Errante’s The Week Ahead: 22 – 26 December 2025

Highlights of the Week

• Year-end seasonality and lighter positioning remain supportive for risk, but rising global yields continue to cap upside.
• US data revisions and confidence indicators are the last meaningful macro inputs before markets enter holiday-thinned liquidity.
• FX trades the tension between resilient US growth, fragile risk appetite, and divergent central-bank credibility (Fed vs. BoJ vs. BoE).

What Now

As markets move into the final full trading week before Christmas, macro dynamics shift from event-driven repricing to position-management and narrative validation.

The dominant force remains rates. Despite supportive seasonality for equities and risk assets, the rise in global yields, sparked initially by the Bank of Japan’s tightening signal and reinforced by firm US long-end yields, has tightened financial conditions at the margin. This creates a regime where upside in risk assets is possible but incremental, while drawdowns can be sharp due to thin liquidity.

In the US, attention centers on durable goods, GDP revisions, and consumer confidence. These releases matter less for growth direction and more for confirmation: markets are testing whether the “hot-economy-into-2026” narrative still holds after the Fed’s latest guidance.

A stable GDP print near 3.8% and resilient consumer confidence would reinforce the view that the Fed’s easing bias is about fine-tuning rather than stimulus, supportive for equities, but potentially USD-positive via higher real-rate expectations.

Conversely, downside surprises would revive duration bids and weigh on the dollar into year-end.

FX is particularly sensitive to relative policy credibility at this stage. The yen’s weakness despite higher Japanese yields highlights a market unconvinced by the BoJ’s policy path clarity. Without explicit guidance on the pace and destination of further normalization, yield differentials still dominate USDJPY.

In Europe and the UK, inflation data earlier in the month has already locked in expectations of policy inertia. As a result, GBP and EUR are trading more as risk-sensitive currencies, reacting to global rates and US data rather than domestic fundamentals.

Equity inflows remain heavy, but valuation sensitivity to rates is extreme.

In this environment, FX traders should think less in terms of trend acceleration and more in range expansion risk: thin liquidity, crowded narratives, and asymmetric reactions to rate moves. Year-end does not remove risk, it concentrates it.

Market Events and Announcements (GMT+2)

Monday, December 22

• 09:00 – GBP – GDP (QoQ, Q3)
• 09:00 – GBP – GDP (YoY, Q3)

Tuesday, December 23

• 15:30 – USD – Durable Goods Orders (MoM, Oct)
• 15:30 – USD – GDP (QoQ, Q3 – Final)
• 17:00 – USD – CB Consumer Confidence (Dec)
• 22:01 – USD – New Home Sales (Sep)
• 22:02 – USD – New Home Sales (Oct)
• 22:03 – USD – New Home Sales (Nov)

Wednesday, December 24

• All Day – Holiday – Most markets closed (Christmas Eve, early close US/UK/EU/NZ/AUS)
• 15:30 – USD – Durable Goods Orders (MoM, Oct – Revised)
• 15:30 – USD – Initial Jobless Claims
• 17:30 – USD – Crude Oil Inventories

Thursday, December 25

• All Day – Holiday – Christmas Day

Friday, December 26

• All Day – Holiday – United Kingdom (Boxing Day)

Market Insights: Key Charts to Watch

USDJPY – Daily Chart

Uptrend Intact, Credibility Gap Limits JPY Relief

USDJPY remains in a well-defined ascending channel. Price action is consolidating just below recent highs, holding above the 61.8% retracement (~155.97) and the rising trendline.

Momentum indicators (PPO flattening, MFI holding mid-range) suggest consolidation rather than reversal. Volatility compression points to a potential range expansion in thin liquidity.

Main scenario:

As long as price holds above 155.50–156.00, the bias remains for continuation toward 157.65 (127.2%) and 158.50 (161.8%). The absence of BoJ forward guidance keeps USDJPY sensitive to US yields rather than Japanese data.

Key levels:

• Support: 156.00 / 154.40
• Resistance: 157.65 / 158.50

Alternative scenario:

A sustained break below 154.40 (last swing low) would signal channel failure and open a corrective move toward 152.00, likely requiring a sharp drop in US yields or explicit BoJ hawkish signalling.

GBPUSD – Daily Chart

Counter-Trend Recovery Inside a Broader Bear Channel

GBPUSD has staged a rebound from November lows but remains structurally bearish within a descending channel. Price is testing the 1.3390–1.3465 Fibonacci cluster, with Bollinger Bands capping upside and momentum improving but not impulsive.

Main scenario:

A sustained hold above 1.3330–1.3400 opens scope for extension toward 1.3500–1.3570, driven primarily by USD softness rather than GBP strength. Volume does not yet confirm a regime shift.

Key levels:

• Support: 1.3325 / 1.3260 / 1.3215
• Resistance: 1.3393 / 1.3465 / 1.3503 / 1.3570

Alternative scenario:

Failure below 1.3260–1.3215 would invalidate the recovery and refocus attention on the 1.3030 base, especially if US data re-anchors higher real rates.

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