The following article is a rewritten and expanded version of the original analysis by DailyForex, offering in-depth insight into the weekly Forex outlook for major currency pairs during the trading week of December 21 to December 26, 2025. The original analysis was authored by DailyForex, and this version includes additional context derived from market trends and other professional forecasts.
Forex Weekly Market Forecast
(December 21–26, 2025)
As we approach the final trading week before the Christmas holiday, volatility is expected to ease slightly across the major Forex pairs. Historically, trading volumes drop in the days surrounding Christmas, but that doesn’t mean that we won’t see opportunities worth considering. This week’s analysis focuses on the major currency pairs including EUR/USD, GBP/USD, USD/JPY, and others based on technical indicators, broader market sentiment, policy speculation, and macroeconomic fundamentals.
Below is an in-depth technical and fundamental analysis of key Forex pairs for the week ending December 26, 2025.
EUR/USD – Euro Strength Faces Resistance
The EUR/USD pair has been steadily rising, bolstered by renewed optimism in the Eurozone economy, as well as a weaker dollar driven by falling U.S. inflation expectations. However, the rally hit resistance near the 1.1050 level.
Key Technical Observations:
– Resistance has formed around 1.1050, a psychological level that also aligns with a longer-term trendline on the weekly chart.
– The RSI sits just above 60, indicating that while momentum remains bullish, the pair is nearing overbought territory.
– A break and close above the 1.1050 region could see a test of 1.1100 and potentially 1.1200 in the medium term.
– Support sits around 1.0930 and more firmly at 1.0850.
Fundamental Outlook:
– The European Central Bank (ECB) stated that it will likely hold interest rates steady until mid-2026, which has provided a degree of stability to the euro.
– Meanwhile, the U.S. Federal Reserve’s dovish stance, with anticipated rate cuts in the first half of 2026, continues to weaken the dollar globally.
Conclusion:
Despite upcoming low-volume trading sessions, bullish bias remains intact in EUR/USD unless the pair breaks below 1.0850. Traders should watch for a breakout above 1.1050 to signal renewed momentum.
GBP/USD – Pound Maintains Uptrend Above 1.2700
The British Pound held firm against the U.S. dollar last week, closing near the 1.2750 zone, having benefited from relatively stable UK CPI data and a dovish shift in global interest rate expectations.
Technical Highlights:
– GBP/USD maintains its uptrend from early November, forming higher highs and higher lows on the daily chart.
– Immediate resistance lies at 1.2780 and the psychological 1.2800 level.
– A break above 1.2800 opens the door to 1.2900 and possibly 1.3000.
– RSI remains near neutral at 55–57, allowing room for further upside movement.
– Key support zones lie around 1.2700 and 1.2620.
Fundamentals to Watch:
– The Bank of England is expected to remain cautious into early 2026, with no additional rate hikes, and possibly even the first cut by mid-next year.
– UK retail sales data due this week could influence short-term trend direction.
Market Sentiment:
According to data from IG Markets, retail traders have been net short on GBP/USD, suggesting the potential for further price gains under contrarian analysis.
Conclusion:
As long as the pair remains above 1.2700, the bullish trend remains intact. A break below could indicate a short-term correction toward the 1.2620 area.
USD/JPY – Still Supported Despite Dollar Weakness
The USD/JPY pair has shown resilience,
Read more on USD/CAD trading.