EUR/USD Price Analysis – Jan 20, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair gained momentum, edging higher towards the 1.0321 level. The pair's upward movement was supported by a decline in the safe-haven demand for the US Dollar (USD), particularly in anticipation of US President-elect Donald Trump’s inauguration.
Furthermore, the gains in EUR/USD were amplified as investors positioned themselves ahead of the event.
However, the outlook for the Euro (EUR) remains clouded, as market participants expect the European Central Bank (ECB) to implement a series of interest rate cuts in its upcoming policy meetings, adding uncertainty to the pair's future direction.
EUR Outlook Uncertain Amid Risk-On Sentiment and ECB Rate Cut Expectations
On the EUR front, the shared currency has been gaining strength as investors adopt a risk-on approach, awaiting US President-elect Donald Trump’s inauguration.
Despite this, the outlook for the Euro (EUR) remains uncertain. as traders are concerned that the European Central Bank (ECB) may cut interest rates multiple times in the coming months.
The market is pricing in a 100 basis point reduction by mid-summer, with a 25 basis point cut expected in each of the next four ECB meetings.
These dovish expectations are driven by the belief that Eurozone inflation will slow and return to the ECB’s target of 2%. A key factor contributing to this outlook is the expectation of lower service sector inflation this year.
Analysts at Capital Economics noted that the small rise in inflation in December was mainly due to transport and holiday sectors, which are sensitive to oil prices. They anticipate oil prices will decline, easing inflationary pressures in the Eurozone.
Therefore, the ECB's expected rate cuts and subdued inflation outlook could weaken the Euro, limiting gains for the EUR/USD pair, especially if the US Dollar strengthens due to domestic policies.
US Dollar Pressure and Fed Policy Expectations Could Support EUR/USD Gains
On the US front, the broad-based US Dollar Index (DXY), which measures the dollar's value against six major currencies, has been declining towards the 109.00 level.
The Greenback is under pressure as investors react to the expectation that President-elect Donald Trump will soon declare a national emergency upon taking office.
This would allow him to ramp up domestic energy production and undo some of the climate change policies put in place by President Joe Biden, according to Bloomberg.
Apart from this, Fox News Digital reports that Trump plans to sign over 200 executive orders on his first day in office, which may include policies like stricter immigration controls, tax cuts, and higher import tariffs.
These measures are expected to boost US growth and inflation, which could ultimately be favorable for the US Dollar. Investors anticipate that these changes will allow the Federal Reserve (Fed) to keep interest rates at current levels for a longer period.
Hence, the CME FedWatch tool shows that traders expect the Fed to maintain borrowing rates in the 4.25%-4.50% range for the next three policy meetings.
However, analysts at Morgan Stanley suggest that the Fed may cut interest rates in March, as inflation showed signs of slowing in December.
The Consumer Price Index (CPI) report for December revealed that core inflation, which excludes food and energy prices, rose at a slower pace of 3.2% year-over-year.
Therefore, the declining US Dollar and expectations of longer Fed rate hikes could weaken the USD, supporting potential gains for the EUR/USD pair, especially if Eurozone inflation remains subdued.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.03055, up 0.38%, as the pair hovers around key technical levels amid cautious sentiment in the forex market. The pair has been attempting to recover from recent lows, but upside momentum remains constrained by overhead resistance levels.
On the 4-hour chart, the immediate pivot point stands at $1.03295, a critical threshold that the pair is currently testing. A decisive move above this level could open the door to further gains, with immediate resistance at $1.03720, followed by secondary hurdles at $1.04338 and $1.05030.
However, failure to sustain momentum above the pivot point may reinforce downside pressure, with key support levels at $1.02406, followed by $1.01867, and deeper support at $1.01288, which could act as potential rebound zones.
From a technical perspective, the 50-day EMA, currently positioned at $1.02841, suggests a mildly bullish bias, with prices hovering slightly above it. This could indicate short-term buying interest, but a sustained break below the EMA may signal renewed bearish pressure.
