Forex News

• USD/CHF weakens as the US Dollar stays under pressure ahead of the Fed interest rate decision.
• Markets remain convinced the Fed will deliver a 25 bps cut, with traders also watching for any hawkish signals in the guidance.
• SNB decision in focus, with economists widely expecting rates to remain at 0.00% as inflation sits near the lower bound of its target range.

The Swiss Franc (CHF) trades slightly firmer against the US Dollar (USD) on Wednesday, with USD/CHF extending losses for a second consecutive day as the Greenback stays on the back foot ahead of the Federal Reserve’s (Fed) interest rate decision at 19:00 GMT.

At the time of writing, the pair is trading around 0.8044, pressured by a softer USD and a cautious market mood ahead of the Fed decision.

Markets remain convinced the central bank will deliver another 25 basis point (bps) rate cut, which would bring the Federal Funds Rate down to the 3.50%-3.75% range.

With the rate cut almost fully priced in, attention will be squarely on Fed Chair Jerome Powell’s post-meeting press conference, along with the updated dot plot and economic projections, as speculation surrounding a hawkish cut builds.

The Fed has already eased policy twice this year, delivering back-to-back 25 bps reductions in September and October. Traders now expect the central bank could signal a pause through early 2026 as policymakers assess the impact of those earlier reductions, particularly while inflation remains above target and the labour market shows no signs of severe deterioration.

The updated dot plot will also play a crucial role in shaping market expectations. The September projections pointed to one rate cut in both 2026 and 2027, no change in 2028, and a longer-run policy rate anchored at 3.0%.

Markets will be watching closely to see whether the Committee shifts these forecasts higher, which would reinforce the prospect of a hawkish policy path and potentially offer some relief to the USD.

In Switzerland, attention is now turning to the Swiss National Bank’s (SNB) interest rate decision due on Thursday. Markets widely expect the SNB to keep its policy rate unchanged at 0.00%.

According to a Reuters poll, 38 of 40 economists forecast no change at the December 11 meeting, while only two anticipate a return to -0.25%. Reuters also reported that 21 of 25 economists expect the policy rate to remain at 0.00% through the end of 2026, with only a few projecting any cuts next year.

Inflation has eased toward the lower end of the SNB’s 0–2% target band, and policymakers have repeatedly indicated that the threshold for returning to negative rates remains very high. The central bank also expects inflation to edge slightly higher in the coming quarters, reinforcing expectations for a steady policy stance.

• EUR/USD picks up to the 1.1640 area after hitting weekly lows at 1.1615.
• The US Dollar trims some of its recent gains with traders positioning for the Fed's monetary policy decision.
• The pair is trading below a previous trendline support, now at the 1.1665 area.

EUR/USD has given away most of the gains taken on Wednesday's early European session and trades at the 1.1630 area, after rejection at session highs near 1.1660. Investors are looking from the sidelines, awaiting the US Federal Reserve's (Fed) monetary policy decision due later in the day.

The market has practically discounted a 25-basis-points Fed interest rate cut later this Wednesday, with the monetary policy committee likely to show the wider divergence in years. In this context, the central bank's rate cut projections, the so-called "dot plot," and the tone of Chairman Jerome Powell's ensuing press conference will be the main market movers.

On the macroeconomic data front, the release of the delayed US JOLTS Job Openings figures from September and October provided a positive surprise, which, together with the sticky PCE inflation numbers seen last week, adds to the case of a "hawkish cut" by the Fed.

US President Donald Trump, however, invited himself to the party on Tuesday, renewing his pressure for sharply lower interest rates, in an interview with Politico, although the impact on the US Dollar was minimal.

Daily Digest Market Movers: Rangebound trading ahead of the Fed

• The US Dollar (USD) is ticking lower on Wednesday, after having appreciated over the previous two days. Price action, however, remains contained within recent ranges, with traders awaiting the outcome of the Federal Reserve's monetary policy meeting to make investment decisions.
• The Fed is widely expected to trim its Repo Rate by 25 basis points to the 3.50-3.75% band, but Chairman Jerome Powell might signal a monetary easing pause in the coming months and warn about upside risks to inflation.
• Investors will also be attentive to the bank's interest rate projection, which will be contrasted with the market expectations of two or three more rate cuts in 2026.
• US President Trump added pressure on the Fed in an interview with Politico published on Tuesday, calling Powell "not a smart person" for not lowering borrowing costs faster, and assured that the support for "immediately slashing interest rates" will be a litmus test for the election of the next Fed chair.
• White House economist Kevin Hassett, who is also the best-positioned candidate to replace Powell at the Fed, affirmed that there is "plenty of room" to ease monetary policy further, although he acknowledged that the situation might change if inflationary pressures rise.
• Meanwhile, the delayed figures by the US Labor Department revealed that job openings rose to 7.658 million in September and to 7.67 million in October, from 7.227 million in August, beating market expectations of a slight decline to 7.2 million.
• In Europe, the European Central Bank (ECB) President, Christine Lagarde, stuck to her usual rhetoric, reiterating that the bank's monetary policy remains in good shape and suggested that they might lift the region's growth forecasts again, adding to evidence that the easing cycle has reached its end.

