Forex News

• The United States Census Bureau will release Retail Sales data for November.
• US Retail Sales are expected to have increased by 0.4% in the month.
• The US Dollar is weak ahead of the announcement, affected by geopolitical turmoil.

The United States (US) Census Bureau will publish November Retail Sales on Wednesday. The delayed data is expected to show that sales rose a modest 0.4% in the month, following no change in October. The report was delayed by the government shutdown, which diminishes its potential impact on the US Dollar (USD). The Retail Sales report is a key indicator of consumer spending and consumer demand, which are major drivers of the US economy.

Retail Sales Control Group, a smoother reading that excludes automobiles, gasoline, building materials, and food services, surged 0.8% in October after an unrevised 0.1% dip in September. The figure is relevant as it corresponds most closely with the consumer spending component of Gross Domestic Product (GDP).

The US economy kick-started the last quarter of 2025 on a strong footing, yet with mounting inflationary pressure that took its toll on consumption, particularly affecting lower and middle-income households.

Market participants do not seem worried about the latest economic developments, as real GDP increased at an annual rate of 4.3% in the three months to September, reflecting “increases in consumer spending, exports, and government spending that were partly offset by a decrease in investment,” according to the Bureau of Economic Analysis (BEA) official report.

But what will happen with the last quarter of 2025? Not only did the government shut down, dragging consumption lower, but also inflation remained stubbornly high. In the meantime, the Federal Reserve (Fed) delivered modest interest rate cuts and had to deal with US President Donald Trump's anger over the matter.

What to expect from the November US Retail Sales report?

As previously noted, sales are likely to show a modest 0.4% increase, while market players will be paying close attention to the core reading outcome after the 0.8% advance posted in the previous month.

In the meantime, the US published the December Consumer Price Index (CPI) data. The annual inflation rate was reported at 2.7% by the CPI, while the monthly reading was 0.3%, matching expectations. The core annual CPI increased by 2.6% while the monthly advance was 0.2%, slightly below expectations but matching November’s readings. The USD came under modest selling pressure with the news, but given that the data was pretty much in line with expectations, the FX board showed no relevant reaction.

With that in mind, deviations between the actual Retail Sales figure and expectations will be critical for the USD direction. A much weaker than anticipated report could put pressure on the Greenback, while much stronger-than-expected data should boost the American currency.

Still, the reaction is likely to be limited to the near term, as investors maintain their eyes elsewhere: US President Trump has been quite busy at the start of 2026, generating geopolitical noise. Not only did Trump conduct a military operation in Venezuela and capture former President Nicolás Maduro and his wife, but he also escalated threats to annex Greenland, a Danish territory rich in rare earth elements. But it did not end there: early on Tuesday, Trump announced a 25% new tariff on those countries doing business with the Islamic Republic of Iran.

When will US Retail Sales data be released, and how can it affect EUR/USD?

The US December Retail Sales data is due at 13:30 GMT, and as previously stated, the market reaction will be directly linked to the degree of deviation from expectations on the headline and the result of the Retail Sales Control Group reading.

Ahead of the announcement, the EUR/USD pair is trapped between 1.1600 and 1.1700, with the risk skewed to the downside yet without any directional momentum.

Valeria Bednarik, FXStreet Chief Analyst, notes: “The EUR/USD pair consolidates around 1.1650 and is technically neutral. The bearish case could become stronger if the pair falls through 1.1590, a strong static support level. Bulls, on the contrary, will likely prefer to jump in once the 1.1740 resistance area is cleared. In between, choppy trading is likely to persist by the hands of sentiment.

• EUR/GBP trades lower around 0.8660 as the Pound Sterling strengthens ahead of UK GDP data.
• The Euro remains supported by signs that the European Central Bank is nearing the end of its rate-cutting cycle.
• Comments from a Bank of England official fuel expectations of a gradual normalization of UK monetary policy.