In conclusion, a short position below $1.03304 could offer a favorable risk-reward setup, targeting $1.02405 for take-profit, with a stop-loss placed at $1.03851, ensuring protection against potential upward spikes.
Traders are advised to monitor market sentiment closely, as upcoming economic data releases and geopolitical developments could introduce volatility.
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- GOLD Price Analysis – Jan 20, 2025
GOLD Price Analysis – Jan 17, 2025
Daily Price Outlook
Despite the overall risk-off sentiment in the market, gold prices (XAU/USD) continue to face pressure, hovering around the 2,704 mark and reaching an intra-day low of 2,703.
This downward movement seems to be linked to the strengthening US dollar, which gained momentum as expectations rise that the Federal Reserve (Fed) will hold off on further rate cuts later this month.
As a result, the dollar's strength is putting downward pressure on gold, which tends to have an inverse relationship with the greenback.
On the other hand, the recent announcement of a ceasefire could help ease geopolitical tensions, reducing the uncertainty that typically drives demand for safe-haven assets like gold. With less fear of conflict, investors may start moving towards riskier assets, further weighing on gold prices.
However, the situation isn’t entirely bleak for gold. The uncertainties surrounding US President-elect Donald Trump's trade policies and tariff plans continue to create potential risks for the global economy.
These factors could provide some support to gold prices, preventing them from falling too drastically. For now, gold seems to be caught between the stronger US dollar and geopolitical risks, leaving investors to navigate these mixed signals.
Impact of Weaker US Data and Fed Expectations on Gold Prices
On the US front, the broad-based US dollar index (DXY), which tracks the USD against six major currencies, ended its four-day losing streak and was trading around 109.10.
However, the dollar faced challenges due to weaker-than-expected US Retail Sales and ongoing inflation concerns, leading to market speculation that the Federal Reserve (Fed) may cut interest rates twice this year. This has put pressure on the Greenback, despite a temporary halt in its decline.
The expectation of interest rate cuts has also caused US Treasury bond yields to drop. The 2-year and 10-year yields are both down, currently at 4.23% and 4.60%, respectively. These yields are on track for a decline of more than 3% this week.
Retail Sales data for December rose by just 0.4% month-over-month, reaching $729.2 billion, falling short of the 0.6% rise that analysts expected.
This weaker data, combined with inflation pressures, has fueled the belief that the Fed may need to reduce rates soon.
Moreover, comments from Chicago Federal Reserve Bank President Austan Goolsbee suggest that the US job market is stabilizing, further supporting the view that the Fed might act cautiously.
The Consumer Price Index (CPI) for December rose 2.9% year-over-year, while the Core CPI, which excludes food and energy prices, increased 3.2%.
Therefore, the weaker US Retail Sales and falling Treasury yields, combined with speculation about Fed rate cuts, support gold prices as a hedge against economic uncertainty. However, stabilizing inflation and a firm US job market may limit gold’s upward momentum.
GOLD (XAU/USD) – Technical Analysis
Gold prices are trading at $2,712.35, down 0.09%, as the metal remains subdued below the pivot point at $2,716.63.
The yellow metal is consolidating within a tight range, reflecting mixed sentiment driven by expectations of Federal Reserve rate cuts and lingering market uncertainty.
Immediate resistance is positioned at $2,726.36, with higher levels at $2,738.21 and $2,752.21 presenting significant hurdles. On the downside, support lies at $2,698.01, followed by deeper levels at $2,676.58 and $2,659.46.
The 50-day EMA at $2,676.70 acts as a critical short-term support level, aligning with bullish momentum observed in recent sessions. However, the failure to break above the pivot point indicates cautious bearish sentiment.
A sustained move above $2,716.63 is essential for a shift toward a bullish trajectory, targeting resistance at $2,738. Conversely, a break below $2,698.01 could intensify selling pressure, pushing prices toward $2,676.58.
Traders should monitor the $2,716.63 pivot closely as it serves as a key decision point for market direction. While gold’s broader structure remains slightly bullish, overbought conditions near resistance zones may prompt short-term corrections.
