AUD/USD traded firmly around 0.6640 on Monday, pausing after a four-day winning streak that propelled the pair to its highest level in nearly two months. The Australian Dollar’s consolidation comes at a crucial moment for global FX markets, with investors positioning cautiously ahead of Tuesday’s Reserve Bank of Australia (RBA) policy decision and Wednesday’s Federal Reserve announcement, a combination that could reshape near-term currency dynamics.

The Australian Dollar has been buoyed by a meaningful shift in monetary-policy expectations. Only weeks ago, markets had priced in the risk of additional RBA rate cuts. But stubborn inflation has effectively wiped out those expectations. Australia’s Q3 CPI rose 3.2% YoY, surging from 2.1% in Q2, underscoring that price pressures remain entrenched across services, rents, and energy components. The sticky nature of inflation has convinced traders that the RBA is unlikely to ease further — and may even need to consider tightening again over the medium term.

For now, consensus overwhelmingly expects policymakers to keep the Cash Rate unchanged at 3.60%, but traders acknowledge that the tone of the RBA’s statement may be far more consequential than the decision itself. A guidance shift — even subtle — could fuel another leg higher in the AUD if the central bank signals a stronger commitment to managing inflation risks without leaning toward cuts in early 2025.

Some analysts have taken this idea further. With household spending accelerating 1.3% in October, far above September’s 0.3%, a growing segment of the market is starting to pencil in the possibility of an RBA hike as early as 2026 if inflation fails to moderate. Yet not everyone is convinced. Analysts at Commerzbank warn that “despite a higher-than-expected inflation print in November, the RBA is unlikely to signal any imminent rate hikes,” a stance that could undermine the Aussie if policymakers sound overly cautious.

China’s improving economic pulse is adding another layer of support for the AUD, given the currency’s close sensitivity to Chinese demand. The National Bureau of Statistics reported a blockbuster $111.68 billion trade surplus for November, driven by an impressive 5.7% rebound in exports after October’s contraction. For resource-heavy Australia, stronger Chinese trade figures are typically bullish — and the market reaction this week has been no exception.

Meanwhile, the US Dollar remains on the defensive ahead of the Fed’s policy decision. The CME FedWatch Tool assigns an 87% probability to a 25 bp rate cut, which would bring the Fed Funds target range down to 3.50–3.75%. The mood has been shaped by accumulating evidence of a cooling labor market, including a decline in job openings and softer wage pressures. The US Dollar Index (DXY) slipped toward 98.90, a five-week low, as traders brace for what could be a pivotal week for global rates.

Recent remarks from New York Fed President John Williams emphasized weakening labor demand and a softer economic backdrop, reinforcing dovish expectations. However, investors remain wary of a potential surprise from Chair Jerome Powell. A more cautious tone — especially if the Fed signals discomfort with front-loaded easing expectations for 2026 — could slow the USD selloff and cap AUD gains.

AUD/USD’s multi-day advance has pushed the pair firmly into a bullish technical structure on the intraday and short-term charts. Price action remains supported by a steep ascending trendline, with the pair consistently trading above the 50-period EMA, reinforcing the broader upward bias.

However, momentum indicators suggest that the rally may be losing a bit of steam in the immediate term. Relative Strength Index (RSI) readings have entered or approached overbought territory, generating early negative signals that could slow the pace of further appreciation.

A near-term pullback toward 0.6610–0.6625 cannot be ruled out, particularly if the RBA strikes a less hawkish tone than traders expect. Still, the broader trend remains constructive as long as AUD/USD holds above key support levels. A decisive move above 0.6680 would open the door toward 0.6730, while a break below 0.6580 would reduce bullish momentum and expose the pair to deeper consolidation.