EUR/GBP trades around 0.8660 on Wednesday at the time of writing, down 0.12% on the day, as the Pound Sterling (GBP) benefits from cautious investor positioning ahead of UK growth data.

The Euro (EUR) nonetheless retains some support amid a gradual easing of inflationary pressures in the Eurozone, reinforcing the view that the European Central Bank (ECB) may be approaching the end of its rate-cutting cycle. Eurozone headline inflation, released last week, slowed to 2% YoY in December, its lowest level in four months and in line with the ECB’s target, while core inflation eased to 2.3% YoY, slightly below market expectations. These figures support the scenario of a more stable monetary policy outlook over the medium term, limiting downside pressure on the single currency.

On the UK side, the Pound Sterling (GBP) outperforms its major peers ahead of the release of the November monthly Gross Domestic Product (GDP) data, scheduled for Thursday. The Office for National Statistics (ONS) is expected to report a 0.1% expansion in activity, following two consecutive monthly contractions of 0.1% in September and October. At the same time, Manufacturing Production is forecast to rise by 0.5% MoM, while Industrial Production is expected to remain broadly flat. Investors are closely monitoring these data to assess the resilience of the UK economy.

Pound Sterling sentiment is also supported by recent comments from Alan Taylor, a member of the Bank of England’s (BoE) Monetary Policy Committee (MPC). Speaking at a summit at the National University of Singapore, Taylor said he expects monetary policy to normalize toward neutral levels “sooner rather than later,” noting that inflation sustainably at target is likely to be achieved from mid-2026. These remarks are in line with the guidance delivered by the Bank of England at its December meeting, when policymakers indicated that monetary policy is set to follow a gradual downward path.

• NZD/USD remains capped below 0.5750 after pulling back from 0.5780 highs on Tuesday.
• The upbeat Chinese Trade Balance has failed to boost the Kiwi.
• The US Dollar remains firm, with the market forecasting a steady Fed moneary policy.

The New Zealand Dollar is ticking higher on Wednesday but remains trading within Tuesday’s range, with upside attempts capped below 0.5750 and FX volatility subdued. The upbeat Trade Balance data from China, New Zealand’s main trade partner, has failed to provide any significant support to the pair.

Data from the Chinese Customs Authority revealed that the country has managed to dodge the impact of Trump’s tariffs. China's trade surplus increased to $114.1 billion in December, from 111.68 billion in November, beating expectations of a 113.6 billion surplus and reaching a record yearly surplus of $1.2 trillion in 2025.

December's increase has been mostly due to non-US trade, which led to a 6.6% year-on-year rise in exports, from 5.9% in November, against the market consensus of a 3% increment. Apart from that, import growth accelerated to 5.7% from 1.9% in November, suggesting a significant recovery in domestic demand.

In New Zealand, data released on Tuesday showed that Building Permits grew 2.8% in November, following a 0.7% decline in December. The impact of these figures on the Kiwi, however, was marginal.

The NZD remains vulnerable amid a somewhat firmer US Dollar.  The moderate consumer inflation figures seen in the US on Tuesday have failed to change the view that the Federal Reserve (Fed) is unlikely to alter its monetary policy over the next months. Later today, US Retail Sales data and a slew of Fed speakers might provide further guidance for US Dollar crosses.

• The Pound Sterling outperforms its major peers ahead of the UK monthly GDP data on Thursday.
• BoE’s Taylor expects monetary policy to normalise at neutral levels soon.
• The US Dollar gains ground as US inflation remained steady in December.

The Pound Sterling (GBP) gains against its major peers, except antipodeans, on Wednesday. The British currency trades higher ahead of the United Kingdom (UK) monthly Gross Domestic Product (GDP) and factory data, which will be released on Thursday.

The UK Office for National Statistics (ONS) is expected to show that the economy expanded 0.1% in November. Meanwhile, month-on-month (MoM) Manufacturing Production is estimated to have grown steadily by 0.5%, with Industrial Production remaining broadly flat.

