The EUR/USD pair is holding near multi-month highs, though upside momentum remains uncertain amid weak eurozone data and anticipation of key US economic releases.
Possible technical scenarios:
As evidenced by the daily chart, EUR/USD has nearly reached resistance at 1.1788, completing a bullish double-bottom reversal pattern with a neckline at 1.1655 marked with a dotted line. Further price direction will depend on the US dollar’s reaction to incoming news and on whether 1.1788 is broken out. A confirmed breakout would open the way toward the next target at the 1.1898 horizontal level. Otherwise, a pullback from resistance at 1.1788 toward dotted support at 1.1655 remains possible.
Fundamental drivers of volatility:
A weaker US dollar has supported EUR/USD. Markets continue to price in further Fed easing, while expectations for the ECB remain more restrained: the regulator is likely to keep rates unchanged and shows little urgency to signal additional easing. This divergence is helping the euro hold its ground despite a deterioration in overall risk sentiment.
That being said, the eurozone’s fundamental backdrop looks fragile. Preliminary PMI data for December came in below expectations, pointing to slowing business activity across both manufacturing and services. The manufacturing sector is slipping deeper into recession, with Germany remaining a key weak spot as falling orders and output increase the risk of a soft economic start next year. These factors cap the euro’s upside potential.
In the US, investors remain cautious ahead of delayed labor market and retail sales releases. Signs of labor market cooling would strengthen expectations of a Fed rate cut and pressure the dollar, while stronger data could offer it temporary support. As a result, conditions currently favor consolidation in EUR/USD: dollar weakness is offsetting weak European data, but clear drivers for a renewed and sustained rally remain limited.
Intraday technical picture:
Judging from the look of things on the 4H chart, EUR/USD still has room to test resistance at 1.1788. However, the behavior and strength of this level today will largely depend on the dollar’s reaction to US employment data.
The GBP/USD pair is gaining strength following solid UK data, though further momentum will depend on signals from the Federal Reserve and the balance of risks surrounding Bank of England policy.
Possible technical scenarios:
On the daily chart, GBP/USD has reached resistance at 1.3436 and is now at a crossroads between two scenarios, awaiting the US employment report. A breakout of 1.3436 would open the way toward the 1.3630 target; otherwise, the pair could pull back toward 1.3279, marked with a dotted line.
Fundamental drivers of volatility:
The pound was supported by stronger-than-expected UK macroeconomic data. Wage growth surprised to the upside, with average earnings excluding bonuses accelerating to 4.6% y/y and including bonuses rising to 4.7%. Another positive signal came from December’s preliminary PMI data, where the composite index increased to 52.1, pointing to expanding business activity across both the services and manufacturing sectors.
At the same time, the labor market is sending mixed signals. Unemployment climbed to 5.1%, and the economy shed an additional 17,000 jobs over the three months. This combination adds uncertainty ahead of the Bank of England meeting. While accelerating wage growth limits the scope for rapid easing, weak labor demand and a cooling economy continue to support expectations of a 25-basis-point rate cut to 3.75%.
From the US side, the pound is also benefiting from overall dollar weakness. The dollar index is hovering near multi-month lows ahead of key employment data, while expectations for more aggressive Fed easing in the medium term continue to grow. As a result, GBP/USD is supported by the mix of relatively strong UK data and a softer dollar, though the durability of the move will largely depend on upcoming US data and central bank guidance.
Intraday technical picture:
Given the developments on the 4H chart, the price is approaching the resistance of the 1.3279–1.3436 range, from which either a downward reversal or an attempt at a breakout is plausible. The trigger for one of these scenarios will most likely be the dollar’s reaction to the US employment report.
The USD/JPY pair is trading under pressure as the yen gains support amid expectations of policy tightening by the Bank of Japan and ongoing weakness in the US dollar.
Possible technical scenarios:
The USD/JPY pair is trading under pressure as the yen gains support amid expectations of policy tightening by the Bank of Japan and ongoing weakness in the US dollar.
Fundamental drivers of volatility:
The Japanese yen has strengthened for the second consecutive session as market confidence grows that the Bank of Japan could raise interest rates as early as Friday’s meeting. These expectations were reinforced by comments from BoJ Governor Kazuo Ueda regarding the increasing likelihood of the baseline inflation scenario, as well as by improving business sentiment. A quarterly survey of large Japanese manufacturers showed confidence climbing to a four-year high, strengthening the case for continued monetary policy normalization and supporting demand for the yen.
