EUR/GBP extended modest gains on Tuesday, trading near the 0.8800 handle as the Euro outperformed the British Pound amid diverging monetary policy expectations between the European Central Bank and the Bank of England. The cross was last up roughly 0.15% on the day, continuing a gradual but consistent recovery fueled by softening UK fundamentals and slightly firmer momentum on the Eurozone data front.

The latest preliminary figures from Eurostat gave the Euro a fresh tailwind, revealing that Eurozone inflation remains more resilient than markets expected. The Harmonized Consumer Price Index (HCPI) ticked up to 2.2% year-on-year in November, up from 2.1% in October, and marginally beating forecasts. Although the core reading held steady at 2.4%, defying expectations for an increase, the data still underscores the challenges the ECB faces in steering inflation sustainably back to its target.

On a monthly basis, headline inflation slipped 0.3%, while core inflation fell 0.5%—a typical seasonal effect rather than evidence of a meaningful disinflation trend. Several economists, including those at Nordea, cautioned that services inflation at 3.5% YoY is still too high for policymakers to declare victory, noting persistent wage pressures that could spill into 2025 and 2026. This persistence in services inflation is one of the key reasons the ECB continues to signal a firm stance, even as broader economic conditions soften.

Meanwhile, the labour market is beginning to show signs of stress. The Eurozone unemployment rate held at 6.4%, its highest level in more than a year and a half, following upward revisions to September’s figures. Despite the uptick, several ECB officials have stressed that inflation is “fluctuating around the target”—a phrase intended to signal stability and reduce speculation about near-term rate cuts. Governing Council member Joachim Nagel reiterated that policy will remain steady for an extended period, reinforcing the Euro’s relative resilience.

Across the Channel, the British Pound continues to face mounting pressure as investors increasingly position for earlier-than-expected rate cuts by the BoE. UK Prime Minister Keir Starmer’s recent remarks—emphasizing the need to bring down both inflation and interest rates to revive investment—added to speculation that the BoE may soon act to support the slowing economy. Combined with easing wage growth and weakening hiring trends, markets have now almost fully priced in a cut at the next meeting.

Still, not all policymakers share the same level of urgency. BoE official Megan Greene pushed back on aggressive easing bets, stating she would only support cuts if employment and consumption deteriorate more sharply. Her comments helped stabilize the Pound temporarily but did little to fully lift sentiment as the broader economic narrative clearly tilts dovish.

From a market-structure perspective, EUR/GBP remains comfortably within its established bullish channel, showing signs that the recent corrective pullback has likely concluded after finding support near 0.8748. The pair has since rebounded toward 0.8785, supported by improving stochastic momentum—a signal that bullish momentum is attempting to reassert itself.

As long as the cross holds above the 0.8760 support region, the bullish outlook remains intact. A sustained push above the 0.8815 barrier would be a strong confirmation of renewed upside interest, likely opening the door toward 0.8855, with room for an extension to the 0.8950 next major resistance level.

BUY EURGBP

ENTRY PRICE: 0.8795

STOP LOSS: 0.8740

TAKE PROFIT: 0.8950

The EUR/JPY cross regained its footing in early Tuesday trade, finding modest relief after three consecutive sessions of losses as investors cautiously reposition ahead of crucial Eurozone inflation data. The pair, which briefly slipped toward the psychologically important 180.00 handle—its lowest level in four days—rebounded during the Asian session and traded near 180.70, up just over 0.10%. While the recovery is still tentative, the stabilization signals that traders may be preparing for a potentially more decisive reaction once the latest inflation figures hit the tape.

At the macro level, the flash estimate for the Eurozone Harmonized Index of Consumer Prices (HICP) is expected to show a mild re-acceleration, with headline inflation forecast at 2.1% year-on-year in November and core inflation ticking up to 2.5% from 2.4%. Monday’s country-level releases offered a mixed picture: France, Spain, and Italy showed continued signs of disinflation, suggesting that price pressures may be settling. However, Germany—traditionally a bellwether for the bloc—posted hotter-than-anticipated readings.

