Key takeaways
- The recent rally may reverse by year-end, influenced by the FOMC and Fed succession.
- The EUR might gain from USD weakness but could lose ground against the GBP.
- The JPY and GBP may strengthen against the USD but patience is needed amid event risks.
Our tactical view
Table of tactical views where a currency pair is referenced (e.g. USD/JPY):An up (⬆) / down (⬇) / sideways (➡) arrow indicates that the first currency quotedin the pair is expected by HSBC Global Research to appreciate/depreciate/track sideways against the second currency quoted over the coming weeks. For example, an up arrow against EUR/USD means that the EUR is expected to appreciate against the USD over the coming weeks. The arrows under the “current” represent our current views, while those under “previous” represent our views in the last month’s report.
USD
For the 9-10 December Federal Open Market Committee (FOMC) meeting, markets are currently pricing in a c40% chance of a 25bp rate cut (Bloomberg, 20 November). Our economists slightly lean towards a December cut, contingent on some labour market data showing weakness. However, the non-farm payroll figures for October and November will only be released on 16 December, post-decision. If the Federal Reserve (Fed) delivers an insurance cut, the USD is likely to weaken in knee-jerk response. Conversely, if rates remain unchanged, the Fed is likely to stress that the door remains open to a future cut. With a c95% chance of a cut anticipated for the 27-28 January meeting, the potential for USD strengthening is constrained. Additionally, discussions on Fed succession and a "risk-on" sentiment could further soften the USD.
Short-term direction : DXY^
Current
▼ Depreciate
Previous
▼ Depreciate
EUR
Rate differentials remain relevant for EUR-USD, but with the European Central Bank (ECB) likely on hold at its 18 December meeting, the swing factor is uncertainty over Fed policyEuropean politics are also unlikely to have a material impact on the EUR, with French political risk subsiding. As such, we look for EUR-USD to move higher in the weeks ahead, reflecting our caution on the USD. Likewise, EUR-GBP is likely to fall, driven by UK equation.
Short-term direction : EUR-USD
Current
▲ Appreciate
Previous
▶ Track Sideways
Short-term direction : EUR-GBP
Current
▼ Depreciate
Previous
▶ Track Sideways
GBP
We look for the GBP to strengthen assuming the Autumn Budget on 26 November passes the credibility test. Our economists predict the Budget will introduce net tightening measures totalling GBP22bn, potentially prompting the Bank of England (BoE) to offer additional monetary support. A 25bp rate cut by the BoE on 18 December is nearly fully priced (with c87% chance, Bloomberg, 20 November). However, our economists believe there will not be sufficient evidence of disinflation by then, expecting the next cut in February instead. A weaker US jobs market could further bolster GBP-USD.
Short-term direction : GBP-USD
Current
▲ Appreciate
Previous
▶ Track Sideways
JPY
USD-JPY is expected to maintain its upward trajectory until a significant FX intervention threat emerges. The pair has deviated from rate differentials, potentially prompting FX intervention if the JPY continues to weaken. We anticipate a reversal in USD-JPY's surge due to divergent central bank policies in December, involving the Fed and the Bank of Japan (BoJ). Current market predictions indicate a 20% probability of a BoJ rate hike on 19 December (Bloomberg, 20 November). We ultimately look for JPY to rally against the USD, but patience may be required amid event risks.
Short-term direction : USD-JPY
Current
▼ Depreciate
Previous
▼ Depreciate
Short-term direction : EUR-JPY
Current
▲ Appreciate
Previous
▼ Depreciate
CHF
The external environment remains a key driver for the CHF. “Risk-on” sentiment could lead to CHF weakness. In the US-Switzerland trade deal, the USD200bn investment pledge introduces uncertainty, as it requires ratification by the Swiss parliament and may face a public referendum (Reuters, 16 November), potentially clouding the CHF’s path. Besides, markets have not priced in any cuts for the 11 December Swiss National Bank (SNB) meeting, but dovish risks remain, which may also weigh on the CHF.
Short-term direction : USD-CHF
Current
▶ Track Sideways
Previous
▶ Track Sideways
Short-term direction : EUR-CHF
Current
▲ Appreciate
Previous
▶ Track Sideways
CAD
USD-CAD is likely to remain stable in the weeks ahead, with the broad USD's influence waning. Recent Canadian economic data suggesting no further easing by the Bank of Canada (BoC) at its 10 December meeting, aligning with market expectations. Currently, there are no significant factors expected to cause a major shift in the exchange rate.
Short-term direction : USD-CAD
Current
▶ Track Sideways
Previous
▼ Depreciate
AUD
The USD's reduced impact on AUD-USD allows risk appetite and interest rates to gain prominence. A bullish risk appetite could bolster the AUD's strength. Conversely, upcoming economic data releases, including October inflation (26 November), 3Q GDP (3 December), and labour market data (11 December), alongside the Reserve Bank of Australia (RBA) meeting on 9 December, will be key for rate expectations. With markets pricing a 1-in-3 chance of an RBA cut by 1Q26 (Bloomberg, 20 November), the bar is quite high for the AUD to capitalise on further hawkish surprises). The AUD-NZD's inability to rise above 1.16 suggests NZD selling fatigue, likely leading to consolidation.