An additional supportive factor for the JPY is the cautious tone in global markets. Lower risk appetite, pressure on Asian equity markets, and concerns about overvaluations in certain sectors are boosting the yen’s appeal as a safe-haven asset. At the same time, relatively weak — though not alarming — Japanese business activity data for December failed to undermine positive expectations for the Bank of Japan’s policy outlook.
Pressure on the pair is also coming from the US side due to a weakening dollar. Markets are now pricing in two additional Fed rate cuts in 2026, keeping the dollar index near its lowest levels in more than two months. Against this backdrop, the divergence between Federal Reserve and Bank of Japan policy trajectories favors further yen strengthening. However, investors remain cautious ahead of key US employment data and the Bank of Japan’s decision, both of which will play a decisive role in determining the next direction for USD/JPY.
Intraday technical picture:
According to the 4H chart, USD/JPY has consolidated below the resistance of the 154.35–155.03 range, leaving enough room for the price to move toward the lower boundary.
The USD/CAD pair is consolidating for the third consecutive session as markets await upcoming US macroeconomic data.
Possible technical scenarios:
Given the unfolding situation on the daily chart, USD/CAD has pulled back from the 1.3744 level. If the US dollar’s reaction to the employment report does not disrupt the current technical setup, a corrective rebound toward 1.3861 remains possible. Otherwise, the medium-term downside target shifts to 1.3503.
Fundamental drivers of volatility:
The key source of uncertainty remains the release of delayed US employment data for October and November. The dollar is trading under pressure near eight-week lows as investors assess the resilience of a cooling labor market. The unemployment rate is expected to remain at 4.4% in November, and any further signs of labor market weakening could reinforce expectations for additional Federal Reserve easing. The Fed has already reduced rates by a cumulative 0.75% this year, bringing them to a 3.50–3.75% range.
Markets are also paying close attention to US retail sales figures and preliminary PMI data. A 0.2% month-on-month increase in retail sales could offer limited support to the dollar, but overall sentiment remains cautious, with labor market data seen as the primary driver of near-term Fed rate expectations.
On the Canadian side, the fundamental backdrop remains relatively neutral. Inflation data for November showed stability, with headline CPI at 2.2% y/y and core CPI at 2.9%, broadly in line with the Bank of Canada’s assessment of inflation near 2.5%. This reduces the likelihood of aggressive policy action from the central bank and keeps USD/CAD rangebound as markets await direction from US data.
Intraday technical picture:
USD/CAD, as we can see on the 4H chart, is recovering within the 1.3744–1.3861 range, with sufficient room to move toward its upper boundary.
Gold is trading with a subdued tone, as easing geopolitical risks and profit-taking are partly offsetting expectations surrounding US monetary policy.
Possible technical scenarios:
On the daily chart, XAU/USD is hovering near the upper boundary of the 4209.95–4375.25 range. From its current position, the price has room to retreat toward support. If upcoming US macroeconomic data proves weak, the price could resume its upward movement and retest the 4375.25 level.
Fundamental drivers of volatility:
The main factor pressuring gold was progress in the Ukraine negotiations. Statements from US officials noting “significant progress” in talks with Kyiv reduced demand for safe-haven assets, limiting further upside after an earlier sharp rise of more than 1% at the session’s open. As a result, spot gold is losing the momentum typically observed during heightened geopolitical tension.
Another restraining force has been profit-taking by investors who opened long positions earlier, which increased intraday volatility and prevented gold from solidifying above recent highs.
At the same time, market focus is shifting toward the upcoming US macroeconomic data. Employment and retail sales reports are expected to offer clues about the future path of Federal Reserve policy. Markets currently assign roughly a 78% probability to rates remaining unchanged in January 2026, which tempers both upward pressure on yields and gold’s upside potential. Overall, the precious metal is balancing fading safe-haven demand with expectations of a more accommodative Fed stance ahead.
Intraday technical picture:
At the same time, market focus is shifting toward the upcoming US macroeconomic data. Employment and retail sales reports are expected to offer clues about the future path of Federal Reserve policy. Markets currently assign roughly a 78% probability to rates remaining unchanged in January 2026, which tempers both upward pressure on yields and gold’s upside potential. Overall, the precious metal is balancing fading safe-haven demand with expectations of a more accommodative Fed stance ahead.
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