At today's meeting, the Federal Reserve lowered the federal funds rate by 25 basis points to a range of 3.50%–3.75%, and simultaneously announced the resumption of technical purchases of short-term Treasury securities to manage year-end liquidity. Following this, the Fed's statement and dot plot generally conveyed a message of "rate cuts proceeding cautiously, with possible pauses in the future." As a result, the market initially sold off the dollar in the short term, but quickly began to digest the implication that "this rate cut does not signal long-term easing." Consequently, USD/JPY showed an initial dip followed by stabilization and even a renewed upside push. The impact of this decision is not one-dimensional. While the 25-basis-point rate cut did reduce the immediate yield advantage of the dollar on a nominal level, more importantly, the Fed did not commit to further rapid cuts in its statement or in the Chair's remarks. Moreover, the updated dot plot indicates that the tightening cycle has not come to a complete end. Therefore, markets have priced in the probability of "limited rate cuts and potential pause going forward." In other words, while short-term rates were lowered, medium- and short-term yields did not collapse. After an initial pullback, the dollar may find support due to a "slower-than-expected pace of rate cuts."

Meanwhile, Japan's interest rate policy has not responded in kind—if the Bank of Japan maintains a relatively accommodative stance and the yield differential between Japanese and U.S. bonds remains intact, the fundamental bullish logic for USD/JPY stays valid. Additionally, the Fed's move to resume purchases of short-term Treasuries helps ease technical tensions in money markets, which can suppress extreme volatility toward year-end and provide a practical window for initiating long positions on pullbacks.

Based on the daily chart, USD/JPY has shown a clear uptrend recently. Despite yesterday's bearish close, as of the European session today, the exchange rate is still oscillating around the 23.6% Fibonacci retracement level at 155.91. If today's closing price holds above 155.91, the likelihood of USD/JPY continuing its earlier uptrend will increase significantly.

Simultaneously, a long lower shadow bullish candle has formed on the 4-hour chart, creating a bullish engulfing pattern, further reinforcing the pair's upward momentum.

Trading direction: Buy

Entry price: 156.00

Target price: 160.10

Stop loss: 155.40

Valid Until: December 25, 2025, 23:00:00

Support: 155.48/154.34

Resistance: 157.89/160.00

Recent financial market concerns over Japan’s economic outlook have intensified, particularly regarding the risk of a negative feedback loop driven by monetary policy lagging, rising inflation, and a weakening yen. According to Hiroyuki Seki, Head of Global Markets at Mitsubishi UFJ Financial Group, market expectations of a December rate hike by the Bank of Japan (BOJ) have risen to 90%. However, the more crucial factor is whether the central bank can signal a firm future policy trajectory. If expectations for tightening are not reinforced and the government increases fiscal expenditure amid inflationary pressures, the yen could depreciate further, raising import costs and sustaining inflationary pressures. Despite the narrowing interest rate differential between Japan and the US, the yen remains weak around 155 per U.S. dollar. Market concerns also stem from Prime Minister Sanae Takaichi’s renewed inflationary stance, which might constrain the BOJ’s tightening measures. Hiroyuki Seki emphasizes the need for Japan to escape a prolonged period of ultra-low real interest rates, with the BOJ implementing a steady normalization of monetary policy to avoid vicious cycles of depreciation and inflation resulting from insufficient tightening. He forecasts that if a December rate increase occurs as expected, subsequent hikes of 25 basis points approximately every six months could bring the terminal rate to 1.25% to 1.5% by mid-2027, with upside risks if inflation becomes more sticky. The BOJ previously estimated the nominal neutral interest rate to be between 1% and 2.5%. In the bond market, Mitsubishi UFJ suggests that after benchmark 10-year yields surpass 1.65%, there is room for re-entry. If yields exceed 2%, the pace of accumulation would accelerate. Currently, the risk exposure is low, and the portfolio remains well-positioned to adapt.