Technical Analysis: EUR/USD remains capped below a previous trendline support

Technically, the EUR/USD broke below the ascending trendline from the November 20 lows and remains unable to return above it, which is a bearish signal. Oscillators are also pointing lower. The 4-hour Moving Average Convergence Divergence (MACD) remains below zero, highlighting a mild bearish momentum, although the 4-hour Relative Strength Index (RSI) has returned to levels right above the 50 line.

Bulls remain capped below Tuesday's high, at 1.1657, and the reverse trendline, now at 1.1665 area, which is closing the path to last week's high, at 1.1682, and the October 17 high, near 1.1730. To the downside, immediate support is at Tuesday's low of 1.1615, ahead of the December 1 and 2 lows around 1.1590 and the November 26 and 28 lows in the 1.1550-1.1555 area.

• The Aussie remains capped below 0.6650 against the USD, with the bullish trend still intact.
• RBA-Fed monetary policy divergence is weighing on the Greenback.
• The US central bank is expected to cut rates for the third consecutive time on Wednesday.
  

The Australian Dollar is trading practically flat below a nearly two-month high, at 0.6654, hit on Tuesday. The pair consolidates gains after rallying more than 3% from November’s lows as investors bid their time ahead of the conclusion of the US Federal Reserve’s (Fed) monetary policy meeting.

The market has practically discounted a 25-basis-point Fed rate cut later on Wednesday. This will be the third consecutive one and is expected to be followed by a hawkishly tilted monetary policy stance, despite the wide divergence among policymakers.

Fed Powell and the "dot-plot" will grab the attention

Investors will be focusing on Chairman Powell’s ensuing press conference and on the bank’s interest rate projections, the so-called “dot-plot”, for further insight about the bank’s near-term monetary policy plans for 2026. Investors will be eager to contrast market expectations of two to three further rate cuts next year with the bank's forward guidance.

On Tuesday, US President Donald Trump added pressure on the central bank in an interview with Politico, calling Powell “not a smart person” for refusing to cut interest rates fast enough and assuring that the support for "immediately slashing interest rates" will be a condition for the election of the next Fed chair.

In Australia, the Reserve Bank of Australia (RBA) left rates on hold on Tuesday, as widely expected, and governor Michelle Bullock warned about rising inflationary pressures, which suggests that the next move will be a rate hike, probably in the second half of 2026.

The Aussie Dollar rallied after the RBA’s decision, before trimming some losses amid the weak inflation levels seen in China, Australia’s main trading partner. The yearly inflation accelerated in November, as measured by the Consumer Prices Index, but monthly inflation contracted, and producer prices’ deflationary pressures deepened, underscoring the weak domestic consumption.

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• The Pound Sterling gains against its major currency peers as BoE members support gradual monetary easing.
• Investors await the Fed’s monetary policy announcement.
• The Fed is expected to cut interest rates, citing employment risks.

The Pound Sterling (GBP) trades 0.16% higher to near 1.3320 against the US Dollar (USD) during the European trading session on Wednesday. The GBP/USD pair gains as the US Dollar drops slightly amid caution ahead of the Federal Reserve’s (Fed) monetary policy announcement at 19:00 GMT.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is down 0.1% around 99.10.

The US Dollar has come under pressure as the Fed is almost certain to cut interest rates by 25 basis points (bps) to 3.50%-3.75%. According to the CME FedWatch tool, the probability of the Fed cutting interest rates in this meeting is 87.6%. This will be the third interest rate cut by the Fed in a row.

Firm Fed dovish expectations are built on concerns about the US labour market, which has shown signs of weak job growth in the last few months. In the October monetary policy meeting, Fed Chair Jerome Powell also acknowledged that the “labour demand has clearly softened”. However, he strongly argued against reducing interest rates in the last meeting of 2026. “December cut is not for sure, far from it,” Powell said.

In late November, New York Fed President John Williams also warned of downside employment risks, but shared a contrarian view from Powell, stating that there is room for further interest rate cuts as the policy is still moderately restrictive.

Investors will also focus on the Fed’s monetary policy statement, dot plot, and Chairman Powell’s press conference this Wednesday to get fresh cues on the monetary policy outlook.

The Fed is unlikely to endorse an aggressive monetary easing stance as inflation has remained well above the 2% target for a long period.

