Japanese government bond prices extended their decline on Monday, pushing the 10-year bond yield up by 7.5 bps to 2.095%, the highest level since February 1999. The 2-year bond yield, which is sensitive to monetary policy expectations, rose by 3 bps to 1.12%, a record high since 1997.

The renewed sell-off in sovereign bonds was triggered by the BOJ’s rate hike last Friday, which put pressure on the yen.

Traders were disappointed that the BOJ did not provide clear guidance on when it might tighten policy again. Meanwhile, after warnings from Japan’s Finance Minister, Kaoru Katayama, and the top foreign exchange official, Atsushi Muraoka, about the recent currency weakness, the JPYUSD exchange rate briefly rose by 0.3% to 157.25.

However, if Japanese authorities attempt to support the yen through foreign exchange intervention, such efforts are likely to be ineffective unless the government also properly manages fiscal policy risks.

The Japanese government is expected to pass the budget for the fiscal year 2026 this Friday. Investors are concerned that the budget may include an unusually large scale of departmental spending. If this is the case, it could trigger a decline in Japanese government bond prices and further exacerbate yen depreciation pressures. The Ministry of Finance may then be forced to intervene in the market, but the success of such intervention is highly uncertain.

During the day, the trend for USDJPY is biased upward, with a target above 157.88. The previous upward momentum from 139.87 is attempting to continue. If it can effectively break through the key structural resistance at 158.85, it will be an important medium-term bullish signal. The next target is the high at 161.94.

On the other hand, as long as the support at 154.38 holds, the risk of a pullback remains. Therefore, the upside risk is still relatively high at present.

Trade Direction: Buy

Entry Price: 156.30

Target Price: 161.23

Stop Loss: 153.60

Valid Until: January 7, 2026, 23:55:00

Support: 156.98/156.00/154.35

Resistance Levels: 157.92/158.88/159.93

The British pound advanced sharply against the US dollar during Monday’s North American session, climbing nearly 0.6% as fresh UK economic data reassured investors that the economy continues to expand steadily, even as markets price in further monetary easing from the Bank of England next year. The GBP/USD pair rose to around 1.3450, rebounding decisively from an intraday low near 1.3372, amid subdued holiday trading conditions ahead of the Christmas Eve break.

Thin liquidity amplified the move, but the underlying driver was renewed confidence in the UK’s growth outlook after official figures confirmed the economy expanded in line with expectations. Data released by the Office for National Statistics showed UK gross domestic product grew 0.1% quarter-on-quarter in the third quarter of 2025, while annual growth held steady at 1.3%, unchanged from the previous period. While modest, the figures helped reinforce the view that the UK economy has avoided a sharper slowdown, offering the pound some breathing room after weeks of pressure driven by soft inflation and dovish central bank rhetoric.

Sterling pushed above the psychologically important 1.3400 level shortly after the data, suggesting that traders were more focused on growth stability than on the prospect of additional rate cuts. That reaction came despite broad expectations that the Bank of England will continue easing policy into 2026. UK inflation data released last week showed further cooling in price pressures, prompting BoE Governor Andrew Bailey to join the increasingly dovish chorus on the Monetary Policy Committee and back a rate reduction.

Following Bailey’s comments, money markets adjusted expectations, pricing in roughly 37 basis points of additional easing by the Bank of England in 2026, according to interest-rate probability measures tracked by Capital Edge. Under normal circumstances, such expectations would weigh heavily on the currency. However, the pound’s resilience suggests that much of the dovish outlook is already priced in and that investors are now shifting attention to relative economic performance and transatlantic policy divergence.

Across the Atlantic, the US economic calendar offered little fresh direction, leaving currency markets sensitive to commentary from Federal Reserve officials. Cleveland Fed President Beth Hammack struck a hawkish tone, warning that November’s consumer price index may have understated true inflation due to data irregularities. Hammack also suggested that the neutral interest rate could be higher than commonly assumed, a view that reinforces the Fed’s cautious stance on the timing and pace of future easing.

In contrast, Fed Governor Stephen Miran offered a more balanced assessment, acknowledging irregularities in recent inflation data linked to the government shutdown but noting that incoming figures broadly align with his outlook on economic conditions. Miran added that while further policy rate reductions are likely at some point, the Fed remains data-dependent, leaving markets without a clear near-term signal.

From a technical perspective, GBP/USD has strengthened its near-term bullish bias. The pair reclaimed its 200-day simple moving average earlier this month and has since traded in a consolidative but constructive pattern. Momentum indicators have turned positive, supported by price action holding above key short-term averages. On Monday, the pair printed a fresh monthly high near 1.3457, reinforcing the view that buyers remain in control despite overbought conditions emerging on some oscillators.