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- EUR/USD Price Analysis – Jan 17, 2025
EUR/USD Price Analysis – Jan 17, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair managed to halt its downward trend, gaining modest traction at 1.0303 and reaching an intra-day high of 1.0310.
The pair's recent decline can be attributed to investor focus on the upcoming inauguration of US President-elect Donald Trump on Monday.
Moreover, the Euro (EUR) remains under pressure due to a weak economic outlook, compounded by persistent dovish expectations surrounding the European Central Bank (ECB).
Traders are pricing in a 25 basis point rate cut by the ECB at each of its next four policy meetings, fueled by concerns over the Eurozone's economic growth and the subdued price pressures in the region.
EUR/USD Faces Downward Pressure Amid ECB Rate Cut Expectations and US Tariff Concerns
On the EUR front, the shared currency remains under pressure as the outlook for the Euro (EUR) stays weak. This is largely due to growing expectations that the European Central Bank (ECB) will continue with interest rate cuts.
Traders are predicting a 25 basis point rate cut by the ECB at each of its next four meetings, driven by concerns over the Eurozone's economic outlook and subdued price pressures.
On the other hand, the ECB is also showing a readiness for further rate cuts. The minutes from the December ECB meeting, released last Thursday, revealed that officials discussed easing policies more than pausing them.
There was even talk of a larger 50 basis point rate cut to address downside risks to growth, caused by both global and domestic political uncertainties. Ultimately, the ECB opted for a 25 basis point cut, signaling ongoing concerns about economic growth.
Therefore, the growing expectations of continued ECB rate cuts and concerns over the Eurozone's economic outlook, combined with potential US tariff hikes, put significant downward pressure on the EUR/USD currency pair, increasing the likelihood of further declines or even reaching parity.
US Dollar Remains Firm Amid Anticipation of Trump’s Economic Policies and Fed Rate Cut Expectations
On the US front, the broad-based US dollar is moving within Thursday’s trading range as investors keep a close eye on US President-elect Donald Trump’s upcoming inauguration on Monday.
The market is awaiting Trump’s economic policy announcements, which are expected to offer fresh insight into the US economic outlook and potential changes to global trade dynamics.
Many experts believe that Trump’s policies could lead to higher inflation and economic growth but also risk triggering a global trade war.
At a Senate Finance Committee meeting on Wednesday, Trump’s treasury pick, Scott Bessent, stressed the need to reform the current tax system to avoid a massive $4 trillion burden on the middle class.
He warned of an "economic calamity" if the tax system is not renewed and extended. Bessent also voiced support for Trump’s protectionist policies, arguing that they would help address unfair trade practices and give the US greater leverage in global negotiations.
Meanwhile, the US Dollar Index (DXY), which tracks the value of the US dollar against six major currencies, has shown a slight increase, holding key support at 109.00.
The US dollar remains firm, despite traders beginning to price in the possibility of at least one interest rate cut by the Federal Reserve this year.
This shift comes after the core Consumer Price Index (CPI), which excludes food and energy prices, slowed to 3.2% in December, its lowest rate in over four years, fueling expectations of a more dovish Fed stance.
Therefore, the US dollar's strength, driven by expectations of Trump’s policies and a firm US Dollar Index, puts downward pressure on the EUR/USD pair, potentially leading to further declines as traders anticipate Fed rate cuts.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.02866, down 0.09%, as it struggles to recover above the pivot point at $1.03196. The pair remains under pressure amid subdued market sentiment and a stronger U.S. Dollar, signaling potential downside risks.
Immediate resistance is located at $1.03720, with additional barriers at $1.04338 and $1.05131. On the downside, key support is seen at $1.02406, followed by deeper levels at $1.01867 and $1.01288.
The 50-day EMA at $1.02938 aligns closely with the current price action, providing a short-term barrier to any bullish attempts.
The inability to sustain above the pivot point suggests cautious sentiment, while a break below the immediate support at $1.02406 could intensify selling pressure, targeting lower levels.
From a technical perspective, a sustained move above $1.03196 is required to signal a potential bullish reversal, with an upside target of $1.03720.