Daily digest market movers: Pound Sterling gains as BoE favors gradual policy easing

• The Pound Sterling rises against its major currency peers on Wednesday as Bank of England (BoE) rate-setting members have favoured the gradual removal of monetary policy restrictiveness over aggressive easing.
• On Tuesday, both BoE Deputy Governors Clare Lombardelli and Dave Ramsden supported a moderate monetary easing cycle, citing that risks to inflation are still on the upside.
• “I worry more about the upside risks to inflation,” Lombardelli said, adding that she is less convinced than other members about “how restrictive monetary policy is at the moment, as in how far we are from reaching the end of the cutting cycle" before the Treasury Select Committee on Tuesday, The Wall Street Journal (WSJ) reported.
• Separately, BoE’s Ramsden stated that a “gradual policy restraint’s removal remains appropriate” as it will allow the Monetary Policy Committee (MPC) to assess ‍carefully ‍the “balance ​of risks to inflation ​as ⁠the evidence evolves”, Reuters reported.
• In the upcoming monetary policy announcement next week, the BoE is expected to cut interest rates by 25 basis points (bps) to 3.50%-3.75%.
• For more cues on the BoE’s monetary policy, investors will focus on comments from Governor Andrew Bailey in a pre-recorded fireside chat on financial stability at the Financial Times (FT) Global Boardroom Conference in London on Wednesday.
• On the fiscal front, United Kingdom (UK) Chancellor of the Exchequer Rachel Reeves said during the European trading session on Wednesday that she can rule out capital gains tax on primary residences in this parliament.

Technical Analysis: GBP/USD stays above 20-day EMA

On the daily chart, GBP/USD trades at 1.3318. Price holds above the rising 20-day EMA at 1.3249, keeping the short-term uptrend intact. The average has turned higher in recent sessions, and dips would meet dynamic support near that gauge. A descending trend line from 1.3726, the September 17 high, was broken at 1.3026, removing overhead pressure and reinforcing a bullish bias.

The Relative Strength Index (RSI) at 58.9 stands above 50 and rising, confirming bullish momentum without overbought risk. If the pair maintains traction above the 20-day EMA at 1.3249, bulls could extend the advance, while failure to do so would expose a retracement toward the broken descending trend line around 1.3026.

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

• USD/JPY trades firmly near the two-week high around 157.00 ahead of the Fed’s policy announcement.
• The Fed is expected to cut interest rates by 25bps to 3.50%-3.75%.
• The Japanese economy declined at a faster pace of 0.6% in the third quarter this year, revised data showed.

The USD/JPY pair clings to three-day gains near 157.00 during the European trading session on Wednesday. The pair demonstrates strength even as the US Dollar (USD) trades cautiously ahead of the monetary policy announcement by the Federal Reserve (Fed) at 19:00 GMT, signalling broader weakness in the Japanese Yen (JPY).

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, ticks down to near 99.10. The DXY trades in a narrow distance from the over five-week low of 98.75 posted last week.

Investors are confident that the Federal Reserve (Fed) will cut interest rates by 25 basis points (bps) to 3.50%-3.75% as the United States (US) job market conditions have remained weak since the start of the year.

Several Federal Open Market Committee (FOMC) members, including Chairman Jerome Powell, have warned of downside employment risks in their latest comments. In late November, New York Fed Bank President John Williams said, "Economic growth has slowed, and the labour market gradually cooled," adding that there is more room for further interest rate cuts.

Apart from the Fed’s interest rate decision, investors will pay close attention to the Fed’s dot plot and Powell’s press conference to get fresh cues on the Monetary policy outlook.

Meanwhile, the Japanese Yen underperforms broadly as rising Tokyo’s fiscal concerns are weighing on Bank of Japan’s (BoJ) interest rate hike bets. On Monday, revised Q3 Gross Domestic Product (GDP) figures showed that the Japanese economy contracted at a faster pace of 0.6% against the preliminary estimate of 0.4%.

• GBP/JPY finds resistance at the 209.00 area but remains steady above 208.20.
• Japan's downbeat GDP and growing fiscal concerns are crushing the Yen this week.
• The technical picture remains positive, with 209.00 and 201.00 on the bull's focus.

The Pound keeps drawing support from the broad-based Yen weakness this week and remains steady near multi-year highs, at the 208.90 area, with downside attempts contained above 208.20 so far

The Japanese Yen has been dropping against its main peers this week, weighed by a combination of gloomy economic growth figures and concerns amid Prime Minister Talkaichi's cabinet’s plans to launch a USD 137 billion stimulus program that will add pressure to an already strained fiscal stability.

Technical analysis: GBP/JPY bulls eye 209.00 and the 210.00 area

The technical picture shows the pair consolidating gains after rallying about 1.7% over the past two weeks. The 4-hour chart shows the Relative Strength Index (RSI) pulling back from overbought levels with the Moving Average Convergence Divergence (MACD) printing green bars, highlighting the positive momentum.

Immediate support is at the intraday low of 208.24, ahead of a previous resistance area, at 207.35 (the November 26, 27, and December 3, 5 highs), which is likely to act as support now. Further down, the trendline support, around 206.30, and the December 5 low, at 206.20, emerge as the following targets.

On the upside, Tuesday’s high at 208.95 is close to the 161.8% Fibonacci extension of the November 20-26 rally, at 209.15. A confirmation above these levels would expose the  210.00 psychological level. The triangle’s measured target is at 210.30.