If bullish momentum persists, a test of the 1.3500 psychological level appears increasingly likely before year-end. A sustained break above that threshold would expose the October 1 high near 1.3527, with a further extension toward the 1.3800 area possible in early January should risk sentiment remain supportive and US dollar demand soften.

TRADE RECOMMENDATION

BUY GBPUSD

ENTRY PRICE: 1.3450

STOP LOSS: 1.3400

TAKE PROFIT: 1.3800

As the Christmas holiday approaches, gold and silver traders show no signs of slowing down. Precious metals continued to surge in the new week, with spot gold spiking to a new record high above $4400 on Monday.

If gold can decisively hold above $4400, it will open up greater upside potential. However, the headwinds facing gold may not truly materialize until the second half of 2026. Even so, the possibility that market participants could price in this expectation prematurely cannot be ruled out. The key challenge to the bullish gold narrative lies in the fact that “major central banks will gradually shift from rate cuts and may re-raise rates in the future.” This is a point worth noting.

But for now, gold buyers will continue to maintain their bullish momentum. However, thin liquidity may amplify the current gains. Especially as Christmas and New Year’s holidays approach, market trading is becoming increasingly light. Therefore, even though seasonal patterns show that December and January have been better-performing months for gold over the past two decades, liquidity factors must be taken into account when looking ahead to further gains.

Against this backdrop, gold’s technical breakout came earlier than expected. The decisive move above $4381 indicates that the consolidation since the $3997 peak has ended. As long as the $4271 level holds as support, the short-term outlook will remain strongly bullish.

Currently, the market’s focus is on whether the price can smoothly break through the upper limit of the ascending channel, which would signal further accelerated price increases. If the upper limit is breached, the next target will be $4685, which is the 61.8% Fibonacci retracement of the rise from $3997 to $4381.

Trade Direction: Buy

Entry Price: 4395

Target Price: 4685

Stop Loss: 4362

Valid Until: January 7, 2025 23:55:00

Support: 4381/4375/4365

Resistance: 4420/4450/4468

Oil prices experienced a short-term rebound today, prompted by geopolitical developments—specifically, U.S. interdiction of oil shipments near Venezuela and intensified enforcement against the "shadow fleet," which heightened market sensitivity to localized supply disruptions; WTI responded immediately with gains. However, such geopolitical shocks tend to be temporary—fundamentally, supply fundamentals remain robust, with inventories slowly declining. Although the International Energy Agency revised demand forecasts upward this month, their overall assessment does not fully eliminate the risk of oversupply in the coming year; additionally, OPEC+ has reaffirmed its current production framework, indicating no short-term commitment to significant production cuts to support prices. U.S. crude oil inventories have shown only marginal fluctuations recently, with physical inventory draws insufficient to support a sustained price rally.

In summary, geopolitical news induces short-term volatility, but medium-term supply-demand dynamics and inventory data pose stronger downward pressures on oil prices.

In the 1D timeframe, WTI's candlestick pattern exhibits a clear downward channel, with SMA systems—both short-term and medium-term—aligning in a bearish configuration, indicating a strong continuation of the downtrend and a higher likelihood of sustained decline in the near term.

In the 4H timeframe, WTI broke below the US$55.00 support level last week and briefly found support at the April low of US$54.75. The recent trading sessions have seen a rebound, with WTI currently testing resistance at US$57.20. It remains below the MA60, creating a confluence of resistance levels that heightens short-term upward pressure.

Currently, if WTI is unable to convincingly break above the US$57.20 resistance, the downtrend may continue, with potential further testing of the support at US$54.75 and even a possibility of breaching this level to accelerate the decline. Conversely, a successful breakout above US$57.20 could open the path for an upward extension toward the US$58.30 - US$60.00.

Trading Direction: Sell

Entry Price: 57.20

Target Price: 52.80

Stop Loss: 59.10

Valid Until: January 5, 2026 23:00:00

Support: 55.70, 54.75

Resistance: 57.20, 58.15

Gold prices (XAU/USD) continue to maintain an upward trend as markets anticipate upcoming rate cuts from the Federal Reserve, which reduces the opportunity cost of holding non-yielding assets like gold. This expectation provides strong support for the bullish momentum. In addition, global economic and geopolitical uncertainties are driving investors toward safe-haven assets, helping XAU/USD remain resilient even during short-term technical rebounds of the U.S. dollar.

Central banks are also increasing their gold reserves, adding long-term demand while supply growth remains limited. However, gold may face short-term corrections if the USD strengthens on positive U.S. economic data or if the Fed signals a more hawkish stance than expected.