Conversely, failure to hold above the pivot may lead to a retest of $1.02406, with further declines toward $1.01867 likely if bearish momentum persists.
Market participants should closely monitor the $1.03196 pivot point, as it serves as a crucial decision level for directional movement. While the broader trend remains bearish, a break above resistance could provide relief for the euro.
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S&P500 (SPX) Price Analysis – Jan 17, 2025
Daily Price Outlook
The global market sentiment has been flashing red and remains under pressure, influencing major equity indices, including the S&P 500. The index is currently trading at 5,937, after hitting an intraday low of 5,930.
Investors are increasingly cautious as weaker-than-expected US economic data and persistent inflation concerns weigh on market confidence. These developments have reignited speculation over Federal Reserve policy shifts, adding uncertainty to the financial markets.
Meanwhile, the weaker US Retail Sales data and mixed inflation readings have sparked a selloff in US equities. Moreover, the Federal Reserve’s Beige Book revealed modest economic activity, with strong holiday sales counterbalanced by declining manufacturing output.
The bearish sentiment is further exacerbated by Federal Reserve rate cut expectations, which have put pressure on Treasury yields, dragging them lower for the week.
Fed Rate Cut Speculation and Economic Uncertainty
On the US front, the growing expectations that the Federal Reserve will implement two interest rate cuts in 2024 have significantly impacted investor sentiment. The US Dollar Index (DXY) halted its losing streak but remains under pressure, reflecting mixed economic signals.
Fed policymakers continue to signal confidence in the labor market's resilience, as highlighted by Chicago Federal Reserve Bank President Austan Goolsbee.
However, the mixed inflation outlook, with a monthly Core CPI increase of just 0.2% in December, has left investors speculating about the timing and extent of rate adjustments.
This uncertainty is driving volatility in the S&P 500 as market participants weigh the risks of an economic slowdown against the potential benefits of lower interest rates.
Geopolitical and International Developments
Apart from this, the global events are also weighing on the S&P 500. In China, fourth-quarter GDP growth matched expectations at 1.6% QoQ, while December Retail Sales and Industrial Production outperformed forecasts.
However, the National Bureau of Statistics noted that challenges persist due to insufficient domestic demand and external economic pressures. These mixed signals from the world’s second-largest economy add to the market’s cautious tone.
Meanwhile, geopolitical tensions have shown signs of easing, with Israeli Prime Minister Benjamin Netanyahu announcing a ceasefire agreement to pause a prolonged conflict. However, the broader implications for energy markets and regional stability remain uncertain.
S&P 500 – Technical Analysis
The S&P 500 index (SPX) is trading at 5937.35, down 0.21%, as it hovers below the pivot point at 5962.43.
The index is under pressure amid cautious market sentiment, with immediate resistance seen at 6021.13, followed by higher levels at 6099.55 and 6165.39.
On the downside, support is firmly established at 5873.95, with deeper levels at 5781.13 and 5705.34 offering further stability.
The 50-day EMA at 5959.73 is currently acting as a near-term ceiling, limiting bullish momentum. Failure to reclaim the pivot point could signal continued bearish sentiment, potentially driving the index toward immediate support at 5873.95. Conversely, a sustained move above 5962.43 may shift sentiment, targeting resistance at 6021.13.
From a technical perspective, the broader trend remains cautious, with the index consolidating within a tight range.
A break below 5873.95 would confirm a bearish bias, likely leading to further declines toward 5781.13. On the upside, overcoming the resistance at 5962.43 could open the path to 6021.13, supported by improved market sentiment.
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AUD/USD Price Analysis – Jan 16, 2025
Daily Price Outlook
During the European trading session, the AUD/USD currency pair struggled to keep up its winning streak, dipping to around the 0.6215 level and even touching an intra-day low of 0.6196.
This decline came after Australia’s employment report showed a rise in the seasonally adjusted unemployment rate to 4.0% in December, up from 3.9% in November.