Investors will pay close attention to the UK GDP growth data to get cues on the current state of the economy. The UK GDP declined by 0.1% in both September and October after remaining flat in August.

The data will also drive market expectations for the Bank of England’s (BoE) monetary policy outlook. In the December policy meeting, the BoE guided that monetary policy will remain on a gradual downward path.

During European trading hours, BoE policymaker Alan Taylor said in a summit in Singapore that he expects interest rates to fall to their neutral levels soon, citing that price pressures could return to target by mid of 2026.

Daily digest market movers: Steady US CPI data boosts US Dollar's appeal

• The Pound Sterling trades 0.2% higher to near 1.3445 against the US Dollar (USD) during the European trading session on Wednesday. The GBP/USD pair rises amid Sterling’s outperformance, while the US Dollar ticks lower.
• As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges down to near 99.10, but is still close to its monthly high near 99.26.
• The US Dollar gained sharply on Tuesday after the release of the US Consumer Price Index (CPI) data for December. The CPI report showed that both headline and core inflation remained steady at 2.7% and 2.6% year-on-year (YoY), respectively, firming expectations that the Federal Reserve (Fed) will not cut interest rates in its policy meeting later this month.
• However, US President Donald continued to increase the pressure on Fed Chair Jerome Powell to cut interest rates further, while praising steady inflation figures. “We have very low inflation. That would give ’too late Powell’ the chance to give us a nice beautiful big rate cut," Trump said, according to a Reuters report.
• For more cues on inflation, investors will focus on the United States (US) Producer Price Index (PPI) data for October and November, which will be published at 13:30 GMT.
• Meanwhile, chiefs of global central banks have shown support towards Fed Chair Jerome Powell over his criminal charges, which he called a “pretext” for refraining from follow the president’s preferences. Chiefs from the European Central Bank (ECB), the BoE, and nine other central banks said collectively that “independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve”, and “we stand in full solidarity with the Fed System and its Chair Jerome H. Powell”.

Technical Analysis: GBP/USD holds 50% Fibo retracement at 1.3393

GBP/USD trades at 1.3437 as of writing. The 20-day Exponential Moving Average has stalled around 1.3439, with price testing this dynamic cap. A close above the average would improve near-term traction. The RSI at 52 (neutral) edges higher, but still reflects balanced momentum.

Measured from the 1.3780 high to the 1.3006 low, the 50% Fibonacci retracement at 1.3393 acts as resistance on rebounds, while the 61.8% retracement at 1.3485 caps the upside. A close above the latter would signal the bearish trend is fading and could extend the recovery, while failure there would keep the pair range-bound.

(The technical analysis of this story was written with the help of an AI tool.)

Japan’s Ruling Ishin Party Leader Yoshimura said during European trading hours on Wednesday that Prime Minister (PM) Sanae Takaichi will call a snap election at the beginning of the parliamentary session.

Comments

PM Takaichi to call a snap election at the beginning of the parliamentary session.

Takaichi said details will be announced on Monday.

Informed by PM Takaichi that she will dissolve parliament at the initial stage of the regular session, the head of Japan's Ruling LDP's Junior Coalition Partner said.

Market reaction

More details on the timeframe of a snap election from Japan's ruling party have resulted psotive for the Japanese Yen (JPY). USD/JPY gives back early gains after posting a fresh one-and-a-half-year high at 159.30 and slides to near 158.70.

Slight increase in downward momentum is likely to lead to a lower range of 0.5720/0.5765 rather than a continued decline. In the longer run, for the time being, NZD is likely to trade in a range between 0.5720 and 0.5805, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

NZD is likely to trade between 0.5720 and 0.5805

24-HOUR VIEW: "On Monday, NZD rose to a high of 0.5775. Yesterday, we highlighted the following: 'The advance has gathered momentum, and NZD could rise further today. That said, overbought conditions could limit any gains to a test of 0.5785. The major resistance at 0.5805 is not expected to come into view. Support is at 0.5775; a breach of 0.5740 would indicate that the current upward pressure has eased'. NZD subsequently rose to 0.5784 and then retreated, reaching a low of 0.5737. Upward pressure has eased, and the slight increase in downward momentum is likely to lead to a lower range of 0.5720/0.5765 rather than a continued decline."

