Title: Forex Pairs in Focus: Week of December 28, 2025, to January 2, 2026 – Technical Outlook and Trading Strategies
Author credit: Based on the original article published by Bradley Gilbert on DailyForex.com
The final week of December 2025 marks a typically thin liquidity period in global forex markets. With major trading centers like New York, London, Tokyo, and Frankfurt experiencing public holidays or reduced holiday staffing, forex price action often becomes erratic or restricted within tighter ranges. Despite the subdued participation, technical analysis remains an essential instrument for traders seeking to capitalize on low-volatility opportunities or anticipating breakout scenarios heading into early January 2026.
This week’s watchlist features several key forex pairs, each showing distinctive technical patterns or fundamental drivers worth monitoring until the broader market resumes full participation next week. In this article, we delve into the major pairs in focus, recognizing short-term technical dynamics, critical support and resistance levels, and potential trading strategies appropriate for holiday conditions.
1. EUR/USD: Cautious Optimism Amid Range-Bound Action
– Current trend: Largely sideways since early December, hovering around the 1.1000 area.
– Weekly range projection: 1.0930 to 1.1070
The EUR/USD has demonstrated considerable resilience over the past several weeks, maintaining support above the psychologically important 1.0900 handle while lacking bullish steam necessary to break decisively above 1.1100. The technical structure remains confined within a static horizontal channel as trading volume diminishes into the year-end.
Noteworthy technical levels:
– Resistance: 1.1030 (initial), followed by 1.1075
– Support: 1.0930, followed by the stronger level at 1.0880
Technical indicators such as RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence) suggest a balanced momentum environment. A breakout above 1.1075 could encourage a push towards 1.1150 in early January 2026, influenced by expectations of expanding Eurozone inflation and stable ECB policy. Conversely, bearish momentum might emerge on a slide below 1.0930, particularly if safe haven demand increases.
Suggested strategy:
– Range traders may seek opportunities between 1.0930 and 1.1075.
– Breakout traders could consider entering on sustained momentum outside this range going into January.
2. GBP/USD: Testing Resistance in Holiday Calm
– Current trend: Gradual upward bias from mid-December
– Weekly range projection: 1.2620 to 1.2820
The British pound showed some upward bias in recent trading, underpinned by moderately positive U.K. economic data and rising optimism about 2026 trade forecasts. However, price remains trapped in a well-defined consolidation zone established over the past 2-3 weeks, centered near 1.2700.
Key support and resistance:
– Resistance: 1.2770 and 1.2820
– Support: 1.2670, then 1.2625
After recovering from mid-December lows near 1.2600, a bullish reversal was confirmed by rising MACD histograms. If GBP/USD manages to sustain a daily close above 1.2770, the next key resistance at 1.2820 could be tested in the short term. Thinner liquidity, however, raises caution regarding false breakouts.
Suggested strategy:
– Swing traders may look to enter long positions on a dip to 1.2670 with stops under 1.2630.
– Optional short setup below 1.2620 if broader risk sentiment turns negative.
3. USD/JPY: Consolidation with Downside Bias Ahead
– Current trend: Bearish to neutral bias amid risk-off undertones
– Weekly range projection: 139.70 to 141.80
The USD/JPY pair has entered
Read more on USD/CAD trading.