BUY AUDUSD

ENTRY PRICE: 0.6640

STOP LOSS: 0.6600

TAKE PROFIT: 0.6730

The Japanese government has recently finalized a supplementary budget of JPY18.3 trillion to support new stimulus measures, primarily financed through issuance of new government bonds. Prime Minister Sanae Takaichi has indicated a departure from prioritizing fiscal balance targets such as the primary fiscal balance to enhance fiscal flexibility and plans to establish new multi-year fiscal objectives. Although the government initially projected primary fiscal surpluses for fiscal years 2025 to 2026, these targets are now under reassessment. Against the backdrop of the Bank of Japan (BOJ) gradually withdrawing from an extended ultra-loose monetary policy and rising borrowing costs, fiscal consolidation is widely regarded as an urgent priority. The IMF has also expressed support for the BOJ's recent monetary policy decisions, asserting that an accommodative stance remains appropriate. Meanwhile, domestic economic data is adding complexity to policy deliberations, with recent government reports indicating a 3.0% YoY decline in household consumption in October—the steepest in nearly two years and significantly below market expectations; seasonally adjusted, consumption contracted by 3.5% MoM, also notably below forecasts. Declines in food, entertainment, and automotive expenditures are primary drag factors, though authorities still consider overall consumption recovery trajectory intact and are uncertain whether the recent downturn is sustainable. Weak consumer spending heightens sensitivity over the BOJ's December rate hike decision, while persistent high inflation and yen depreciation are prompting some policymakers to favor earlier tightening. Analysts suggest that despite December rate hike being broadly anticipated, subdued consumption may constrain the pace of subsequent increases, while weakening growth expectations could further pressure the yen following any rate hikes.

The U.S. dollar exhibited cautious trading ahead of the Federal Reserve's monetary policy statement scheduled for Wednesday. Market consensus anticipates a 25 basis point interest rate cut to a range of 3.50%-3.75%, driven by ongoing deterioration in the labor market conditions. Recent data from the U.S. Department of Commerce indicate that September consumer spending experienced a modest 0.3% increase following three consecutive months of robust growth, signaling a slowdown in economic momentum toward the end of the third quarter. Elevated living costs coupled with a fragile labor market have suppressed demand. The report also highlights that, due to comprehensive tariffs imposed on imports by the Trump administration, annualized inflation in September reached its fastest pace in nearly one and a half years. Consumer expenditure accounts for over two-thirds of U.S. economic activity, with the 0.3% growth slightly below the revised 0.5% for August, aligning with economists' expectations from a Reuters survey. The release was delayed due to the 43-day government shutdown. Gains in spending were primarily driven by energy commodities, particularly gasoline, while expenditures on durable goods such as automobiles and entertainment products declined. Clothing and footwear expenditure decreased, resulting in flat overall goods spending. Service sector expenditure increased by 0.4%, mainly supported by housing and utilities, with sectors such as healthcare, financial services, insurance, hospitality, and transportation also experiencing growth.

In the 1D timeframe, the Bollinger Bands are converging with narrowing bands, while SMAs are flattening, indicating a potential trend reversal. The price has persisted near the middle band of the Bollinger envelope for three consecutive days, accompanied by lower shadows, signaling effective support levels. Following a MACD death cross, the MACD line and signal line are currently retracing toward the zero-axis, suggesting that the correction phase has not yet concluded. The RSI stands at 51, reflecting strong market neutrality. As long as the price remains above the middle Bollinger band, there is a high probability of a bullish breakout toward the upper band and key psychological levels around 157.6 and 160. In the 4H timeframe, Bollinger Bands are tightening, with SMAs flattening. After the MACD generated a golden cross, the MACD line and signal line are pulling back toward the zero-axis. Despite new lows, downside momentum is waning, indicating a bullish divergence. The RSI is at 47, suggesting cautious market sentiment. A confirmed move above the middle Bollinger band could lead to an upward rally toward the upper band near 156. It is recommended to go long at the lows in the short term.

Trading Direction: Buy

Entry Price: 155.2

Target Price: 158.8

Stop Loss: 153.5

Support: 154.7, 153.2, 150

Resistance: 157, 158.8, 160

Amid a rapid escalation in security and diplomatic friction, Japanese media and officials have accused PLA aircraft of locking fire-control radar on JSDF planes near Okinawa, prompting an equally forceful riposte from Beijing. The string of incidents is feeding market anxiety over regional stability and the safety of Japan-based assets. Contrary to the historical "geopolitical shock → yen safe-haven rally" reflex, investors are now pricing a "capital-flight risk + waning confidence in Japan's economic and asset security" narrative, which is exerting sustained downward pressure on JPY.