The divergence complicates the policy landscape but reinforces market expectations that the European Central Bank will maintain its current stance for now. Any suggestion that the ECB is done tightening, combined with improved inflation dynamics, tends to support the Euro. For EUR/JPY, this aligns with the current mild upside bias, as investors see more stability in the Eurozone’s policy outlook compared with Japan’s evolving stance.

On the other side of the equation, the Japanese Yen continues to struggle as broader risk appetite picks up, reducing demand for safe-haven assets. However, the currency’s weakness remains measured, largely due to the market’s conviction that the Bank of Japan is slowly but surely walking toward policy normalization. BOJ Governor Kazuo Ueda reinforced that perception on Monday, noting that the probability of the Bank’s economic and price projections being realized is rising—a remark interpreted as a subtle nod toward future tightening steps.

Adding to the Yen-supportive backdrop, Japan’s Finance Minister Satsuki Katayama issued fresh warnings over recent currency volatility, stressing that the rapid depreciation of the JPY is inconsistent with underlying fundamentals. The comments revived speculation that Tokyo stands ready to intervene again should the Yen weaken too aggressively, effectively erecting a psychological ceiling for EUR/JPY bulls. Policymakers’ repeated signals act as a brake for traders who may otherwise push the pair decisively higher.

Still, the market appears content to buy the Euro cautiously on dips, especially as the Yen lacks a strong catalyst to resume broad strengthening. With inflation data on deck and the ECB’s path seemingly steadier than the BOJ’s, EUR/JPY remains caught between competing forces—policy divergence that favors the Euro and intervention risks that underpin the Yen.

While EUR/JPY has not yet escaped its broader consolidation phase, technical indicators suggest that the cross may be gearing up for another bullish attempt. The pair continues to hold comfortably above the critical support area at 179.40, and recent price action shows efforts to establish additional support around 180.25—a zone that traders are closely monitoring as a springboard for near-term gains.

A sustained push above 181.15 would further reinforce bullish momentum, but the more decisive trigger lies at the barrier near 181.75. A clean break above this level would open the path toward the next resistance at 182.30, with the broader bullish target sitting at 183.05.

Stochastic oscillators are hovering near the 80 level, a region that often precedes renewed upside traction. If momentum continues to build, the technical setup favors buyers, aligning with the broader narrative of Euro resilience against a steady—but not aggressively strengthening—Yen.

For today, the expected trading range is projected between 180.35 and 182.30, with the bias leaning decisively bullish as long as the cross holds above its emerging support zones.

BUY EURJPY

ENTRY PRICE: 181.25

STOP LOSS: 179.30

TAKE PROFIT: 183.05

The UK Prime Minister, Keir Starmer, on Monday defended the fiscal budget announced last week by Chancellor Rachel Reeves, emphasizing that the budget aims to sustain market confidence and stabilize the economic environment, thereby providing the certainty needed for long-term business planning. Starmer highlighted that the current priority is to control inflation and promote lower interest rates to reduce corporate financing costs, expressing confidence that economic growth can surpass expectations. However, the budget has faced criticism for increasing tax burdens and lacking clear measures to support sustainable growth. In terms of monetary policy, Bank of England Monetary Policy Committee member Megan Greene indicated that supportive rate cuts would require more evident signs of weakening in the labor market and consumer spending. During the November meeting, she narrowly supported maintaining interest rates and previously stated that the current 4% rate is "insufficiently restrictive," while remaining cautious about wage growth prospects. Financial markets currently anticipate the Bank of England might cut interest rates by a further 25 basis points to 3.75% before the end of 2025. Recent data shows signs of recovery in the UK manufacturing sector in November. The S&P Global Purchasing Managers' Index (PMI) rose to 50.2, marking the first breach of the expansion-contraction threshold since September 2024, indicating a recovery and expansion in activity. The growth was primarily driven by improvements in domestic demand, with total new business stabilizing after a 13-month decline, while the decline in new export orders slowed to its lowest point in a year. However, the underlying growth remains uneven, with only the output of investment goods increasing, mainly contributed by large manufacturers; employment continues to decline, albeit at a reduced rate. Notably, manufacturing sales prices experienced their first decrease in over a year.

