As we close out 2025 on this final trading day, markets are positioning themselves for what promises to be an eventful start to 2026. Here’s what traders need to watch today across equity and currency markets.
Stock Market Outlook
The S&P 500 continues to hover near the psychologically significant 6900 level, with the benchmark maintaining firm support above key resistance zones at 6750 and 6830. Despite three consecutive sessions of modest declines, the index remains well-positioned, up over 17% year-to-date and within striking distance of the 7000 milestone—just 1.5% overhead.
Today’s session falls within the traditionally favorable “Santa Claus rally” period, encompassing the final five trading days of the year and the first two of the new year. While recent profit-taking has tempered some of the year-end enthusiasm, underlying technical support from major moving averages and positive seasonal tendencies suggest potential for one final push higher as traders look to pin markets into round-number levels.
Sentiment remains constructive, with Tuesday’s put-call ratio closing at a bullish 0.83, indicating that market participants are maintaining a positive outlook despite the recent consolidation.
Key Market Themes
A notable shift is emerging in global equity leadership. US technology stocks, which have dominated market performance for the past three years, may be ceding ground to international tech names. Chinese technology stocks in particular are showing renewed strength, potentially signaling a rotation in global tech leadership as we enter 2026.
The artificial intelligence narrative, which propelled the S&P 500 to gains of 24% in 2023 and 23% in 2024, has evolved considerably this year. The rally has broadened beyond the megacap names, with performance within the Magnificent Seven diverging significantly. This diversification of market leadership is a healthy development that could support continued gains, albeit with increased volatility.
Year-End Performance Snapshot
As of yesterday’s close, major US indices have delivered solid returns for 2025:
- Dow Jones Industrial Average: +13.7%
- S&P 500: +17.3%
- Nasdaq Composite: +21.3%
- Russell 2000: +12.1%
The Dow is on track for its eighth consecutive winning month, the first such streak since 2018, while both the S&P 500 and Nasdaq are poised for similar achievements.
Forex Market Outlook
Currency markets remain largely subdued as holiday conditions continue to drain liquidity and suppress volatility. With major financial institutions operating with skeleton crews and the economic calendar offering few catalysts, traders should expect thin, choppy conditions throughout today’s session.
Major Currency Pairs
EUR/USD: The euro has developed an emerging bearish bias over the past four sessions, declining approximately 0.3%. However, technical analysis suggests a potential bullish correction attempt, with resistance eyed near the 1.1780 level. Traders should watch for signs of stabilization or further weakness as we close out the year.
GBP/USD: The British pound continues to trade in a choppy range around the 1.35 handle, having recently tested support at 1.3450 after moving below its nine-day exponential moving average. Near-term forecasts suggest a possible bearish correction toward support at 1.3405, though a rebound above 1.3462 could target the three-month high of 1.3534 reached on December 24.
USD/JPY: The dollar-yen pair is struggling to maintain recent gains despite surpassing its 50-period exponential moving average. The pair faces resistance as it attempts to overcome negative technical pressure, making it one to watch for potential reversal signals.
Dollar Dynamics
The US dollar has shown relative strength in recent sessions, fighting back against major currency pairs. This resilience comes despite the holiday-thinned trading environment and suggests underlying support for the greenback as we transition into the new year.
Trading Strategy for Today
Given the holiday conditions and year-end positioning, traders should approach today’s session with measured expectations. Volume will likely remain below average, and price action may be erratic. Key levels to watch include the S&P 500’s 6900 support and 7000 resistance, while forex traders should focus on the technical levels outlined above.
As we look ahead to 2026, strategists anticipate continued equity market gains, though with increased volatility as valuations adjust and corporate earnings growth catches up to current multiples. The foundation for further gains remains intact, supported by positive seasonal patterns, constructive sentiment, and broadening market participation.
Wishing all our readers a profitable final trading day of 2025 and a prosperous start to the new year!
