The euro is strengthening against the dollar as the US currency weakens amid persistent expectations of Federal Reserve monetary easing in 2026.
Possible technical scenarios:
On the daily chart, EUR/USD is testing resistance at 1.1788. A breakout and consolidation above this level would open the way toward the next target at 1.1898. Otherwise, a pullback from 1.1788 toward the dotted support at 1.1655 remains possible.
Fundamental drivers of volatility:
The dollar remains the main driver of price dynamics. Markets continue to price in the first Fed rate cut around mid-June 2026, despite muted and occasionally contradictory signals from policymakers. US inflation slowed to 2.7% year-over-year in November from 3% previously, although the Fed continues to point to data distortions caused by the 43-day government shutdown. Even so, investors interpret the Fed’s rhetoric as confirmation that the tightening cycle has ended and that the next move will be toward rate cuts, keeping sustained pressure on the dollar.
From the eurozone, momentum remains broadly neutral but supportive. ECB officials, including Isabel Schnabel, have effectively ruled out further rate hikes in the near future while continuing to stress lingering inflation risks. This limits the chances of a sharp policy shift but also avoids aggressively hawkish expectations, keeping the euro within a moderate growth range without a meaningful repricing of future yields.
In the near term, EUR/USD dynamics will depend on incoming macroeconomic data from both the US and the eurozone. Market focus will be on US Q3 GDP, employment, and business activity data, as well as GDP figures from Germany and Spain. Evidence of a slowing US economy would increase pressure on the dollar and preserve the euro’s advantage, while stronger data could temporarily cap gains in the pair.
Intraday technical picture:
As evidenced by developments on the 4H chart, EUR/USD is attempting to break out above 1.1788, though it remains unclear whether the price will be able to hold above this level. Further direction will depend on how the pair settles around this horizontal resistance.
The GBP/USD pair has reached fresh 10-week highs amid sustained US dollar weakness and expectations of a more cautious pace of rate cuts by the Bank of England.
Possible technical scenarios:
As we can see on the daily chart, GBP/USD is attempting to consolidate above 1.3436, which would open the path toward the next upside target at 1.3630.
Fundamental drivers of volatility:
The pound has been supported by revised expectations surrounding Bank of England policy. Despite the recent rate cut to 3.75%, the regulator has signaled that further easing will proceed gradually. A divided Monetary Policy Committee and continued pressure from wages and inflation remaining above the 2% target make the future rate path less predictable, reducing the likelihood of aggressive easing.
An additional source of uncertainty comes from the Bank of England’s updated communication strategy, which places greater emphasis on alternative scenarios rather than firm guidance. This increases volatility in expectations. Nevertheless, under current conditions, markets view UK policy as relatively tighter than that of the Fed, providing fundamental support for the pound and allowing GBP/USD to remain near multi-week highs.
From the US side, the dollar remains under pressure following a series of Fed rate cuts and amid expectations of a slowing US economy. Markets are pricing in further monetary easing in 2026 despite more restrained official projections. Weak labor market data and expectations of softer GDP growth are driving dollar selling and supporting continued gains in GBP/USD.
Intraday technical picture:
The 4H chart supports the scenario of a likely upward movement within the 1.3436–1.3630 range.
The USD/JPY pair remains under pressure amid a widening divergence in monetary policy between the Bank of Japan and the US Federal Reserve. The yen continues to show resilience and a tendency toward strengthening, despite short-term technical pullbacks.
Possible technical scenarios:
Given the unfolding scenario on the daily chart, USD/JPY has moved below the 156.71 level, opening the path for a decline toward the next downside targets at 155.03 and 154.35.
Fundamental drivers of volatility:
Expectations of further monetary tightening by the Bank of Japan remain the key factor supporting the Japanese yen. After hiking rates to a three-decade high, the regulator has clearly signaled readiness for additional steps, provided favorable macroeconomic conditions persist. The rise in 10-year Japanese government bond yields to 26-year highs confirms a shift in the monetary regime and further enhances the yen’s attractiveness.
Additional support comes from firm statements by Japanese authorities regarding their willingness to intervene in currency markets, which is restraining speculative pressure against the yen. Against this backdrop, attempts to push USD/JPY higher continue to face strong resistance.
From the US side, the dollar remains under pressure due to expectations of Federal Reserve monetary easing in 2026. Markets are pricing in at least two rate cuts, standing in sharp contrast to the Bank of Japan’s tightening bias. Ongoing discussions about a potential revision of the Fed’s communication framework are adding uncertainty and weighing on confidence in the dollar.
Geopolitical tensions are also increasing demand for safe-haven assets, further favoring the yen. Taken together, these fundamental factors point to a continued bearish bias in USD/JPY, with any upside moves likely limited to corrective rebounds ahead of key US macroeconomic releases and Japanese inflation data.
Intraday technical picture:
The 4H chart suggests that the technical setup confirms the likelihood of a continued price decline toward the 155.03 target and potentially lower, toward 154.35.
The USD/CAD pair continues to move lower against a backdrop of US dollar weakness and a firmer Canadian dollar, with expectations of further Fed easing remaining the main driver.
Possible technical scenarios:
From the look of things on the daily chart, USD/CAD has broken out the 1.3744 level. A consolidation below this area would open the way toward the next support at 1.3556, marked with a dotted line.
Fundamental drivers of volatility:
The US dollar remains under pressure as market confidence grows in the continuation of rate cuts in the US. Recent comments from Federal Reserve officials have reinforced this view, while persistently high interest rates are increasingly perceived as a risk to economic growth, reducing support for the dollar. Political signals from the White House aimed at lowering borrowing costs are adding further downward pressure on the USD.
Meanwhile, the Canadian dollar is finding support from rising oil prices. Escalating geopolitical tensions are increasing demand for commodities, which benefits the CAD as the currency of a major oil exporter to the US. Higher oil prices are partially offsetting the Bank of Canada’s cautious policy stance and are adding pressure to the USD/CAD pair.
In the near term, market focus is shifting to the upcoming US GDP data. Evidence of a slowing US economy would strengthen expectations of additional Fed easing and keep the downside scenario for USD/CAD in play.
Intraday technical picture:
According to the 4H chart, USD/CAD shows technical potential for further decline within the 1.3556–1.3744 range.
Brent crude oil prices edged higher as markets assessed the limited impact of current geopolitical risks against a backdrop of persistent supply overhang and weak demand expectations.
Possible technical scenarios:
On the daily chart, Brent is consolidating above the 61.10 level, from where upward movement could continue toward resistance at 63.23.
Fundamental drivers of volatility:
The factors that have an impact on oil prices remain mixed. On one hand, the market is incorporating a geopolitical risk premium due to increased US pressure on Venezuela and the escalation of hostilities in the Black Sea region, where Russian and Ukrainian export infrastructure remains vulnerable. These developments are heightening anxiety and could trigger sharp, but short-lived, price spikes, particularly against the backdrop of thin liquidity and heightened sensitivity to news.
On the other hand, underlying supply-demand fundamentals remain bearish. Forecasts for 2026 continue to point to excess supply and sluggish consumption growth, offsetting the impact of even potentially severe sanctions scenarios. Major market participants broadly agree that even meaningful supply disruptions are unlikely to result in a structural deficit over the coming quarters.
As a result, Brent remains caught between a geopolitical risk premium and expectations of surplus supply, producing muted price dynamics and limiting the scope for sustained gains until there are clear signs of a tighter market balance or a meaningful pickup in global demand.
Intraday technical picture:
Judging by the developments on the 4H chart, the formation of a bullish flag pattern creates technical preconditions for a move higher toward the 61.10–63.23 target zone.
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