The U.S. Department of Global Research at JPMorgan Chase indicated on Monday that the Federal Reserve is likely to initiate a 25 basis point interest rate cut in December, primarily driven by persistent labor market softness and dovish signals from policymakers. The bank further projects the possibility of two additional rate cuts by mid-2026, reducing the terminal interest rate range to 3.00%-3.25%. Market responses have been swift, with the CME FedWatch tool indicating an 87.6% probability of a rate cut in December. However, significant internal divergence within the Federal Reserve complicates the policy outlook. On one hand, inflation remains sticky, while on the other, slowing employment growth creates a direct conflict between dual mandates. Additionally, a previous 43-day government shutdown delayed key economic data, increasing policy uncertainty. Public information reveals that up to five voting members of the Federal Open Market Committee (FOMC) are skeptical or opposed to further rate reductions, whereas core Board members tend to favor easing. If a rate cut occurs in December, it may mark the first instance since 2019 of three or more dissenting votes. Chairman Jerome Powell has yet to clearly signal expectations for the December meeting, but recent remarks from Vice Chair Williams about the potential for "room to cut rates in the near term" are viewed as dovish by markets. Analysts suggest a potential compromise could involve implementing a rate cut while signaling a pause in the accompanying statement and press conference to maintain policy flexibility moving forward.

In the 1H timeframe, the GBPUSD price has reached a new high, indicating a potential bearish divergence as the MACD bullish momentum diminishes. Meanwhile, the MACD's MACD line and signal line are retreating below the zero-axis, suggesting a shift toward a bearish trend. The Bollinger Bands are expanding downward, and the SMAs are diverging negatively, likely signaling a retracement toward the EMA200 around 1.318. The RSI is at 42, reflecting market pessimism. In the 1D timeframe, the price remains pressured below the EMA200 and the upper Bollinger Band; a short-term correction towards the middle band near 1.315 is plausible after a MACD golden cross with the MACD line and signal line retesting the zero-axis, indicating a potential trend reversal. The RSI at 52 suggests the market remains indecisive. Overall, the short-term upward rebound appears to be near exhaustion. Therefore, it is recommended to go short at the highs.

Trading Direction: Sell

Entry Price: 1.322

Target Price: 1.29

Stop Loss: 1.34

Support: 1.3, 1.29, 1.28

Resistance: 1.326, 1.33, 1.34

Markets speculate that Japanese authorities may intervene to curb further yen weakness, which could discourage aggressive short positioning against the yen. On the other hand, with markets expecting another Fed rate cut this month, the dollar is struggling to attract meaningful buying interest, potentially limiting upside room for USD/JPY. Recent Japanese economic data and policy signals present a complex picture: manufacturing remains weak, domestic demand stays resilient, and monetary policy may be shifting. In November, Japanese manufacturing activity remained in contraction but at a slower pace. The S&P Global Manufacturing PMI rose from 48.2 in October to 48.7, marking the slowest contraction in nearly three months. Midstream industries and investment goods sectors remain sluggish, while consumer goods show slight improvement. New orders have declined for two and a half years; companies largely attribute weak demand to a gloomy global economic environment, tighter client budgets, and insufficient capital investment. Demand shrinkage is particularly notable in the automotive and semiconductor sectors. Meanwhile, input cost inflation accelerated for the fourth consecutive month, driven mainly by higher labor costs and raw material prices, prompting firms to raise their selling prices. Despite near-term pressures, business confidence over the next 12 months has risen to a ten-month high, supported by recovering demand in electronics and transportation as well as expectations of new product launches. Against a backdrop of weak economic data alongside structural adjustments, the BoJ is considering a policy shift. Governor Kazuo Ueda noted that the central bank will assess the pros and cons of raising rates at its December policy meeting—the clearest signal yet of a possible hike. He said the Japanese economy is expected to rebound from the Q3 contraction, and the impact of U.S. tariffs is lower than previously feared. With tariff risks easing, the likelihood of achieving the BoJ's price and economic forecasts is increasing. Ueda stressed that Japan is now at a stage where wage growth trends must be tested, and wage growth will decisively influence the timing of rate hikes. Amid sustained high corporate profits, worsening labor shortages, and major business groups advocating pay raises, wage issues have become central to monetary policy discussions.

