Currency traders and global investors have been glued to their screens as the final days of 2025 bring a flurry of technical signals and shifting momentum in the foreign exchange markets. Two closely watched currency pairs—the Australian dollar/Japanese yen (AUD/JPY) and the US dollar index (USD)—are each sending out signals that could shape trading strategies and economic forecasts as the world heads into 2026.
According to Action Forex, the AUD/JPY currency pair has been the subject of significant attention throughout December. On December 15, AUD/JPY was forming a three-wave pullback from a low of 101.521, with analysts noting that the corrective structure was not yet complete. The consensus among experts was clear: there was still room for the pair to decline further, with a likely adjustment expected in the 102.824–102.072 range. This zone, often referred to as the "green box" area on technical charts, became the focal point for those hunting for new buying opportunities.
Rather than recommending a short position, analysts advised caution, suggesting that traders avoid selling AUD/JPY. "The main trend remains upward, so we expect at least one more three-wave recovery from the green box area," Action Forex analysts noted. The strategy was straightforward: as soon as the price reached the 50% Fibonacci retracement level from the reference point known as (X), traders would move their stop losses to break-even. This maneuver would transform open positions into a no-risk state, allowing traders to secure partial profits while staying exposed to further gains.
Fast forward to December 19, and the AUD/JPY pair delivered just as predicted. The currency extended its decline right into the previously identified buying zone. What happened next was textbook technical analysis—a strong buying reaction emerged, propelling the pair upward. The subsequent rally surpassed the critical 50% Fibonacci retracement from connection point (b), which, as Action Forex reported, meant that all long positions from the green box area were now risk-free. Stop losses had been moved to break-even, and a portion of profits was already realized.
With the price holding above 102.312, technical experts declared that the corrective wave (iv) had concluded, and that wave (v) was now in play. This, they argued, set the stage for further upside potential, with new highs potentially on the horizon. The next target zone for AUD/JPY? Action Forex identified a range between 104.86 and 105.64—a bullish outlook that traders will no doubt be watching closely as the new year approaches.
While AUD/JPY traders were busy managing positions and adjusting stop losses, the broader currency market had its eyes on a different kind of signal—the so-called "golden cross" that just flashed on the US dollar index chart. As reported by Trí Nhân, the USD has endured a tough 2025, losing 9% of its value since the start of the year and hovering near multi-year lows. On December 22, the index dipped another 0.3% to 98.30 points, capping off what many would call a brutal stretch for the greenback.
But then, a glimmer of hope: Paul Ciana, a technical analyst at BofA Global Research, confirmed that the 50-day moving average had crossed above the 200-day moving average—a classic "golden cross" pattern. This was the 39th time since 1970 that such a configuration had appeared on the USD index chart, and, as Ciana explained, "golden cross signals are generally reliable and positive for USD price trends." In plain English, history suggests that when this pattern emerges, the dollar often stages a recovery, with price increases unfolding over the next 20 to 60 trading sessions.
For many investors, this technical milestone couldn’t have come at a better time. The US dollar’s woes in 2025 were driven by multiple factors. According to Trí Nhân, the currency started the year riding high, but quickly lost momentum as concerns mounted over the impact of Donald Trump’s trade policies. Many investors worried that these policies could undermine America’s global standing and credibility, prompting a retreat from the greenback. At the same time, the Federal Reserve’s dovish stance—hinting at further interest rate cuts—contrasted sharply with other major central banks, which were either holding rates steady or even tightening policy. This divergence created an unfavorable interest rate differential for the dollar, pushing investors toward currencies offering better returns.
Particularly against the euro and other major currencies, the USD’s decline was pronounced. Yet, as the golden cross pattern appeared, hopes for a turnaround began to surface. For those scanning the charts for signs of life, this technical indicator was a welcome sight. "For investors seeking recovery signals, this pattern brings hope that the worst phase for the USD may be over," Trí Nhân reported.
So, what does all this mean for global markets and everyday investors? In the short term, technical patterns like the golden cross can influence speculative flows and set the tone for trading sessions. But they also serve as a barometer of sentiment—a way for market participants to gauge whether the tide is turning after a prolonged slump. In the case of the USD, the golden cross could mark the beginning of a recovery phase, especially if historical patterns hold true.
Meanwhile, the AUD/JPY story offers a lesson in disciplined trading and the value of technical analysis. By identifying key support zones and adhering to risk management protocols—such as moving stop losses to break-even and securing partial profits—traders can navigate volatile markets with greater confidence. The bullish outlook for AUD/JPY, with targets set as high as 105.64, reflects both the strength of the underlying trend and the power of collective market psychology.
Of course, technical signals are only one piece of the puzzle. Broader economic forces, policy decisions, and geopolitical developments will all play a role in shaping currency trends in 2026 and beyond. Still, as this December draws to a close, the foreign exchange market is offering up a mix of caution, opportunity, and—just maybe—a hint of optimism. For traders and investors alike, the message is clear: keep your eyes on the charts, but don’t forget the bigger picture.
