The foreign exchange market for the week that ended on December 21st was sensitive to a series of announcements by central banks regarding their interest rates. The Bank of England (BOE) and the Federal Reserve Board (FRB) both lowered their rates. The European Central Bank (ECB), however, maintained its policy interest rate. In contrast, the Bank of Japan (BOJ) raised its interest rate. Comments by BOJ Governor Kazuo Ueda at the post-meeting press conference triggered a sell-off of the yen, which weakened against the dollar, the euro, and the pound.

December 15 (Mon)

As speculation about a U.S. rate cut increased, the market shifted its focus to the possibility of a rate hike by the BOJ. At the press conference, Chief Cabinet Secretary Minoru Kihara stated that the cabinet would respect the decision of the central bank. The market interpreted it as the government's acceptance of the rate hike, and traders bought yen. As a result, the USDJPY fell to the 154.8 yen range.

Meanwhile, the EUR/USD rose to 1.1768. The GBPUSD touched 1.3398, though it stayed flat most of the day.

December 16 (Tue)

The yen continued to strengthen modestly against the dollar. The USDJPY edged down below the mid-154 yen level during the day.

Meanwhile, the EURUSD temporarily fell but then rebounded to the 1.18 range. The GBPUSD rose to 1.3455.

December 17 (Wed)

The weaker-than-expected U.K. Consumer Price Index (CPI) for November increased speculation about an additional rate cut by the BOE and triggered a sell-off of the pound. The GBPUSD tumbled to the 1.311 range. Conversely, the decline of the USDJPY halted as investors bought back the dollar, lifting the pair to the 155.7 yen range.

Meanwhile, after falling just above the 1.17 level, the EURUSD rebounded to 1.175 but concluded the daily trading session in the 1.173 range.

December 18 (Thu)

The market was quiet on the day before the BOJ's Monetary Policy Meeting. The USDJPY fluctuated within the 155 yen range.

The weaker-than-expected U.S. CPI lifted the EURUSD to the 1.176 range intraday and pushed the GBPUSD back up to the 1.344 range, respectively. However, the impact of the CPI was limited.

December 19 (Fri)

At its Monetary Policy Meeting, the BOJ decided to raise the interest rate by 0.25%, as the market had expected. At the post-meeting press conference, Governor Kazuo Ueda refrained from insisting explicitly on the further rate hike. As a result, the yen was sold off, and the USDJPY jumped to the 157.7 yen range.

This confirmed the dollar's strength. The EURUSD declined but managed to remain above the 1.17 level. The GBPUSD concluded the weekly trading session by hovering within the upper 1.33 range.

December 22 (Mon)

• 07:00 U.K.: July-September Quarterly Gross Domestic Product (revised GDP)

December 23 (Tue)

• 13:30 U.S.: July-September Quarterly Gross Domestic Product (revised GDP)
• 23:50 Japan: Summary of Opinions at the Monetary Policy Meeting

December 25 (Thu)

• Closure: U.S. and U.K. (holiday)

December 26 (Fri)

• Closure: U.K. (holiday)

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.

Following the statements by BOJ Governor Kazuo Ueda, the USDJPY is expected to advance as the yen is anticipated to be sold. Ueda is also scheduled to deliver a speech on December 25th. The market will focus on what he is going to say about the upcoming monetary policy. Meanwhile, as volatility is expected to go down ahead of the end of the year, it is important to pay attention to sudden fluctuations.

Next is an analysis of the USDJPY daily chart.

The pair concluded last week's trading session by surging above the upper limit of the band. Position adjustments may push the pair down in the short term. However, if the pair breaks above 157.89 yen, the monthly high in November, it will be able to target the annual high of 158.78 yen.

We continue with an analysis of the USDJPY weekly chart.

Last week, the pair rebounded before continuing to decline. It is now on the verge of returning to the uptrend. If the pair breaks above the 158.87 yen level, it will be able to target 160 yen. It is safe to say that the uptrend will likely continue.

The ECB decided to maintain its policy interest rate. Although speculation of a rate hike in 2026 is mounting, the market views it as unlikely that the central bank will decide to raise rates early in 2026. The market will move slightly during the week of Christmas due to a lack of news.

Next is an analysis of the EURUSD daily chart.

After reaching a weekly high on December 16th, the pair has continued to decline. However, looking back at recent fluctuations, the pair rebounded after a brief decline and extended its rally. Therefore, it is important to watch whether it could happen again. If the pair falls below the 1.1615 level, it would signal that the pair has entered a downtrend. For now, though, it is safe to say that the uptrend will likely continue.

We continue with an analysis of the EURUSD weekly chart.

On the weekly chart, the pair has been moving within a fixed range. However, last week, the pair temporarily reached the upper limit of the range. It appears the resistance line is around the 1.182 level. If the pair breaks above this level, it will extend the uptick.

At the Monetary Policy Conference, the BOE decided to lower the policy interest rate. However, since the market had already factored in the rate cut, the central bank's decision does not significantly impact the GBPUSD. The U.K. market will be closed for two consecutive days in the latter half of this week due to Christmas. The market will move slightly due to a lack of news.

Next is an analysis of the GBPUSD daily chart.

Last week, the pair moved almost flat. However, as the middle line continues to trend upward, it encourages traders to believe that the pair's uptrend will likely continue. It is currently important to watch whether the pair can break above 1.34714.

We continue with an analysis of the GBPUSD weekly chart.

On the weekly chart, four consecutive positive candlesticks appear. However, the pair is facing an increase in selling pressure after reaching the middle line. Therefore, it is premature to determine that the pair has returned to an uptrend. For now, the pair seems to be targeting the 1.35 level.