1-3 WEEKS VIEW: "We continue to hold the same view as yesterday (13 Jan, spot at 0.5770). As highlighted, the recent downward pressure has eased, and for the time being, NZD 'is likely to trade in a range between 0.5720 and 0.5805'."

Silver has extended its breakout and is approaching the upper boundary of a steep ascending channel near $96.50–$97.00, with momentum indicators at multi-year highs despite clear signs of an overstretched trend, Société Générale's FX analysts note.

XAG/USD nears channel resistance at $97

"Silver broke out of its brief consolidation earlier this week, extending its upward move. It is now approaching the upper boundary of a steeper ascending channel at $96.50/$97.00. The daily MACD has surged to multi-year highs and remains well above the equilibrium line, underscoring strong momentum but also highlights an overstretched trend."

"Notably, Silver is nearly 45% above the 50-DMA; this is a historically extreme deviation and highlights the risk of near-term consolidation or corrective action. However, no clear signs of a meaningful pullback have emerged yet. The upper part of recent range at $82.70 could serve as initial support."

There is a chance for Australian Dollar (AUD) to test 0.6670; the major support at 0.6655 is not expected to come into view. In the longer run, the current price movements are likely part of a range-trading phase between 0.6655 and 0.6745, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

Current price movements are likely part of a range-trading phase

24-HOUR VIEW: "AUD rose to a high of 0.6722 two days ago. Yesterday, when it was at 0.6705, we noted that 'the increase in upward momentum is not strong enough to suggest a continued rise'. We held the view that AUD “is more likely to trade in a higher range of 0.6685/0.6730'. During the NY session, AUD fluctuated between 0.6673 and 0.6727, closing on a soft note at 0.6681 (-0.43%). This time around, the increase in downward momentum is not sufficient to indicate a sustained decline. That said, there is a chance for AUD to test 0.6670. The major support at 0.6655 is not expected to come into view. Resistance is at 0.6700, followed by 0.6715."

1-3 WEEKS VIEW: "In our latest narrative from last Friday (09 Jan, spot at 0.6700), we highlighted that 'the current price movements are likely part of a range trading phase between 0.6655 and 0.6745'. Our view remains unchanged."

• EUR/USD treads water below 1.1650 in a bearish trend from weekly highs at 1.1700.
• The US Dollar remains firm despite moderate US inflation figures.
• The pair remains in a bearish channel with one-month lows at 1.1618 in sight.

EUR/USD is practically flat on Wednesday, trading just below 1.1650 at the time of writing, with one-month lows in the 1.1615 area in sight, which are at a relatively short distance. The US Dollar maintains a moderate bullish bias in a calm market session, unfazed by the softer-than-expected US core Consumer Prices Index (CPI) data released on Tuesday.

Figures from the US Bureau of Labour Statistics (BLS) revealed that price pressures remained fairly steady in December, against market hopes of an uptick in the core inflation. The US Dollar, however, maintained its mild bullish tone, as the data did not change the Federal Reserve's (Fed) monetary policy expectations. Futures market is practically fully pricing a steady interest rate decision in the late-January meeting, and the chances of a rate cut in March have dropped to 26% from nearly 40% one week ago, according to the CME FedWatch tool.

Market volatility has been low during a dozy Asian session. The economic calendar in Europe is void, apart from a speech by the European Central Bank’s Vice-President, Luis De Guindos. In the US, Retail Sales data and an array of Fed speakers will be in focus, although traders will keep an eye on the US Supreme Court, which might rule on US President Donald Trump’s tariffs later on Wednesday.