Short-term direction : AUD-USD
Current
▶ Track Sideways
Previous
▶ Track Sideways
Short-term direction : AUD-NZD
Current
▶ Track Sideways
Previous
▶ Track Sideways
NZD
Like the AUD, the NZD is influenced by the broader USD trend, interest rates, and risk appetite, though it benefits less from interest rate support. Markets have already factored in a 25bp cut by the Reserve Bank of New Zealand (RBNZ) on 26 November, with a c40% probability of an additional cut (Bloomberg, 20 November). Our economists believe that the November cut will be the final one in this cycle, with growth expected to rebound in 2026. While this may not immediately boost the NZD, it may stabilise its decline, with NZD-USD likely finding support.
Short-term direction : NZD-USD
Current
▶ Track Sideways
Previous
▶ Track Sideways
Note: ^DXY = US Dollar Index, is an index (or measure) of the value of the USD against major global currencies, including the EUR, JPY, GBP, CAD, SEK, and CHF. Source: HSBC
FX Data Snapshot
(from close on 22 October to 21 November*)
FX |
Spot |
200 dma |
1-month % change* |
Support |
Resistance |
|---|---|---|---|---|---|
| DXY | 100.24 | 99.86 | 1.32% | 98.00 | 102.00 |
| EUR-USD |
1.1518 | 1.1405 | -0.71% | 1.1400 | 1.1660 |
| EUR-GBP | 0.8817 | 0.8575 | -1.60% | 0.8750 | 0.8900 |
| GBP-USD | 1.3063 | 1.3298 | -2.30% | 1.2870 | 1.3470 |
| USD-JPY |
156.81 | 147.85 | -3.11% | 152.80 | 160.00 |
| EUR-JPY | 180.62 | 168.62 | -2.43% | 178.00 | 183.46 |
| USD-CHF |
0.8062 | 0.8222 | -1.22% | 0.7829 | 0.8171 |
| EUR-CHF | 0.9286 | 0.9366 | -0.52% | 0.9200 | 0.9370 |
| USD-CAD | 1.4091 | 1.3927 | -0.48% | 1.4000 | 1.4400 |
| AUD-USD |
0.6437 | 0.6460 | -0.79% | 0.6400 | 0.6620 |
| AUD-NZD | 1.1504 | 1.1033 | -1.76% | 1.1400 | 1.1600 |
| NZD-USD |
0.5596 | 0.5857 | -2.53% | 0.5500 | 0.5690 |
Note: * Priced as at 19:09 HKT on 21 November 2025
Source: HSBC, Bloomberg
Explanation of terms
Spot: Spot refers to the current market price of a currency pair that is important for immediate transactions.
200 dma: 200-day simple moving average numberrepresents the average price of an index or a currency pair over the past 200 days.
Support (S), Resistance (R):Support and resistance are significant previous lows and highs plus retracement levels, based on historical price patterns of anindex or a currency pair. Support is a historical price level where a downtrend of a currency pair paused due to demand for the first currency quoted in the pair increasing, while resistance is a historical price level where an uptrend of a currency pair reversed amid demand for the second currency quoted in the pair increasing.
HSBC Positioning Indices
Note: Priced as of market close 20 November 2025
Source: HSBC, Bloomberg
The indicators have been devised to track the net position of momentum traders, looking at hundreds of strategies, operating over many different time horizons. It considers time horizons of 5 days up to 260 days. An indicator level of +10 would indicate that the hundreds of different strategies have all lined up and gone long (i.e., buy the first currency quoted in the pair). Similarly, an indicator level of -10 indicates that all strategies are short (i.e., sell the first currency quoted in the pair).
Glossary
Dovish
Dovish refers to an economic outlook which generally supports low interest rates as a means of encouraging growth within the economy.
Hawkish
Hawkish is typically used to describe monetary policy which favours higher interest rates, and tighter monetary controls to keep inflation in check.
MoM / YoY
Month on month / Year on year
PMI
Purchasing Managers Index (PMI) is an indicator of economic health of the manufacturing sector (>50 represents expansion vs. the previous month).
IMM data
International Monetary Market (IMM) is a division of the Chicago Mercantile Exchange (CME) that deals with the trading of currencies and interest rate futures and options and the IMM data is part of the Commitments of Traders (COT) reports published by the U.S. Commodity Futures Trading Commission (CFTC). The IMM data provides a breakdown of each Tuesday’s open futures positions on the IMM. Speculative positions are a trader’s non-commercial positions (i.e. not for hedging purposes).
G10
G10 refers to the most heavily traded, liquid currencies in the world: USD, EUR, JPY, GBP, CHF, AUD, NZD, CAD, NOK, and SEK.
Fed / FOMC
Federal Reserve System (US’s Central Bank)/Federal Open Market Committee.
ECB
European Central Bank (Eurozone’sCentral Bank).
BOE
Bank of England (UK’s Central Bank).
BOJ
Bank of Japan (Japan’s Central Bank).
BOC
Bank of Canada (Canada’s Central Bank).
RBA
Reserve Bank of Australia (Australia’s Central Bank).
RBNZ
Reserve Bank of New Zealand (New Zealand’s Central Bank).
SNB
Swiss National Bank (Switzerland’s Central Bank).
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