FX Strengthens as Dollar Softens (12.26.2025)

The euro held above 1.17 near multi-month highs as stable ECB policy, improved growth forecasts, and softer US inflation supported the single currency. 

The yen strengthened on expectations of further BOJ tightening despite slowing inflation, while gold and silver stabilized near record levels amid geopolitical tensions and rising Fed rate-cut bets. Sterling climbed to a three-month peak as markets priced additional US easing and adjusted to a cautious BoE outlook.

Euro Maintains Multi-Month Highs

The euro remained slightly above $1.17, holding near its highest point since late September. The ECB has maintained current interest rates for four straight meetings while raising its 2025 growth outlook to 1.4%, noting the region's ability to withstand US tariffs. With Eurozone inflation projected to hit targets through 2028, weakening US price data has supported the euro as investors anticipate Federal Reserve rate cuts in the coming year.

Technically, 1.1700 is the key support, while resistance is seen at 1.1800.

Yen Strengthens on Rate Hike Outlook

The yen climbed beyond 156 against the dollar, securing strong weekly gains as investors anticipate further Bank of Japan rate increases despite slowing inflation. Tokyo's December inflation dipped to 2%, yet the BOJ recently lifted rates to 0.75%, a level not seen since 1995. Governor Ueda indicated more hikes are possible, though authorities remain cautious about intervention since the currency still lingers near January lows.

Technically, resistance stands near 156.50, while support is firm at 154.60.

Gold Stabilizes Near Record Levels

Gold traded near $4,500 per ounce after reaching a record peak of $4,530, driven by geopolitical friction and anticipated US rate reductions. Market participants are closely monitoring the blockade in Venezuela, the Russia–Ukraine war, and US military operations in Nigeria. Investors anticipate two 25-basis-point Federal Reserve cuts next year as inflation and employment data soften. Up over 70% in 2025, bullion is seeing its best year since 1979, supported by significant central bank accumulation and consistent ETF demand.

Gold sees support near $4470, while resistance is around $4530.

Sterling Hits Three-Month Peak

The pound climbed above $1.35, marking a three-month high as investors anticipate at least two Federal Reserve rate reductions next year. The Bank of England narrowly lowered rates to 3.75% in December, citing persistent inflation concerns. Although inflation has cooled to 3.2%, it stays significantly over target. Sterling is up more than 2% this month and roughly 8% for 2025, on track for its strongest yearly gain since 2017.

From a technical view, support stands near 1.3430, with resistance around 1.3550.

Silver Sets New Record Above $74.7

Silver climbed past $74.7 per ounce, marking a fourth consecutive day of gains and a new all-time high. Mixed economic reports, including weak consumer confidence and stagnant industrial production, have fueled expectations for US rate cuts despite strong Q3 GDP. Geopolitical risks, particularly the US blockade of Venezuelan oil, further supported safe-haven interest. Up 149% in 2025, silver continues to benefit from supply deficits, high industrial usage, and its status as a US critical mineral.

From a technical view, resistance stands near $78.00 while support is located around $70.00.