**Forex Technical Outlook: Major Pairs in Focus (December 28, 2025 – January 2, 2026)**
*Adapted and expanded from original analysis by Mahmoud Abdallah, DailyForex.com*
As we approach the transition from December 2025 into the New Year, global Forex markets are likely to experience reduced volatility due to low trading volumes during the holiday period. However, key technical developments in several major currency pairs still merit close attention. The period between December 28, 2025, and January 2, 2026, could present nuanced trading opportunities, especially as investors position themselves for the beginning of the new quarterly trading cycle.
This extended technical analysis will delve deeper into the key Forex pairs as originally covered by Mahmoud Abdallah of DailyForex, while providing supplemental insights and projections based on wider market sentiment and recent price action patterns.
### 1. EUR/USD: Neutral to Bullish Bias as Support Levels Hold
The EUR/USD pair has recently been consolidating after a period of sustained bullish movement in Q4 2025. The pair is showing signs of holding above critical support levels, hinting at potential for renewed upward momentum.
**Technical Highlights:**
– Key Resistance: 1.1140 and 1.1200
– Key Support: 1.0950 and 1.0890
– RSI: Neutral, trading near 50
– 50-day Moving Average: Slight upward slope, suggesting potential continuation of bullish bias
**Analysis:**
– December has seen continued resilience in the Euro amid softening U.S. inflation data and dovish shifts in Federal Reserve guidance.
– The pair attempted a breakout above 1.1100 but faced resistance around 1.1140.
– As long as EUR/USD holds above 1.0950, upward momentum may resume heading into January 2026.
**Key Catalysts:**
– Eurozone inflation data due on December 29 will likely impact EUR sentiment.
– U.S. labor figures scheduled for January 2 may produce volatility in early 2026 trading.
**Conclusion:** A sustained close above 1.1140 could open the path toward 1.1200 and even 1.1275 resistance seen earlier in September 2025.
### 2. GBP/USD: Sustained Downtrend Amid Economic Headwinds
Pound Sterling faces continued pressure due to subdued UK economic data and persistent concerns over Bank of England rate policies in 2026. The GBP/USD pair has been moving in a bearish channel since early December.
**Technical Highlights:**
– Resistance Levels: 1.2680 and 1.2750
– Support Levels: 1.2500 and 1.2400
– RSI: Slightly oversold near 38
– MACD: Bearish divergence persists on daily chart
**Analysis:**
– Sterling has struggled to regain its bullish footing since the BOE hinted at the end of its rate-hike cycle.
– Declining inflation in the UK is fuelling speculation of early cuts in 2026.
– Short-term relief rallies meet resistance near 1.2680, making it a key level for bulls to reclaim.
**Broader Outlook:**
– A break below 1.2500 could trigger further losses toward the 1.2350 threshold.
– However, a rebound above 1.2750 would signify potential reversal of short-term bearish bias.
**Conclusion:** Negative momentum may continue unless UK GDP growth shows signs of recovery or global risk sentiment improves materially in Q1 2026.
### 3. USD/JPY: Consolidation Above 142.00 Ahead of BOJ Developments
The USD/JPY pair concluded 2025 with a slowdown in the aggressive downside correction that characterized much of Q4. The pair has begun consolidating within a narrow range, suggesting a possible change in market posture.
**Technical Highlights:**
– Resistance:
Read more on USD/CAD trading.