Overall, fundamental factors still lean toward a bullish outlook for XAU/USD, supported by lower expected interest rates, safe-haven flows, and continued institutional buying. Traders should remain cautious of key U.S. data releases, as they can trigger sharp volatility and temporary pullbacks in gold prices

This morning, gold surged above the previous resistance area around 4385, breaking past the prior swing highs and triggering strong bullish sentiment. The breakout has encouraged sidelined traders to jump back into the market, increasing overall market participation.

However, despite the upward move, the current price zone does not offer a clear profit-taking structure. Therefore, traders should carefully watch for a potential false breakout. A downside break back below 4385 may signal a shift in momentum and create an opportunity to sell.

Entry: 4384

Take Profit: 4350

Stop Loss: 4390

Support: 4350 / 4330

Resistance: 4420 / 4450

Supported by the inflation backdrop, at the end of its two-day policy meeting, the Bank of Japan (BoJ) voted unanimously — as widely expected — to raise the short-term interest rate from 0.5% to 0.75%. This marks the first rate hike since January this year and pushes rates to their highest level since 1995, signaling Japan's further move away from prolonged ultra-loose monetary policy. The BoJ stated in its announcement that recent data and survey results suggest a mechanism whereby wages and inflation rise moderately in tandem is likely to persist. With real interest rates still significantly low, if economic and price outlooks are realized, the bank will continue advancing the process of raising rates. Governor Kazuo Ueda emphasized in his post-meeting remarks that the pace and timing of future hikes will depend on how the economy responds to each policy adjustment. If wage growth expands further, the BoJ may continue raising rates, but it gave no clear guidance on specific timing or the number of hikes. This relatively cautious stance led the yen to weaken after the decision was announced; USD/JPY briefly rose to a one-month high, breaking above the 157 level. Meanwhile, Japan's 10-year government bond yield jumped to a 26-year high following the rate hike. The market believes the rate increase itself has been fully priced in, with the real focus being whether the BoJ will provide clearer, more hawkish forward guidance in the future. Several analysts noted that while the statement appeared slightly optimistic, the overall tone remained cautious and lacked a clear commitment to a rate hike path, leading markets to react in a "Buy the Rumor, Sell the News" manner. Some view holds that as long as real interest rates remain deeply negative, the BoJ still has room to raise rates, but the pace may be slow and highly dependent on sustained wage growth and whether inflation proves resilient.

On December 19th, White House Economic Advisor Kevin Hassett stated that President Trump's assessment that inflation is at a low level is correct, despite official data, public opinion, and the views of most economists disagreeing. Hassett argued that the commonly used year-on-year inflation measure has flaws, and a more reasonable approach is to observe three-month moving average price pressures. According to this metric, inflation is not significantly above the Fed's 2% target but is actually below it, which is how the president views the inflation situation. A government report released earlier showed that the November Consumer Price Index rose 2.7% year-on-year, down from 3.0% in September. The data was delayed due to the government shutdown. Although inflation has eased, it remains above the Fed's target, and many Fed officials continue to worry about elevated price pressures; some even oppose rate cuts, citing persistent inflation risks and the possibility that Trump's tariff policies could push prices higher. Trump has long advocated for lower interest rates, even though such moves might further intensify price pressures. Facing low approval ratings for his economic policies, he insists inflation is easing and says he is rapidly bringing down high prices. Also on December 19th, New York Fed President John Williams said there is currently no urgent need to cut borrowing costs again following last week's Fed rate cut. He believes the current rate level has placed monetary policy in a fairly favorable position. Williams pointed out that the Fed's core goal is to bring inflation back to the 2% target while supporting the labor market, and within this balancing framework, the current rate policy is generally appropriate. He also noted that key inflation and employment data resumed publication after the recent government shutdown ended, but showed no substantive changes, while some technical issues have added complexity to interpreting the data.

Interpreted by the daily chart, the Bollinger Bands have narrowed and flattened, with moving averages running sideways. Last Friday saw a large bullish candle break above the Bollinger Upper Band, confirming a short-term return to an uptrend. If prices can sustain above 157, there is a high probability of testing 158 or 160 again. MACD formed a golden cross, with the MACD and Signal lines pulling back near the zero axis, indicating the correction phase has ended. RSI stands at 60, reflecting strong bullish sentiment, while support levels lie at 157 and 156.1. Based on the weekly chart, Bollinger Bands are widening upward, moving averages are diverging higher, and the bullish trend remains intact. After a golden cross, the MACD and signal lines returned above the zero axis, with price oscillating upward along the EMA12 — a sign of strong upward momentum. RSI is at 69, showing investors are predominantly in buying mode. Buying at lows is strongly recommended.

Trading direction: Buy

Entry price: 157.3

Target price: 160

Stop loss: 155

Support: 154.7/153.2/150

Resistance: 158/158.8/160