead of the new year appear to be driving some volatility following the recent price surge ahead of Christmas day.

Commodity Market Snapshot

Source: TradingView

Gold is down around 4.5% which is small in comparison to palladium and platinum which have both slipped around 17% and 15% respectively. Silver is also experiencing a double digit drop off on the day, currently down around 12.6% on the day.

Geopolitical Hope Aiding the Selloff?

Geopolitics had been driving some of the rally particularly from a safe haven perspective ahead of Christmas. US, Venezuela tensions appeared to be on course for a possible military intervention which stoked haven demand.

However, the US administration has clarified that they intend to turn up the economic pressure first and see if that yields the desired result.

Add to that cautious hope following comments from the U.S. government regarding progress in the Ukraine peace talks, which is acting as a slight drag on haven demand.

On Sunday, President Trump stated that he and Ukrainian President Zelensky are getting "very close" to reaching an agreement to finally end the war.

What Comes Next for Gold Prices?

Investors are closely watching for the release of the Federal Reserve's meeting notes on Tuesday to get a better idea of future interest rates.

Currently, traders expect rates to be cut twice next year, which is usually good for assets like gold that do not earn interest.

However, gold prices are already very high, and there is a risk they could fall if the Fed surprises everyone by keeping rates high or if large investment funds decide to sell their holdings.

For all market-moving economic releases and events, see the MarketPulse Economic Calendar. (click to enlarge)

Technical Outlook - Gold (XAU/USD)

Looking at the four-hour chart below, the technical picture is intriguing to say the least..

The selloff today has taken gold into oversold territory while at the same breaching the 50-Day MA and testing the 100-day MA resting at 4321.

If Gold can hold above the 100-day MA bulls may regain interest as liquidity returns and push prices higher.

The pullback today could be down to profit taking and repositioning and in the current environment there appears to be little bullish pressure to stop the slide.

There is of course the probability that the selloff continues and brings lower levels of support into play.

Gold (XAU/USD) Four-Hour Chart, December 29, 2025

Source: TradingView (click to enlarge)

Key levels to pay attention to include

• $4,321, 100-day MA
• $4,275, Previous Swing Low on December 16 Before the pre-Christmas Rally
• $4250, Previous Breakout Level

Daily Pivots: (S1) 1.1757; (P) 1.1777; (R1) 1.1792; More….

Intraday bias in EUR/USD stays neutral and more consolidations could be seen below 1.1807. Further rally is in favor as long as 1.1702 support holds. Break of 1.1807 will resume the rise from 1.1467 to retest 1.1917 high. However, firm break of 1.1702 will turn bias back to the downside for 1.1467 support, to extend the corrective pattern form 1.19717 with another falling leg.

In the bigger picture, as long as 55 W EMA (now at 1.1386) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will carry larger bullish implication. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.