EURUSD and GBPUSD Rise as Dollar Weakens Ahead of January Rate Decision
EURUSD and GBPUSD climbed last week as the US Dollar weakened ahead of a potential January rate cut. With markets quiet for the New Year, traders should watch the FOMC minutes and key technical levels for early trading opportunities this week.
EURUSD Rises as Holiday Trading and Fed Rate Cut Expectations Weigh on the US Dollar
EURUSD closed last week’s trading session higher, as investors and traders continued to sell the US Dollar, pricing in an interest rate cut in January. The shortened weekly trading session and thin liquidity due to the Christmas holidays drove the pair higher. Ongoing differences between President Trump and Fed’s Jerome Powell regarding interest rate policy added further downside pressure on the US Dollar. Comments from President Trump once again highlighted that the new Fed chairman is expected to align more closely with his views and support his policy stance.
Looking ahead to this week, traders and investors are expected to remain in a holiday mood, with trading activity likely to be limited due to the New Year holidays. As a result, no significant price action is expected. The FOMC minutes, due to be released on Wednesday, will be the main catalyst, as they may provide signals regarding future interest rate cuts. Key technical levels will be closely watched during this week’s trading sessions.
EURUSD Holds Above Key Technical Levels as Bearish Positioning Dominates
There are no major events to follow on the economic calendar.
From a technical perspective, the pair remains positive after last week’s close above 23.6% at 1.1768. Traders’ short positions are targeting profits at 1.1500.
Current positioning sentiment stands at BUY 10% – SELL 90%.
EURUSD chart, December 28th, 2025. Source: TenTrade.com
GBPUSD Rises on US Dollar Weakness as Holiday Trading Limits Volatility
GBPUSD closed last week’s trading session higher, as investors and traders continued to sell the US Dollar, pricing in an interest rate cut in January. The shortened trading week and thin liquidity due to the Christmas holidays supported the pair’s move higher. Differences between president Trump and the Fed’s Jerome Powell regarding the Fed’s interest rate policy added further downside pressure on the US Dollar, as comments from President Trump again highlighted that the new Fed chairman could be more aligned with his views on policy direction.
Looking ahead to this week, traders and investors are expected to remain in a holiday mood, with trading actively likely to be limited because of the New Year holidays. As a result, no significant price action is expected. The FOMC minutes, due to be released on Wednesday, will be the main catalyst, as they may provide signals regarding future interest rate cuts. Key technical levels will be closely watched during this week’s trading sessions.
GBPUSD Technical Outlook: Traders Eye 1.3300 Amid Limited Economic Events
On the economic calendar, there are no major events to follow.
Technically, the pair remains positive after last week’s close just below 23.6% at 1.3495. Long positions have taken profits, while new short positions have been opened, targeting profits at 1.3300.
Current position sentiment is BUY 20% – SELL 80%.
GBPUSD chart, December 28th, 2025. Source: TenTrade.com
Key Takeaways
EURUSD and GBPUSD closed higher last week as the US Dollar came under pressure.
Market liquidity was thin due to Christmas holidays, amplifying price movements.
President Trump’s comments and Fed policy expectations added downside pressure on the Dollar.
This week, limited trading is expected due to New Year’s holidays.
FOMC minutes on Wednesday are the main catalyst to watch for potential market moves.
EURUSD chart, December 21, 2025. Source: TenTrade.com
GBPUSD Sideways as Markets Await Ukraine-Russia Ceasefire
GBPUSD closed last week’s trading session unchanged after a tide-range, choppy, week. The BoE cut interest rates by 0.25%, as widely expected, without triggering any significant volatility in the pair. Softer-than-expected US CPI and UK CPI data largely offset each other, muting price action and keeping the pair trading in a narrow range.
Looking ahead to this week, traders and investors are expected to be in a holiday mood, with limited trading activity due to the Christmas holidays. As a result, no significant price movements are expected. Volatility may hit the markets if there is a ceasefire agreement between Ukraine and Russia.
GBPUSD Market Sentiment Mixed as GDP Data Looms
On the economic calendar, Monday features the UK Gross Domestic Product, expected to remain unchanged at 1.3%. On Tuesday, the US Gross Domestic Product is projected to come in lower at 3.2%
Technically, the pair is neutral after last week’s close just below 38.2% at 1.3374. Long positions are still open between 1.3369 and 1.3100, targeting profits above 1.3500, while short positions are targeting profits at 1.3100.
Position sentiment: BUY 60% – SELL 40%.
GBPUSD chart, December 21, 2025. Source: TenTrade.com
Key Takeaways
EURUSD rose after US CPI printed 2.6%, triggering a sell-off in the dollar.
The ECB kept interest rates unchanged, widening the divergence with the Fed.
GBPUSD remained neutral, with short positions targeting 1.1500 and long positions holding near 1.1706.
Holiday-thinned trading is expected to limit significant price action this week.
Key catalysts include US and UK GDP releases and any potential Ukraine-Russia ceasefire news.
For more detailed economic calendar events please visit our live economic calendar on:
https://tentrade.com/economic-calendar/
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