The Federal Reserve has entered a policy observation period following a distinctly hawkish rate cut driven by internal dissent. The Federal Open Market Committee (FOMC) unanimously voted 9-to-3 to cut interest rates by 25 basis points to a target range of 3.50%–3.75%, marking the third rate reduction since 2025. However, the dot plot indicates a markedly narrowed future easing outlook: the majority of policymakers project only one more rate cut in 2026, with a subsequent pause probable. This decision occurs amid persistent inflation above the target, slowing employment growth, an increase in the unemployment rate to 4.4%, and incomplete data due to a government shutdown. Additionally, tariff hikes have exerted further upward pressure on prices, causing inflation to rebound to 2.8% since the start of the year. While economic activity continues to show moderate expansion, outlook uncertainty remains. The latest projections suggest that the Fed anticipates economic growth reaching 2.3% in 2026, with inflation easing to approximately 2.4% by year-end and the unemployment rate holding steady at 4.4%. Post-meeting market reactions reflect interpretations of a "moderate rate cut with a dovish tone," with U.S. equities rising, the dollar weakening, and Treasury yields declining. The FOMC statement emphasizes that economic growth remains modest, labor market softening coincides with elevated inflation, and reaffirms its dual mandate to maximize employment and maintain a 2% inflation rate, indicating ongoing reliance on incoming data to guide future policy adjustments.

In the 1D timeframe, the Bollinger Bands are converging and narrowing, with SMAs leveling off, signaling a potential trend reversal. Yesterday's formation of a bearish engulfing pattern indicates short-term bearish momentum; however, as long as prices remain above 156, there is a high likelihood of re-challenging the 158 or 160 resistance levels. Following the MACD death cross, the MACD line and signal line are retracing towards the zero-axis, but still at some distance, suggesting that the correction phase is not yet complete. The RSI stands at 56, reflecting a relatively strong bullish market sentiment. Resistance levels are near the upper Bollinger Band and key psychological thresholds at 157.7 and 160. In the 1W timeframe, Bollinger Bands are expanding upward, with SMAs diverging, indicating an ongoing bullish trend. After the MACD formed a golden cross, the MACD line and signal line moved above the zero-axis, and EMA 12 is oscillating upwards, signaling strong upward momentum. The RSI is at 66, with market participants predominantly displaying buying bias. It is recommended to go long at the lows in the short term.

Trading Direction: Buy

Entry Price: 154.7

Target Price: 158.8

Stop Loss: 152.5

Support: 154.7, 153.2, 150

Resistance: 157, 158.8, 160

EUR/NZD today (11/12/2025) is trading around 2.0125, up slightly 0.1% but still in a short-term downtrend. The euro is supported by the ECB holding the deposit rate at 2.00%, with Eurozone inflation stable at 2.2% and 2025 growth forecast upgraded to 1.2%. In contrast, the NZD remains under pressure after the RBNZ aggressively cut the OCR to 2.25% with room for further easing, as New Zealand’s economy stays weak and inflation rapidly cools toward 2%. Result: narrowing interest-rate differential favours the NZD over the medium term, keeping EUR/NZD biased mildly lower, with year-end 2025 forecasts around 1.99–2.02. Short-term outlook remains bearish; watch the ECB meeting on 18 December.

EUR/NZD is currently trading around a major bottom zone at 2.01060. This level has triggered strong bullish reactions in the past.

We can consider BUY orders with a low risk-to-reward ratio, targeting 2.02160 first or further up to 2.03080.

Since this is a bottom-fishing setup without full confirmation yet, there is a risk of a breakdown. If price breaks below 2.01060, wait for the next support-turned-resistance zone at 2.00290 before considering new entries.

TRADING DIRECTION: BUY

Entry: 2.01060

Stop Loss: 2.00700

Take Profit: 2.02070 (primary), extendable to 2.03080

Support: 2.00700 / 2.00250

Resistance: 2.02150 / 2.03080

Federal Reserve Chair Jerome Powell stated that the central bank is "well positioned" to "wait and see" how the economy evolves, following the 75 basis points (bps) of policy easing implemented this year. Powell elaborated that the Fed funds rate currently lies within the upper range of neutrality estimates. He added that policymakers will patiently await incoming economic data, which he noted could potentially be "distorted."