This psychological logic is driven by two core forces. First, capital is reassessing the risk premium on JPY/JGBs. As geopolitical tensions persist, international investors demand a higher risk premium on Japanese assets, prompting multinational funds to trim JPY exposures and redeploy into USD and alternative-currency assets. Once these outflows become a sustained rotation, the expanded supply and reduced demand for yen exert natural downward pressure. Second, markets are pricing in heightened uncertainty over Japan's domestic growth outlook and the credibility of its inflation-cum-fiscal anchor. Should the conflict disrupt trade, export receipts, or FDI inflows, the expected macro-volatility further erodes the yen's store-of-value appeal.

Meanwhile, the dollar is drawing liquidity away from the yen, buoyed by its reserve-currency status, safe-haven appeal and the still-competitive real yields on offer in the U.S. Treasury market. Even in the absence of a material Fed pivot, USDJPY can stay bid as long as cross-border flows continue to favour the depth and safety of USD-denominated assets. In other words, when geopolitical risk collides with portfolio-flow risk, the traditional "risk-off JPY bid" can reverse. The market has already priced in this dual structure of a "capital-inflow premium plus safety premium," providing a durable underpinning for a weaker yen and a stronger USDJPY.

USDJPY has broken out of the symmetrical-triangle consolidation and the underlying bias remains bullish. Although the pair has been pulling back recently, the last few sessions have produced consecutive long-lower-shadow candles. Friday's close formed a textbook hammer, an explicit reversal signal, indicating that short-term buying momentum has strengthened and the uptrend is likely to resume.

Immediate resistance is eyed at 155.90-156.00. A decisive break and daily close above 156.00 would open extension room toward 158.00, with scope to challenge the psychological 160.00 handle.

Trade Direction: Buy

Entry Price: 155.20

Target Price: 160.10

Stop Loss: 154.30

Valid Until: December, 22, 2025, 23:00:00

Support: 154.90/154.34

Resistance Levels: 155.92/160.00

With Chancellor Rachel Reeves formally unveiling the budget, previous market anxiety over fiscal policy uncertainty has significantly eased, and the suppression of risk appetite caused by that uncertainty has been fully lifted. Against this backdrop, GBP/USD extended its recent strength last week, demonstrating robust market resilience. From a support perspective, positive changes in domestic fundamentals form the core underpinning. On one hand, the UK budget passed the first round of stress tests in the bond market smoothly, markedly cooling investor concerns about UK fiscal sustainability, effectively stabilizing cross-border capital flows, and providing fundamental support for sterling. On the other hand, Wednesday's upward revision of the final November Composite PMI showed marginal improvement in both UK services and manufacturing sectors, dispelling market fears of stagflation and further strengthening fundamental support for the exchange rate. Regarding the external environment, growing expectations for a Fed rate cut at this week's meeting dampened the USDX, offering reverse impetus for GBP/USD gains. Market analysis generally believes that the pound's recent strength partly stems from a "short squeeze" effect — speculative traders who had bet on pound weakness were forced to cover positions as the currency continued rising, amplifying short-term upward momentum. Looking ahead, the trading logic for GBP/USD will center on policy divergence between the BoE and the Fed: markets widely expect the Bank of England to lower its benchmark rate by 25 basis points at the December meeting, which may exert temporary downward pressure on sterling. However, expectations for the Fed to begin a rate-cutting cycle are equally strong, making the dollar's weak trend difficult to reverse in the near term, thus continuously providing reverse support for the pound. The interplay of these two forces will dominate the exchange rate's future trajectory.