The dollar fell to a two-week low on Monday. The ISM reported that the U.S. manufacturing PMI dropped to 48.2 in November from 48.7 in October, below market expectations. Combined with recent weak U.S. data, it suggests growth in the world's largest economy is cooling. Dovish signals from Fed officials have fueled speculation of another rate cut this month. In fact, CME Group's FedWatch tool shows an almost 88% probability of a 25-basis-point cut at the Fed's December 9th–10th meeting. This stands in sharp contrast to the BoJ's hawkish stance and may restrain USD/JPY movements. Before the Fed's rate decision next week, investors will closely watch the release of the U.S. Personal Consumption Expenditures (PCE) Price Index—the Fed's preferred inflation gauge—for more clues about the future rate-cut path. However, due to the recent federal government shutdown, official employment reports have yet to be released, adding to market uncertainty.

Regarding the daily chart, the Bollinger Bands are expanding upward, moving averages are diverging higher, and the bullish trend remains intact. After stabilizing near the middle band, the price momentum shown by MACD weakens somewhat. RSI is at 56, indicating strong bullish sentiment. As long as price holds above the middle band, there is a high probability of testing the upper band and round-number resistance levels near 157.6 and 160. In the weekly chart, Bollinger Bands are also expanding upward, moving averages diverge higher, and MACD has formed a golden cross with both lines back above the zero line, signaling a return to bullish territory. RSI stands at 67, showing investors are predominantly in buy mode. If the weekly candlestick closes with a long lower shadow, the pair is likely to rise toward the previous high near 158.8. In the short term, investors should focus on buying the dips.

Trading direction: Buy

Entry price: 155.8

Target price: 158.8

Stop loss: 154

Support: 154.7/153.2/150

Resistance: 154.7/153.2/150

Gold prices have recently strengthened amid intertwined geopolitical risks and interest rate expectations, briefly surging to 4264.66 before retreating into a volatile range. A series of developments escalating tensions between China and Japan, including friction over the Diaoyu and Senkaku Islands and verbal confrontations at international forums, have elevated “regional geopolitical risks” on the trading agenda. As uncertainty intensifies, investors naturally rebuild their safe-haven positions, benefiting gold as a traditional safe-haven asset.

From a transmission logic perspective, Sino-Japanese tensions impact gold prices through three pathways: First, direct safe-haven premium, when regional conflict risks escalate, some multinational capital shifts positions from risk assets to gold and government bonds, driving up gold prices in the short term; Second, macroeconomic and trade shocks, if tensions disrupt trade or fuel concerns over global supply chains and growth, market expectations for the pace of Fed rate cuts may accelerate or intensify (risk withdrawal → central bank easing expectations), depressing real interest rates and supporting gold prices; Third, currency and capital flows, if the yen fluctuates due to war premiums and capital outflows, interactions between regional currencies and the dollar will indirectly influence cross-currency demand for gold. The combined effect of these three pathways significantly heightens gold's sensitivity during the current news.

On the 4-hour chart, gold recently broke out of a triangle consolidation pattern and continued its upward momentum. After breaking through the resistance level of 4245 to reach 4264.66, it began to pull back. Currently, gold has tested the 20-day moving average support with two consecutive downward-trending 4-hour candlesticks, both closing with lower shadows. This indicates an inability to break below effectively, signaling a significant strengthening of bullish momentum in the market. Concurrently, multiple moving averages within the system exhibit a bullish alignment pattern, suggesting strong continuity in gold's upward trend and further enhancing the likelihood of continued gains in the near term.

