Weekly FX Technical Analysis - 22nd December 2025

FX markets remain finely balanced as the dollar consolidates and major pairs approach key technical inflection points. GBP/USD continues to recover toward longer-term resistance, EUR/GBP is easing from multi-month highs but remains supported, EUR/USD is pressing toward the top of its broader channel, and USD/JPY is consolidating below major resistance after a strong run higher. This week’s update focuses on the levels that matter most as markets assess whether recent momentum can be sustained into year-end.

GBP/USD

GBP/USD continues to recover, extending gains toward the 1.3410–1.3450 region after successfully holding above the 1.30 support zone earlier in the month. Price is now trading back above the 20-day moving average and approaching the broader descending trendline from the 2024 highs. Momentum has strengthened further, with RSI moving into the low 60s, suggesting improving bullish conviction, though overhead resistance remains significant.

Potential Scenarios

• Bullish: A sustained break above 1.3470 would open the door toward 1.36 and potentially the upper boundary of the longer-term corrective structure.

• Bearish: Failure to hold above 1.3320 could trigger a pullback toward 1.32 and then 1.30.

Macro Backdrop to Consider

Sterling continues to benefit from a softer US dollar and improved risk sentiment into year-end. UK data has stabilised but remains mixed, while BoE expectations have largely plateaued. Near-term direction will remain sensitive to US rate expectations and global risk appetite, particularly with thinner liquidity conditions.

GBP/USD: DECEMBER ‘24 - PRESENT

EUR/GBP

EUR/GBP has eased modestly from recent highs, trading around 0.8740 after repeated failures to break decisively above the 0.8850 resistance zone. The pair remains within its rising channel, but momentum has softened, with RSI slipping into the mid-40s, indicating waning upside pressure in the near term.

Potential Scenarios

• Bullish: A renewed break above 0.8850 would reinstate upside momentum toward 0.89.

• Bearish: A close below 0.8715 would increase the risk of a deeper pullback toward 0.8650 and channel support.

Macro Backdrop to Consider

The cross continues to reflect a gradual stabilisation in sterling alongside steady, but unspectacular, eurozone data. With neither the ECB nor the BoE signalling imminent policy changes, EUR/GBP is likely to remain range-bound unless inflation or growth data forces a repricing.

EUR/GBP: DECEMBER ‘24 - PRESENT

EUR/USD

EUR/USD has pushed higher toward the 1.1730–1.1750 area, approaching the upper boundary of its broader descending channel. Price action continues to form higher lows, and RSI has risen into the low 60s, reflecting strengthening momentum. However, the 1.18 region remains a key technical ceiling that has capped rallies multiple times this year.

Potential Scenarios

• Bullish: A decisive break above 1.1800 would target 1.19 and potentially 1.20.

• Bearish: Failure to sustain gains above 1.1650 could see a pullback toward 1.1550 and 1.1480.

Macro Backdrop to Consider

The euro is benefitting from a softer dollar backdrop as markets price in eventual Fed easing. Eurozone inflation remains contained, limiting pressure on the ECB. Near-term direction will be driven by US data and shifts in rate expectations, particularly given reduced liquidity into year-end.

EUR/USD: DECEMBER ‘24 - PRESENT

USD/JPY

USD/JPY remains elevated but has slipped back toward the 155.00 area after failing to sustain a break above the 157.50–158.00 resistance zone. The broader uptrend remains intact, with price holding well above rising channel support. RSI has cooled toward the low 50s, signalling consolidation rather than trend reversal.

Potential Scenarios

• Bullish: A renewed break above 157.50 would expose 158.50 and potentially the psychological 160 level.

• Bearish: A break below 153.80 would signal a deeper correction toward 152.00.

Macro Backdrop to Consider

Yield differentials continue to favour USD strength, while the BoJ remains firmly accommodative. Although Japanese officials remain alert to yen weakness, the lack of volatility has reduced immediate intervention risks. USD/JPY is likely to remain supported on dips unless US yields fall sharply.

USD/JPY: DECEMBER ‘24 - PRESENT

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Disclaimer: The information in this publication is provided for general information purposes only. It does not constitute financial or investment advice, nor should it be relied upon as such. Readers should consider their own circumstances and seek independent advice where appropriate.