As markets anticipate another Fed rate cut this week, the dollar is hovering near its lowest level since late October, making it a key driver of GBP/USD's continued strength. Traders see nearly a 90% probability of a Fed rate cut at next week's meeting, with expectations of possibly two more cuts next year. This view is backed collectively by top investment banks, including Morgan Stanley, JPMorgan Chase, and Bank of America, all of which recently revised their Fed December policy outlook from 'hold steady" to "cut by 25 bps." Recent U.S. labor market data showing some softness has further reinforced rate-cut expectations. On Friday, the early-December U.S. consumer confidence index improved marginally, and September core PCE inflation met market forecasts. Nevertheless, such fundamental data failed to reverse dollar weakness, as market attention is now fully focused on the Fed's monetary policy outlook. Moreover, potential leadership changes at the Fed have added dovish speculation: White House economic adviser Kevin Hassett is seen as a leading candidate to succeed current Chair Powell, and his relatively accommodative policy leanings have sparked expectations of adjustments to the Fed's long-term framework. With near-term rate-cut expectations already heavily priced in, this marginal shift in longer-term policy orientation has further intensified downward pressure on the dollar.

Based on the four-hour chart, GBP/USD is rising strongly along EMA12, but the MACD and signal lines have formed a death cross. Although they are returning near the zero axis, there is some distance away, indicating the adjustment phase is not yet over. Bollinger Bands are beginning to narrow, moving averages are flattening, and a pullback toward the Bollinger Middle Band and EMA50 is likely, targeting around 1.33 and 1.327. Besides, the RSI stands at 59, reflecting bullish sentiment. On the one-hour chart, price highs are gradually declining, signaling a short-term downtrend. Moreover, the MACD's upward momentum is weakening, suggesting a probable decline toward the Bollinger Lower Band and EMA200. RSI is at 45, showing pessimistic sentiment, and its peaks are also falling. Therefore, selling at highs remains the key strategy.

Trading direction: Sell

Entry price: 1.3332

Target price: 1.29

Stop loss: 1.35

Support: 1.3/1.29/1.28

Resistance: 1.34/1.342/1.35

On Friday, gold prices held steady near US$4,200 per ounce as investors focused on key inflation reports due next week ahead of the Federal Reserve's policy decision.

Ahead of the Federal Reserve's December meeting, core PCE data will be particularly significant. Should inflation figures exceed expectations, the Fed may opt to keep interest rates unchanged. Conversely, if the data meets or falls below projections, it would pave the way for another rate cut as anticipated.

Earlier this week, further signs emerged of cooling in the labor market. The ADP report showed private-sector employment unexpectedly declined by 32,000, while the market had anticipated 71,000 layoffs in November. This brings the total layoffs so far this year to nearly 1.17 million.

Weak employment data has further bolstered investor confidence that the Federal Reserve will cut interest rates as early as next week, with the market currently implying an approximately 87% probability of a rate cut.

Further bolstering dovish sentiment are reports that White House economic adviser Kevin Hassett may succeed Jerome Powell as Federal Reserve chair in May. Markets interpreted this as a potential shift toward more aggressive easing by the Fed.

Despite closing slightly lower during the Golden Week holiday, gold maintained solid support ahead of key data releases.

Gold prices rebounded on Friday but remained within the weekly trading range. Expectations of a dovish stance from the Federal Reserve continued to weigh on the dollar and provided support for gold prices. However, bulls may opt to wait for the release of the U.S. Personal Consumption Expenditures (PCE) price index before making aggressive bets.

Nevertheless, we believe that since today marks the final trading day of the week, even if gold prices surge strongly, the rally is unlikely to be overly aggressive. Due to price algorithmic factors, upward resistance for gold will likely be encountered in the 4245–4250 range, which represents the average weekly resistance level. At the same time, given that past PCE data releases have typically exerted only limited market impact, it would be unwise to anticipate bullish momentum extending significantly further.

Trading Direction: Buy

Entry Price: 4209

Target Price: 4350

Stop Loss: 4160

Valid Until: December 21, 2025 23:55:00

Support: 4188, 4174, 4164

Resistance: 4208, 4217, 4241

EUR/JPY regained upward momentum on Friday, recovering from early-session weakness as the Japanese Yen once again struggled to capitalize on mounting speculation of an upcoming Bank of Japan rate hike. The pair was last seen trading near 180.77 after dipping to an intraday low of 180.10, extending a familiar pattern of range-bound movement that has dominated trade since mid-November. Despite intraday swings, the underlying bias remains tilted toward the Euro, thanks in part to an improving economic backdrop across the Eurozone.