On the upside, the primary resistance level for gold is at 4264.66. If this level is broken, further upward space will open, potentially testing 4300.00 or even the previous historical high of 4381.44.

On the downside, if gold breaks below the key support at 4200.00 with increased volume, it could pull back toward 4140.00.

Trading direction: Buy

Entry price: 4215.00

Target price: 4360.00

Stop loss: 4190.00

Validity until: 2025-12-16 23:00:00

Support: 4200.00, 4173.47

Resistance: 4264.66, 4300.0

Eurozone economic data delivered a mixed picture, with German Retail Sales unexpectedly falling short of estimates in October. However, the German Harmonized Index of Consumer Prices (HICP) for November surprised to the upside, nearing the 3% threshold. In France, third-quarter Gross Domestic Product (GDP) aligned with both estimates and the preliminary reading, while Spain's HICP similarly exceeded the 3% mark.

A prior review of the European Central Bank (ECB) policy meeting minutes indicated that policymakers judged the economic and inflation outlook to be broadly consistent with the September baseline projection, albeit with high uncertainty remaining. Members agreed that maintaining interest rates unchanged remained appropriate, as recent data had not materially altered the medium-term assessment and the distribution of risks around inflation was generally balanced.

In the U.S, the ISM Manufacturing PMI softened to 48.2 in November from 48.7 in October, marking the ninth consecutive month the U.S. industrial sector has been in contraction territory and falling short of the 48.6 forecast. Breaking down the details, the Employment sub-index plunged deeper into contraction, slipping from 46 to 44, pointing to weakening labor market momentum. Furthermore, the New Orders Index fell to 47.4, signaling a third straight month of contracting demand. The only component showing resilience was the Prices Paid Index, which rose to 58.5, indicating continuous cost pressures for businesses.

Following the latest round of weaker U.S. economic data, traders have aggressively increased their bets on interest rate cuts in December, with the probability now standing at 87%, according to the CME FedWatch Tool. In political news, rumors have surfaced suggesting that White House National Economic Advisor Kevin Hassett could be named as the next Fed Chair. U.S. President Donald Trump confirmed he has made his choice but stated: "We will be announcing it."

U.S. inflation indicators showed signs of stabilization in September. The Producer Price Index (PPI) rose 2.7% year-over-year (YoY), suggesting that wholesale price pressures have leveled off. However, consumer activity appeared to weaken, with Retail Sales rising only 0.2% month-over-month (MoM) in September, a noticeable slowdown from the 0.6% increase in August. Compounding this, the Conference Board reported that household sentiment deteriorated significantly in November, with Consumer Confidence dropping 6.8 points to 88.7 from 95.5 in October.

The EUR/USD pair has encountered stiff resistance at the 1.1645 level, a point where it has faced strong bearish reactions on previous occasions. If this pattern of rejection repeats, a downward correction is highly probable. The failure to achieve a new higher high suggests that the underlying bearish trend may still be in control. This corrective move could initiate from the 1.1645 resistance, targeting the ascending trendline support, which converges near the 1.1511 support zone.

The 100-period and 200-period Moving Averages (MAs) are located at 1.1560 and 1.1585, respectively. A decisive close below these MA levels would accelerate the bearish impulse toward the trendline. The Relative Strength Index (RSI) is currently at 66; while not yet in the extreme overbought zone, it is high enough to warrant caution. This suggests that one final push to retest the 1.1645 resistance is possible before a full correction begins. However, a strong, decisive break and close above the 1.1645 resistance would invalidate the bearish setup, opening the path for a more sustained upward movement.

Trading direction: Sell

Entry price: 1.1637

Target price: 1.1520

Stop loss: 1.1675

Validity: Dec 12, 2025 15:00:00