Three Markets to Watch Next Week (12.12.2025)

Three Markets to Watch

The final week before the Christmas holidays typically ushers in reduced volatility and the entrenchment of existing trends in financial markets. However, 2026 appears to have different plans. The close of the year will bring a series of crucial, delayed data releases from the United States, alongside two key interest rate decisions from the Eurozone and Japan. Accordingly, the most critical markets to observe this week are EURUSD, USDJPY, and the US100 index.

EURUSD

The world’s most important currency pair has surged to its highest levels since October. This ascent is primarily driven by the notably dovish signal from Federal Reserve Chair Jerome Powell, who anticipates weakness in the labor market, despite growing dissent within the Fed regarding the path of future rate movements next year. Unusually, due to the need for more time to gather data, the NFP (Non-Farm Payrolls) report will be released on Tuesday, December 16th. CPI inflation, meanwhile, is scheduled for publication on Thursday, December 18th. That same day, we will also receive the European Central Bank (ECB) rate decision, which could potentially deliver a hawkish surprise, given the recent revival in inflation and potentially improved growth forecasts for the Eurozone.

USDJPY

US data releases will exert a significant influence on the USDJPY pair, which attempted a renewed pushback towards a downtrend last week. The strengthening of the yen in November was linked to communication suggesting the Bank of Japan (BOJ) would likely raise interest rates. Beyond the decision itself, the forward guidance will be key. While interest rates are expected to remain low, Japanese bond yields are currently at their highest level since 2007, suggesting that the USDJPY pair should fundamentally trade at a significantly lower level. This scenario would require not only weaker data from the US but also hawkish rhetoric from the Bank of Japan and a clear signal of further rate hikes.

US100

We have now seen the publication of important financial reports from companies such as Oracle, Adobe, and Broadcom. Although most firms presented significant growth momentum, considerable doubts emerged regarding the Artificial Intelligence (AI) sector following disappointments relative to consensus estimates for both Oracle and Broadcom. Nevertheless, should US data suggest lower inflation and possible further cooling in the labor market, while the economy remains robust, the US100 has an opportunity to continue its move toward historical highs, mirroring the recent trajectory of contracts on the small-cap index, US2000.