**Forex Weekly Outlook: Key Currency Pairs to Watch (December 28, 2025 – January 2, 2026)**
*Based on analysis by David Becker, DailyForex. Additional insights incorporated from ForexLive, FXStreet, and Investing.com.*
As 2025 ends and the market inches toward the New Year, trading liquidity will likely remain low due to the holiday season. However, opportunities may still emerge across key currency pairs, particularly as markets adjust to expectations about 2026 monetary policy pivots among major central banks. This article reviews the major forex pairs — EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, and USD/CAD — providing a technical and fundamental analysis to help traders stay informed and prepared.
The week from December 28, 2025, to January 2, 2026, may be quieter in terms of volume, but several macroeconomic developments could stir movement, including the U.S. labor data release scheduled for January 3. Heading into this week, the U.S. dollar has shown some mixed sentiment, with traders assessing the prospects for a slowdown in rate hikes from the Federal Reserve in 2026 due to declining inflation.
Let’s examine each major currency pair more closely.
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### EUR/USD – Consolidating Amid Holiday Lull
The euro has had a relatively strong December, as falling U.S. inflation data has weighed on the dollar. The EUR/USD pair has trended higher, breaking through key technical levels.
– **Current trend**: The pair recently broke resistance around 1.1050, closing the prior week at levels around 1.1120.
– **Technical setup**:
– The pair is trading above its 50-day and 200-day moving averages (MA), suggesting continued bullish momentum.
– The Relative Strength Index (RSI) on the daily chart approaches overbought territory near 70, indicating a possible pullback or consolidation in the short term.
– **Resistance levels**:
– 1.1200: A psychological and technical barrier
– 1.1275: August 2023 high, which may act as a stronger ceiling
– **Support levels**:
– 1.1050: Recently tested handle that could now act as support
– 1.0985: 50-day MA, which could offer further consolidation support
– **Outlook**: As traders return in January, attention will focus on economic releases out of the Eurozone, including inflation data. A break above 1.1200 could open the door to a test of the 1.1300 level if strong macro data supports euro strength.
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### GBP/USD – Sterling Shows Resilience as Rate-Cut Bets Ease
The British pound closed 2025 on a firm footing relative to the U.S. dollar, as signs emerged that the Bank of England (BoE) may delay rate cuts longer than the Fed.
– **Current price action**: GBP/USD climbed above 1.28 toward the end of December. The pair continues to ride positive momentum from better-than-expected UK inflation, which now appears stickier than previously forecast.
– **Technical summary**:
– RSI has approached 68 on the daily timeframe and is flirting with overbought conditions
– The 200-day MA near 1.2590 remains a firm long-term support
– **Resistance levels**:
– 1.2850: Multiday high that may be tested early in the week
– 1.3000: A significant psychological barrier
– **Support levels**:
– 1.2680: The weekly pivot level
– 1.2590: 200-day MA and former resistance zone
– **Fundamental factors**:
– Wage growth and inflation remain elevated in the UK, which could delay BoE easing until the second half of 202
Read more on USD/CAD trading.