**Weekly Forex Forecast: 28th December 2025 to 2nd January 2026**
*Adapted from the analysis by Adam Lemon, DailyForex.com, with supplemental insights*
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### Overview
As the Forex market moves into the transition between 2025 and 2026, traders should anticipate both seasonal and fundamental factors driving currency movements. The tail end of the year is marked by thin liquidity, given the holiday season, and this environment often enhances volatility or leads to constrained price action due to subdued participation. Yet, as traders return in the first week of January, the resumption of normal trading volumes may prompt sharp moves, especially if macroeconomic data or central bank policy expectations shift.
For this period, a combination of global inflationary pressures, monetary policy divergences, and geopolitical developments play a central role. Key pairs such as EUR/USD, GBP/USD, USD/JPY, and commodity-linked currencies like AUD/USD and USD/CAD remain primarily driven by expectations surrounding US Federal Reserve actions and relative economic performance.
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### Key Market Drivers
Several pivotal themes influence major currencies in this time frame:
– **Central Bank Policy Divergence:**
Investors have been closely watching differences between the Federal Reserve, European Central Bank (ECB), Bank of England (BoE), and Bank of Japan (BoJ), especially as the US shows signs of cooling inflation while Europe contends with slower growth.
– **Inflation and Growth Data:**
After a period of cross-continental inflation spikes, there is increasing focus on incoming Consumer Price Index (CPI) readings, GDP figures, and employment reports from major economies.
– **Geopolitical Uncertainties:**
Developments in Eastern Europe, Middle East, and Asia have the potential to prompt risk-off or risk-on moves, impacting demand for safe-haven currencies like the US dollar, Swiss franc, and Japanese yen.
– **Year-End Rebalancing & Seasonal Low Liquidity:**
Fund and portfolio managers historically engage in closing or rebalancing positions, leading to choppy price action, particularly given lower market participation during the holiday week.
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### Economic Calendar Highlights
A selection of high-impact data and events expected during this period includes:
– **Monday, December 29:**
Limited data releases as global markets remain in reduced holiday mode.
– **Tuesday, December 30:**
US CB Consumer Confidence
Preliminary inflation numbers from Spain (a lead indicator for Eurozone data)
Australian Private Sector Credit data
– **Wednesday, December 31:**
US Pending Home Sales
Early releases of GDP or employment data from emerging economies
– **Thursday, January 1:**
Most global markets are closed for the New Year’s Day holiday.
– **Friday, January 2:**
US ISM Manufacturing PMI
Eurozone Manufacturing PMI (final)
German Unemployment Change
Insights from Japanese monetary policy summary
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### Major
Read more on AUD/USD trading.