"After 175 basis points of cuts, we have moved our policy back to a level that is certainly not strongly restrictive right now," Powell said. "I believe it is in a neutral range." The accompanying Summary of Economic Projections (SEP) revealed the latest "dot plot," which showed that the majority of members hinted that the Fed funds rate for next year would be around 3.4%. This implies that policymakers anticipate potentially implementing a single 25 bps cut next year. For the longer term beyond 2028, Fed officials view the neutral rate at approximately 3%.

Recent U.S. economic data presented a mixed, though generally softer, picture of the labor market. The number of Americans filing for unemployment benefits for the week ending November 29th fell below economists' estimates, with initial jobless claims at 191,000, lower than the 220,000 forecast. Meanwhile, continuing claims for the week ending November 22nd were recorded at 1.939 million. Separately, the Challenger Job Report disclosed that employers announced 71,321 job cuts in November—a notable 53% decrease from the high figure announced in October, though still marking a 24% increase year-over-year (YoY).

The European Central Bank (ECB) is widely expected to maintain its three key policy rates unchanged next week. Nevertheless, speculation is mounting regarding the possibility of a rate hike next year, fueled by firmer comments from various ECB policymakers. Governing Council member Gediminas Simkus stated that there is no need to alter rates while inflation remains at the target. His comments were reinforced by Isabel Schnabel, who said she is "quite comfortable" with market expectations that the ECB's next move could eventually be an increase. ECB President Christine Lagarde further supported the positive outlook, noting that the Eurozone economy shows signs of resilience and that the Governing Council may update its growth projections at the December meeting.

The EUR/USD pair has decisively broken out of its bearish channel and has simultaneously surged above the 200-period Moving Average (MA) following the Fed's commentary. This dual breakout strongly fuels the bullish momentum toward the 1.1819 resistance level.

The 100-period and 200-period MAs are located at 1.1588 and 1.1641, respectively. With the price now trading above both these key technical levels, bullish pressure is expected to accelerate toward levels not seen since September. The Relative Strength Index (RSI) is currently at the 66 level, remaining outside of overbought territory, which indicates ample room for further upside movement. The RSI also found strong support at the 48.85 level on the recent dip. A decisive move below this RSI support would open the door for renewed selling; however, given the current technical bias, any retest of the 200-period MA is likely to be met with renewed buying interest.

Trading direction: Buy

Entry price: 1.1645

Target price: 1.1820

Stop loss: 1.1560

Validity: Dec 23, 2025 15:00:00

The European Central Bank (ECB) is widely expected to maintain its three key policy rates unchanged next week. Nevertheless, speculation is mounting regarding the possibility of a rate hike next year, fueled by a series of firmer comments from various ECB policymakers.

Governing Council member Gediminas Simkus stated earlier on Wednesday that there is no need to alter rates while inflation remains at the target. His comments followed a Bloomberg interview published on Monday, in which Isabel Schnabel said she is "quite comfortable" with market expectations that the ECB's next move could eventually be an increase.

Adding to the recent commentary, ECB President Christine Lagarde said on Wednesday that the Eurozone economy shows signs of resilience and that the Governing Council may update its growth projections at the December meeting. She indicated that the current policy stance remains appropriate given sustained progress toward the inflation target, while emphasizing that the ECB will continue to rely on incoming data to determine the timing of any future adjustments.

Meanwhile the Bank of England (BoE) is broadly expected to cut rates at its upcoming meeting. However, internal divergence is evident in recent BoE commentary. Policymaker Alan Taylor expressed his expectation that UK inflation will return to the 2% target in the near term, which he believes creates scope for additional rate reductions.

