Week Ahead: Japan Shifts Gears Without Shocking Markets

The week ahead looks quiet on the calendar but loud on the charts. As liquidity thins into year-end, even modest data surprises could push USD, gold and crypto out of their current ranges.

The Bank of Japan raised its policy rate to 0.75% on 19 December, marking the highest level in three decades and confirming a slow exit from ultra-loose policy. Markets feared a sharp unwind of the yen carry trade, yet the initial reaction stayed orderly.

Real yields in Japan remain negative, keeping financial conditions accommodative.

For traders, this matters because the yen still lacks the yield appeal needed to trigger forced deleveraging across global assets. The carry trade may unwind over months rather than days.

US Growth Signals Take Centre Stage

Attention now turns to US preliminary GDP for Q3, forecast at 3.2% versus the prior 3.8%. A softer print would reinforce expectations that US growth peaked earlier in the year.

The dollar index rebounded from the 97.40 zone last week, but upside momentum looks fragile. If GDP confirms slowing growth, USD strength could fade again, supporting commodities and risk assets into year-end. Liquidity conditions also thin out rapidly this week, which often exaggerates technical moves around key levels.

Risk Assets Hold Their Nerve

Equities and crypto continue to digest the idea that global tightening is now more predictable. The absence of policy shock has kept risk appetite intact, though follow-through depends on whether growth data deteriorates further. As such, Bitcoin remains range-bound, showing balance rather than conviction. While gold continues to attract bids on dips as real yield expectations stay capped.

Key Economic Events

For full view of upcoming economic events, check out the VT Markets Economic Calendar.

Key Movements Of The Week

US Dollar Index (USDX)

• USDX rebounded from the 97.40 monitored zone last week.
• Resistance sits near 98.55, with scope toward 99.10 if momentum holds.
• A weak GDP print could reverse gains back into range.

USDJPY

• USDJPY pushed higher following the BOJ decision.
• Price may test above 157.88 before encountering selling pressure.
• Failure to hold above recent highs may signal consolidation rather than trend.

Gold Price (XAUUSD)

• Gold bounced from the 4,290 zone but lacks strong continuation.
• Pullbacks toward 4,290 or 4,215 may attract dip buyers.
• Direction depends on US data and USD reaction.

Bitcoin (BTCUSD)

• Bitcoin remains range-bound near 89,250.
• A close below 83,814 opens downside toward 75,850.
• A break higher places focus on 91,780 resistance.

S&P 500 (SP500)

• Index rebounded strongly from recent lows.
• Upside levels to monitor sit near 6,870 and 6,905.
• Holiday liquidity may exaggerate intraday moves.

Bottom Line

The market enters the week in a transition phase, moving from policy-driven volatility toward technically led trading. With Japan shifting away from ultra-loose policy, disruption has temporarily been avoided, allowing risk sentiment to remain steady as traders reassess positioning.

Focus now turns to US growth data and how the dollar responds. A softer GDP outcome may limit USD upside and support commodities and risk assets, while thin holiday liquidity increases the risk of exaggerated moves around key levels.

Click here to open account and start trading.