The Euro drew significant support from fresh GDP figures released by Eurostat, which painted a more resilient picture of the region’s economic landscape than previously anticipated. Third-quarter GDP expanded 0.3% on a quarterly basis, outperforming market forecasts of 0.2% and improving from the 0.2% growth recorded in the previous quarter. Year-on-year growth reached 1.4%, matching expectations and reinforcing the narrative that Europe’s recovery—although uneven—continues to slowly rebuild momentum.

The data highlighted broad improvement across key components of the Eurozone economy. Household spending edged higher, signaling modest improvement in consumer sentiment despite persistent price pressures. Government expenditure rose at a faster pace, offering fiscal support at a time when private sector confidence remains fragile. Investment activity also strengthened, rising nearly 1% and underscoring renewed confidence in long-term capital commitments. External trade contributed positively as both exports and imports increased, pointing to a gradual normalization of global supply and demand conditions.

Labour market trends were similarly encouraging. Employment in the Eurozone increased 0.2% during the quarter, surpassing analyst estimates and strengthening from the previous reading. On an annual basis, employment rose 0.6%, reinforcing the notion that the labour market remains tight and continues to provide a buffer against cyclical pressures. For currency markets, this relative macroeconomic stability has been sufficient to keep the Euro buoyant and limit aggressive Yen-driven pullbacks.

On the Japanese side, however, the dynamics remain far more complicated. Despite a growing chorus of speculation suggesting that the Bank of Japan may finally lift interest rates at its December 18–19 meeting, the Yen has been unable to sustain meaningful gains. Earlier in the week, BoJ Governor Kazuo Ueda signaled a willingness to consider policy adjustments, triggering renewed expectations of an imminent exit from the central bank’s long-standing ultra-loose stance.

That sentiment was reinforced by a Bloomberg report suggesting that BoJ officials are prepared to raise rates at the upcoming meeting, provided no major economic or financial shock emerges in the near term. The report also indicated policymakers may communicate readiness to pursue further rate increases if inflation trends and economic conditions continue to develop as projected. Still, the same insiders cautioned that the BoJ remains unsure about how far interest rates should ultimately rise, reflecting a characteristically cautious approach to tightening.

The Yen’s inability to strengthen in response to these developments highlights ongoing skepticism among traders. Many remain wary given the BoJ’s history of signaling shifts only to pull back at the last moment. Others believe that even if a hike occurs, it may be more symbolic than structural, offering limited long-term support for the currency. With global risk sentiment relatively stable, the Yen has also been unable to attract its usual safe-haven flows.

Market attention now shifts to Monday’s incoming Japanese data batch, which includes labor earnings, current account figures, and the final Q3 GDP revision. These figures will play a critical role in shaping expectations heading into the December meeting. Stronger growth and earnings could bolster confidence in a rate hike, while weaker numbers may reintroduce doubts and weaken the Yen further.

From a technical standpoint, EUR/JPY’s structure remains broadly constructive despite the latest corrective dip. The pair closed below the 181.70 ceiling, signaling a short-term pause in bullish momentum, while stochastic indicators continue to reveal lingering negative pressure. Nonetheless, the decline remains shallow and does not threaten the broader upward trajectory as long as the pair maintains support near the 179.40 zone. The market’s repeated refusals to break below this key level reinforce its importance as the base of the current bullish structure.

The correction toward 180.10 appears to be part of a healthier consolidation pattern rather than the early stages of a reversal. Traders are expected to look for renewed bullish momentum in the coming sessions, especially if Eurozone macro conditions continue to firm or if Japanese data fail to significantly strengthen the case for a BoJ hike. A decisive break above 181.70 would reopen bullish pathways and potentially extend the recent uptrend.

For now, EUR/JPY is expected to oscillate between 179.65 and 181.70, with the overarching trend still favoring the upside as long as key support levels hold.

BUY EURJPY

ENTRY PRICE: 180.830

STOP LOSS: 180.00

TAKE PROFIT: 186.00