Dollar gets slammed before FOMC- Week 49| Technical Analysis by Jasper Lawler

Week Ahead📅 8–14 December, 2025

Markets enter the second week of December after a shaky start, driven by Japanese bond yields hitting 20-year highs and weak US labour and manufacturing data that deepened concerns about a global slowdown.

With the Fed‘s final rate decision, China’s trade figures, and UK GDP all due this week, investors now face a pivotal stretch that could either steady year-end sentiment or weigh on it further.

News

• Bond markets shocked early in the week:

JGB yields spiked to 20-year highs after BOJ Governor Ueda delivered unexpectedly hawkish commentary. The yen swung sharply, while PM Sanae Takaichi‘s spending plans raised fears of a potential “Truss shock” given Japan’s debt profile. The move set a global tone, pushing investors to focus heavily on yield movements.

• AI-sector wobble midweek:

Reports of Microsoft clients delaying new AI product adoption briefly shook AI-related stocks before the company denied the claims. Sentiment was further tested as Google launched Gemini and DeepSeeks progress pushed OpenAI to recalibrate its strategy.

Global data remained weak:

Chinas manufacturing PMI slipped back into contraction, Europe and the US stayed below 50, and the US ADP report showed the biggest job losses since 2020 — all reinforcing slowing growth and labour momentum. Equities initially fell on soft demand signals before recovering on hopes of policy easing.

Geopolitics added pressure to energy markets as Russia rejected Washington‘s latest peace proposal and the Trump administration escalated actions against Venezuela, blocking flights and demanding President Maduro’s resignation.

• Fed expectations shifted dovish:

Markets now price roughly a 90% chance of a rate cut at next Wednesdays FOMC meeting.

Price Action

• USD underperformed, weighed down by soft data and rising expectations of a dovish Fed shift. The biggest movers were the commodity currency pairs AUD/USD and USD/CAD.

• AUD outperformed, supported by RBA Governor Michelle Bullocks emphasis on rising inflation pressures and an economy running above potential.

• Gold and silver have paused near recent highs as bulls second guess the strength of the rebound.

• Crude oil gained, reacting to geopolitical tensions and evidence of slowing OPEC output.

Market Themes to WatchFed to Cut and Pause

The Fed is widely expected to cut rates at the December 10 meeting, completing the three-cut roadmap projected earlier in 2025. Attention now turns to:

• Dot-plot adjustments for 2026

• Whether January becomes a pause (75% likely)

• Stable policy could help gold establish support near $4,160/oz and position for new record highs.

RBA and BoC Expected to Hold

• RBA: A hawkish tone could drive AUDUSD higher

• BoC: Weak Canadian growth may prompt a more dovish message

UK GDP (Oct): Flat Growth Expected

Markets look for 0.0% growth, an improvement from the prior –0.1%.

Top Events in the Week Ahead

• Fed rate decision (Wed)

• China trade data (Mon)

• Japan Tankan index (Mon)

• Australia NAB confidence (Tue)

• US JOLTS (Tue)

• China CPI (Wed)

• US trade balance (Thu)

• China new yuan loans (Fri)

Corporate Updates This Week

Toll Brothers, AutoZone, Oracle, Adobe, Broadcom, Costco, British American Tobacco, TUI.

Technical Analysis

We look at hundreds of charts each week and present you with three of our favourite setups and strategies.

EUR/USDSetup

Sideways range - bullish reversal

• 1.15 has held as range support

• Bullish breakout from weekly inside bar

• Inverse Head & Shoulders completed pattern on daily chart

• Daily RSI back at 60 after avoiding oversold (uptrend)

Commentary

The euro has shown renewed upside momentum after failing to sustain bearish created by the pin bar at 1.19. While signals are less reliable without a trend in place, a rally to the top of the range looks likely.

Strategy

• Buy pullbacks towards the neckline above 1.16

• Buy on daily close above 1.17



• USD/JPYSetup

Uptrend Correction

• Inside bar breakdown on weekly chart. A 1:1 RR would target 154, a 2:1 would target 152.50)

• Long term resistance at 158

• Daily price action still above the 50 SMA (bullish) and 50 RSI (bullish)

• Commentary

After hitting long term resistance, price broke a steep uptrend line but remains above the 50 SMA. Despite a heavy USD sell off in other pairs, USD/JPY held up quite well, indicating underlying strength.

• Strategy

• Bull another dip to 154

• Buy breakout over 156



• Nikkei 225 (225/JPY)Setup

Bullish - correction

• Two week rebound after three week decline.

• Very over-extended weekly uptrend has struggled since hitting big 50K level

• Price still above uptrend line and 50 RSI

• Correction from ATH has rebounded 61.8%

• Commentary

The Nikkei is still in an uptrend but could be about to undergo another leg lower as part of a bigger ABC correction. A 2:1 RR on a weekly inside day trade would target 46,000 but this trade would be stopped out above 51,500 - signalling a continuation of the uptrend.

• Strategy

• Buy breakout above 51,500

• Sell breakdown from 50,600



But - as always - thats just how the team and I are seeing things, what do you think？