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US initial jobless claims fell -16k to 199k in the week ending December 27, well below expectation of 215k. Four-week moving average of initial claims rose 2k to 219k.

Continuing claims fell -47k to 1866k in the week ending December 20. Four-week moving average of continuing claims fell -20k to 1874k.

Full US jobless claims release here.

• The return of American exceptionalism will help the greenback.
• The yen will start the new year with interventions, and the RBA with a rate hike.

The US dollar ends 2025 with its worst performance in nearly a decade. By mid-September, fears for the fate of the US economy due to tariffs and expectations of Fed rate cuts had caused the USD index to plummet to its lowest level in 3.5 years. However, the greenback then recovered thanks to large-scale investments in artificial intelligence, GDP growth and capital inflows into the stock market.

At the end of the year, divergence in monetary policy between the Fed and other central banks caused the USD index to fall. Goldman Sachs believes that the downward trend for the US dollar will continue in 2026, albeit on a smaller scale. The main drivers of the greenback's decline will be accelerating economic growth abroad and lower federal funds rates. The consensus forecast of major Wall Street banks is for EURUSD to rise to 1.2 and GBPUSD to 1.36 by the end of 2026.

What could go wrong? A Supreme Court ruling that the White House tariffs are illegal would sow chaos in financial markets and force investors to buy the US dollar as a safe-haven asset. A big and beautiful tax cut bill, coupled with investments in artificial intelligence, will boost GDP and bring back the theme of American exceptionalism to the markets. As a result, the Fed will have less reason to ease monetary policy. The federal funds rate will be cut only once in 2026, if at all.

If the factors of divergence in monetary policy and the narrowing gap in economic growth between the US and the eurozone do not work, investors' views on the fate of the US dollar will change radically. History may play in favour of the greenback. In 2017, Donald Trump's first year as president, the USD index weakened significantly. However, in 2018, it recovered some of its lost ground.

The yen will start 2026 under the sign of intervention. The government is unhappy with the USDJPY rally, and the Bank of Japan has failed to break the bulls' back by raising the overnight rate to its highest level since 1995. Either a rapid continuation of the cycle of monetary restriction or Tokyo's intervention in the Forex market is required.

The Australian dollar appears to be the favourite thanks to expectations of a key rate hike by the Reserve Bank and the Chinese economy's adaptation to US tariffs.

Daily Pivots: (S1) 210.37; (P) 210.73; (R1) 211.05; More...

Consolidations continues below 211.57 in GBP/JPY and intraday bias stays neutral. Deeper retreat could be seen but downside should be contained above 206.74 support to bring another rally. On the upside, break of 61.8% projection of 184.35 to 205.30 from 199.04 at 211.98 will extend current up trend to 100% projection at 219.99 next.

In the bigger picture, up trend from 123.94 (2020 low) is in progress. 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.

Daily Pivots: (S1) 183.45; (P) 183.77; (R1) 184.13; More...

Intraday bias in EUR/JPY remains neutral and consolidation continues below 184.89. While deeper retreat cannot be ruled out, downside should be contained above 181.98 resistance turned support to bring another rally. On the upside, break of 184.89 temporary top will resume larger up trend to 186.31 long term projection level.

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. Considering bearish divergence condition in D MACD, upside could be capped by 186.31 on first attempt. Still, outlook will stay bullish as long as 55 W EMA (now at 171.77) holds, even in case of deep pullback. Sustained break of 186.31 will pave the way to 100% projection at 205.81 next.

Daily Pivots: (S1) 1.7520; (P) 1.7558; (R1) 1.7583; More...

EUR/AUD is staying inc consolidations above 1.7477 and intraday bias remains neutral. On the downside, firm break of 1.7477 will resume the whole decline from 1.8160, and target 1.7245 support and below. Nevertheless, break of 1.7635 minor resistance will turn bias back to the upside for stronger rebound back to 1.7804. Overall, corrective pattern from 1.8554 is still extending.

In the bigger picture, as long as 55 W EMA (now at 1.7470) 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) 0.9283; (P) 0.9296; (R1) 0.9315; More....

Intraday bias in EUR/CHF stays neutral as consolidations continues above 0.9271. Deeper decline is expected as long as 0.9326 resistance holds. Below 0.9271 will resume the fall from 0.9394 to retest 0.9178 low. However, break of 0.9326 will bring stronger rise back to retest 0.9394 resistance.

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 0.9366) will indicate medium term bottoming at 0.9178, and suggests that it's already in larger scale rebound. Further break of 0.9452 resistance will bring stronger medium term rally towards 0.9928 resistance next. Nevertheless, rejection by 55 W EMA will retain bearishness for another fall through 0.9178 at a later stage.

Daily Pivots: (S1) 1.1735; (P) 1.1757; (R1) 1.1772; More….

EUR/USD's retreat from 1.1807 extends lower today but stays above 1.1702 support. Intraday bias remains neutral and further rise is in favor. On the upside, 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.

Daily Pivots: (S1) 155.94; (P) 156.25; (R1) 156.76; More...

Range trading continues as consolidations continues below 157.88. Intraday bias in USD/JPY remains neutral. With 154.33 support intact, outlook remains bullish. On the upside, firm break of 158.85 key structural resistance will be an important medium term bullish sign. Next target will be 161.94 high. However, decisive break of 154.38 will turn bias to the downside for deeper correction.

In the bigger picture, corrective pattern from 161.94 (2024 high) could have 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) 1.3436; (P) 1.3483; (R1) 1.3517; More...

GBP/USD's retreat from 1.3533 extends lower today but stays above 1.3356 support. Intraday bias remains neutral and further rally remains in favor. Above 1.3533 will resume the rally from 1.3008 to retest 1.3787 high. However, firm break of 1.3356 will turn bias back to the downside for deeper pullback.

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) 0.7888; (P) 0.7906; (R1) 0.7936; More….

USD/CHF's recovery from 0.7860 extends higher today but stays below 0.7986 resistance. Intraday bias remains neutral first. On the downside, below 0.7860 will target a retest on 0.7828 low. Decisive break there will confirm larger down trend resumption. However, break of 0.7986 will argue that corrective pattern from 0.7828 is still extending with another rising leg already in progress.

In the bigger picture, outlook will stay bearish as long as 0.8332 support turned resistance holds (2023 low). Long term down trend from 1.0342 (2017 high) is still in progress. Next target is 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382.