Conversely, Deputy Governor Clare Lombardelli adopted a more cautious tone, noting that some upside risks to inflation remain and arguing that the pace of cuts may need to slow as the BoE approaches the end of its current easing cycle. The BoE's Catherine Mann also emphasized that inflation persistence remains her key concern, while Dave Ramsden stated he would not dismiss worries over persistence. On the data front, BRC Retail Sales for November unexpectedly deteriorated from 1.5% YoY to 1.2%, missing the 2.4% forecast.

The EUR/GBP pair is currently testing a crucial ascending trendline, having recently hit a local low of 0.8721 on December 8th and subsequently reacting to the upside. Notably, the 200-period Moving Average (MA) on the 8-hour chart, located at 0.8737, sits directly at this support confluence, while the 100-period MA is positioned at 0.8782.

The price is attempting to decisively recover the 200-period MA level. A convincing close above this MA would open the path for a new bullish impulse, with an immediate target at the 0.8797 resistance level.

Crucially, the Relative Strength Index (RSI) dropped to 31.73, approaching oversold levels. This is a significant reading because these levels were not revisited even during the stronger October 21st rally along the same trendline. The recent price action created a clear bullish divergence on the RSI (a lower price low corresponding to a higher RSI low), suggesting that the underlying selling pressure may be fading. This heavily favors a renewed bullish impulse from this critical support zone. Conversely, a firm break below the ascending trendline would invalidate the bullish setup, opening the door for a deeper correction.

Trading direction: Buy

Entry price: 0.8740

Target price: 0.8795

Stop loss: 0.8705

Validity: Dec 23, 2025 15:00:00

The recent strong upward momentum of the AUDUSD may be coming to an end, with the currency pair currently in a consolidation phase. Earlier, the asset had reached its highest level since September 18 and entered a consolidation phase during Wednesday's trading session, with mixed gains and losses.

The Reserve Bank of Australia (RBA) kept its cash rate unchanged at 3.60% on Tuesday, a move fully priced in by the market. However, Governor Michele Bullock struck a more hawkish tone than anticipated, dismissing market speculation about easing policies in early 2026. She stated: “Given the underlying momentum of the current economy... it appears unnecessary to cut rates further.” She further added that she does not foresee any rate cuts “in the foreseeable future.”

Bullock confirmed that the board did not actively discuss raising interest rates as a policy option today, but she emphasized that members spent “considerable time” examining the circumstances that might compel them to hike rates next year. The discussion focused on the persistence of inflation and the extent to which the economy would need to cool before the board could be confident that price pressures had returned to target levels.

When asked about the possibility of a rate hike in February, Bullock did not rule it out. She stated that the RBA would closely monitor whether inflation remains persistently elevated. If inflation fails to return to target levels, “I think it would certainly raise questions about the tightness of financial conditions, and the board might need to consider whether to maintain current rates or whether to raise rates at some point.” She added that any decision would be made “meeting by meeting.”

Market Watch: Expectations of an RBA rate hike around late 2026 are already fully priced into the market. Tuesday's communication effectively signaled “don't expect any easing in the near term, nor assume the next move will be a rate cut.” Meanwhile, the RBA effectively acknowledged that the downward trend in inflation has stalled, with the balance of risks now tilting to the downside. Inflation is rising, domestic demand is stronger than anticipated, and the labor market remains excessively tight. Should persistent sticky service sector inflation, robust domestic demand, and strained labor conditions persist, future rate hikes would shift from tail risks to tangible options.

The AUDUSD has been rising steadily since 0.6420, with intraday momentum leaning neutral to bullish. It is poised to retest the 0.6705 high. A decisive break above this level would confirm the uptrend and target the 61.8% Fibonacci retracement level around 0.6910, derived from the 0.6420 to 0.6706 range.

However, the rally from the 0.6421 level has shown little structure, and the momentum for further gains lacks sustainability. The path of least resistance is downward.

Trading Direction: Sell

Entry Price: 0.6670

Target Price: 0.6520

Stop Loss: 0.6750

Valid Until: December 26, 2025 23:55:00

Support: 0.6608, 0.6580, 0.6550

Resistance: 0.6670, 0.6690, 0.6707