In the foreign exchange market for the week that ended on December 14th, the dollar initially strengthened against the yen. However, after the Federal Reserve Board (FRB) lowered interest rates at its Federal Open Market Committee (FOMC) meeting, the dollar weakened against major currencies. The USDJPY temporarily fell below the 155 yen level before rebounding to the 156 yen range. Conversely, the EURUSD and GBPUSD rose steadily.

December 8 (Mon)

The USDJPY started the weekly trading session by dipping to the 154.9 yen range but then rebounded. The pair extended its rally to the 155.9 yen range as traders bought the dollar before the FOMC meeting and sold the yen due to an earthquake off the coast of Aomori in northern Japan.

As the dollar strengthened, the EURUSD fell to the 1.161 range. Meanwhile, the GBPUSD hovered in the 1.33 range.

December 9 (Tue)

The day before the FOMC meeting, the USDJPY became sensitive to comments from Bank of Japan (BOJ) Governor Kazuo Ueda, who said the central bank would "adjust the degree of monetary accommodation." Traders interpreted this as the central bank's intention to continue monetary relaxation, prompting them to sell the yen. Consequently, the pair soared to the 156.9 yen range.

Meanwhile, the EURUSD struggled to climb, remaining in the lower 1.16 range. The GBPUSD fell to the 1.328 range during the day.

December 10 (Wed)

Just before the FOMC meeting, the USDJPY sagged as it struggled to reach the 157 yen range. Then, as widely expected, the FRB decided to lower the interest rate. The market interpreted the post-meeting statements and comments by Federal Reserve Chair Jerome Powell as dovish, which accelerated the sell-off of the dollar. Consequently, the pair plummeted to the 155.7 yen range.

In contrast, the EURUSD jumped to the 1.169 range and the GBPUSD rose to the 1.338 range.

December 11 (Thu)

The dollar continued to be sold off in the aftermath of the previous day's FOMC meeting. The USDJPY fell to the 154.9 yen range before rebounding to the mid-155 yen range. Meanwhile, the EURUSD and GBPUSD extended their rally to the 1.176 and 1.343 ranges, respectively.

December 12 (Fri)

The dollar's post-FOMC downtrend halted. The USDJPY moved steadily, reaching the 156.1 yen range by the end of the day.

The euro faced selling pressure, but the EURUSD managed to remain above the 1.17 level. Meanwhile, the GBPUSD sagged to the 1.334 range intraday.

December 14 (Sun)

• 23:50 Japan: Bank of Japan (BOJ) October-December Short-Term Economic Survey of Enterprises (Tankan)

December 16 (Tue)

• 13:30 U.S.: November change in nonfarm payrolls
• 13:30 U.S.: November unemployment rate
• 13:30 U.S.: November average hourly earnings
• 13:30 U.S.: November Retail Sales
• 13:30 U.S.: November Retail Sales (excluding automotives)

December 17 (Wed)

• 10:00 Europe: November Harmonised Index of Consumer Prices (revised HICP)
• 10:00 Europe: November Harmonised Index of Consumer Prices (revised HICP Core Index)

December 18 (Thu)

• Noon U.K.: Bank of England (BOE) policy interest rate announcement
• Noon U.K.: Minutes of BOE Monetary Policy Committee (MPC) meeting
• 13:15 Europe: European Central Bank (ECB) Governing Council policy interest rate announcement
• 13:30 U.S.: November Consumer Price Index (CPI)
• 13:30 U.S.: November Consumer Price Index (CPI Core Index)
• 13:45 Europe: Regular press conference by ECB President Christine Lagarde
• 23:30 Japan: November Consumer Price Index (CPI, all items, year-on-year data)
• 23:30 Japan: November Consumer Price Index (CPI, all items less fresh food)
• 23:30 Japan: November Consumer Price Index (CPI, all items less fresh food and energy)

December 19 (Fri)

• TBA Japan: BOJ Monetary Policy Meeting, post-meeting policy rate announcement
• 6:30 Japan: Regular press conference by BOJ Governor Kazuo Ueda

The following currency pair charts are analyzed using an overlay of the ±1σ and ±2σ standard deviation Bollinger Bands, with a 20-period moving average.

As expected, the FRB made an additional rate cut last week. This week, the November CPI and employment figures will be released. If these data miss the forecast, the market will increase speculation of another rate cut in the U.S., which could trigger a sell-off of the dollar.

Next is an analysis of the USDJPY daily chart.

On the daily chart, the pair is losing direction as the middle line is about to flatten. If the pair breaks above the 156.5 yen level, it will continue to climb. However, if the pair clearly falls below 154.34 yen, it would be safe to say that the pair has entered a downtrend.

We continue with an analysis of the USDJPY weekly chart.

The weekly chart shows a strong uptrend, with the pair climbing along the upward bandwalk. In spite of the increase in selling pressure on the dollar after the pair broke above the upper limit of the band, it is safe to say that the uptrend will likely continue as long as the pair stays above the 154.34 yen level.

The ECB Governing Council is expected to decide to keep its monetary policy unchanged at its meeting on December 18th. However, it is unclear whether the central bank will raise interest rates by the second half of 2026. Therefore, the Council's decision will not trigger the sell-off of the euro. Instead, the market will focus on U.S. economic data to be released on December 16th and 18th.

Next is an analysis of the EURUSD daily chart.

The pair's downtrend has concluded. It has turned into an uptrend and reached the upper limit of the band. Although the pair temporarily dipped, it rebounded and is continuing to rally. It seems better to focus on buying on dips now. The current target lies around the 1.1778 level. It is important to watch whether the pair breaks above this level.

We continue with an analysis of the EURUSD weekly chart.

On the weekly chart, three consecutive positive candlesticks appeared, and the pair closed last week's trading session by breaking above +1σ. It is safe to say that the uptrend will likely continue. The support line lies at the 1.1491 level.

The BOE is expected to either keep its policy interest rate unchanged or make an additional rate cut at its MPC meeting on December 17th and 18th. Therefore, it is unlikely that the meeting's decision will trigger pound buying. However, if U.S. economic data increases speculation about an additional rate cut, the dollar may be sold, which in turn may favor the pound.

Next is an analysis of the GBPUSD daily chart.

On the daily chart, it is evident that the pair is trending upward. Although the pair temporarily dipped below +1σ last week, it quickly rebounded and is now extending its rally. If the pair breaks above the 1.3471 level, it may continue to climb.

We continue with an analysis of the GBPUSD weekly chart.

On the weekly chart, three consecutive positive candlesticks appeared. However, the pair experienced mounting selling pressure upon reaching the middle line. If the pair breaks above the 1.3471 level, the medium-term direction will be confirmed.