Daily Digest Market Movers: US CPI data failed to hurt the US Dollar

• The US Dollar maintains its moderate constructive tone intact, despite the softer-than-expected core CPI figure seen on Tuesday.
• Headline US inflation grew 0.3% pace in December and 2.7% year-on-year, in line with market expectations, while the core CPI slowed to 0.2% from 0.3% the previous month and grew at a steady 2.6% annual pace, against market expectations of 0.3% and 2.7% increases, respectively.
• The US ADP employment 4-week average report, on the other hand, revealed an 11.75K increase in the first week of 2026, following the previous 11K. This reading marks the fifth consecutive week with a net increase in jobs, which has contributed to easing concerns about the labour market and strengthens the case for steady Fed interest rates in the coming months.
• Also on Tuesday, the heads of the European Central Bank (ECB), the Bank of England (BoE), the Bank of Canada (BoC), and nine other central banks released a statement showing their solidarity with Federal Reserve Chairman Powell in reaction to the unprecedented attacks from US President Donald Trump. The central bankers defended the independence of their institutions as a cornerstone for price, financial, and economic stability in the interest of the citizens that they serve.
• Later on Wednesday, November's US Retail Sales are expected to show that consumption bounced up 0.4% after a flat performance in October, boosted by higher car sales. Excluding autos, sales of all other items are seen growing at a 0.4% pace, unchanged from last month.
• A slew of Fed speakers will also take the stage during the American session. The focus will be on Governor Stephen Miran, Trump's latest pick for the Board, and a vocal dove. Philadelphia Fed President Anna Paulson, Atlanta Fed President Raphael Bostic, Minneapolis Fed President Neel Kashkari, and New York Fed President John Williams will also meet the press on Wednesday.

Technical Analysis: EUR/USD bears eye the 1.1615 support area

The EUR/USD pair treads water below the 1.1650 line, after pulling back from the 1.1700 area earlier this week. Technical indicators show a neutral-to-bearish tone. The Moving Average Convergence Divergence (MACD) is practically flat on the 4-hour chart, showing a lack of momentum, while the Relative Strength Index (RSI) has dropped below 43, pointing to fading demand.

Price action remains trapped within a descending channel from late December highs. The intraday low is near 1.1635, and the one-month low of 1.1618 remains in the bears' sight. Further down, the confluence of the channel bottom and December 2 lows, right below 1.1600, is a key area.

Immediate resistance stands at the channel top, now around 1.1685, ahead of Monday's high, near 1.1700. Further up, the target is the January 6 high, in the area of 1.1740.

(The technical analysis of this story was written with the help of an AI tool.)

There seems to be no way of stopping the USD/JPY rally. Speculation of snap elections is mounting, and the return of some degree of political risk premium is offering another chance to test Japan’s tolerance band on its currency. Ongoing Japan-China diplomatic tensions are also adding fuel to the fire, ING's FX analyst Francesco Pesole notes.

Intervention alone unlikely to reverse USD/JPY trend

"On Monday, we thought upside risks extended to 160, and while the rally may slow close to that mark on intervention fears, it’s looking increasingly likely that level will be ultimately tested. After all, in July 2024, Japan let the pair rise above 160 and only intervened when it nearly touched 162. It’s hard to pick the right level for intervention, but if the BoJ hasn’t moved so far, it’s reasonable to expect it’ll just wait for a 160+ print."

"For reference, the 11 July 2024 USD/JPY move on the first intervention was -1.8%. Interestingly, back then, CFTC net non-commercial positions on the yen were -52% of open interest, and they are now instead 3% in net-long territory, even if spot action argues otherwise. What matters the most is whether FX interventions can drive a sustainable USD/JPY recovery."

"As a rule of thumb, they don’t on their own. In 2024, they effectively curbed upside pressure in the short term, but the follow-up drop in USD/JPY was entirely a function of US 2-year swap rates collapsing by some 50bp in the following month. That doesn’t seem like a plausible scenario at this stage, and the risk of snap elections keeps markets reluctant to price in any BoJ hike before this summer."