The data, released by the Australian Bureau of Statistics (ABS), met market expectations but signaled a slight cooling in the labor market, which weighed on the Aussie Dollar.
Meanwhile, the US Dollar remained under pressure, with the US Dollar Index (DXY) trading near 109.00. The Greenback extended its losses as US inflation data for December came in cooler than expected, fueling speculation that the Federal Reserve might cut interest rates twice this year. These factors combined to keep AUD/USD under selling pressure during the session.
Mixed Employment Data and Weak Consumer Confidence Weigh on AUD/USD
On the data front, Australia’s unemployment rate rose slightly to 4.0% in December, up from 3.9% in November, as reported by the Australian Bureau of Statistics (ABS).
However, employment saw a strong increase, adding 56,300 jobs in December, much higher than the expected 15,000. This marked a significant improvement from November’s revised figure of 28,200.
The mixed data showed that while more people found jobs, unemployment also rose due to a larger number of people actively seeking work.
Bjorn Jarvis, head of labor statistics at the ABS, highlighted some important trends. The employment-to-population ratio reached a record high of 64.5%, which is 0.5% higher than a year ago and 2.3% above pre-COVID-19 levels.
He noted that the rise in both employment and unemployment pushed the participation rate higher, indicating more Australians are either working or looking for jobs. This suggests a robust but evolving labor market.
Meanwhile, consumer sentiment remained weak, with the Westpac Consumer Confidence Index dropping by 0.7% to 92.1 points, reflecting ongoing pessimism about the economy.
The dip in confidence has raised concerns about interest rate decisions, with markets now expecting the Reserve Bank of Australia to lower its cash rate from 4.35% by 25 basis points in February and potentially a full rate cut by April.
The mixed Australian employment data and weak consumer confidence weighed on the AUD/USD pair, as rising unemployment and pessimism about the economy raised concerns over rate cuts by the Reserve Bank of Australia, pushing the Aussie Dollar lower against the US Dollar.
Weaker US Inflation Data Fuels Expectations of Rate Cuts, Impacting AUD/USD Pair
On the US front, the US Dollar Index (DXY), which tracks the Greenback against six major currencies, is trading near 109.00. The US Dollar has been weakening due to lower-than-expected US inflation data for December.
The Consumer Price Index (CPI) rose by 2.9% year-over-year, up from 2.7% in November. On a monthly basis, CPI increased by 0.4%, slightly higher than the 0.3% in November.
This cooling inflation has led to expectations that the Federal Reserve might cut interest rates twice this year.
The US Core CPI, excluding food and energy prices, increased by 3.2% annually, which was below November’s figure and analysts’ expectations of 3.3%.
On a monthly basis, core CPI grew by 0.2%. The Producer Price Index (PPI) also showed slower growth, rising by just 0.2% month-over-month in December, below the 0.3% forecast, signaling easing inflationary pressures.
Meanwhile, Scott Bessent, a Treasury Secretary nominee, stressed the importance of keeping the US Dollar as the world’s reserve currency to ensure economic stability.
According to the Federal Reserve’s Beige Book survey, economic activity grew moderately in late 2023, with strong consumer spending during the holiday season.
However, manufacturing slowed slightly due to inventory build-up, and policymakers, including Michelle Bowman, are managing expectations of slower interest rate cuts.
Therefore, the weaker-than-expected US inflation data and cooling economic pressures suggest the Federal Reserve may cut interest rates, which likely weakened the US Dollar. As a result, the AUD/USD pair could see upward movement, benefiting the Australian Dollar.
AUD/USD – Technical Analysis
The AUD/USD pair is trading at $0.62007, down 0.41% on the day, reflecting persistent bearish pressure in the market. The pair hovers just below the pivot point at $0.62071, a critical threshold for determining short-term sentiment.
Immediate resistance is seen at $0.62455, with higher targets at $0.62898 and $0.63274. On the downside, immediate support lies at $0.61781, followed by $0.61488 and deeper support at $0.61208.
The 50-day EMA at $0.62045 aligns closely with the pivot point, reinforcing the significance of the $0.62071 level. The downward trend is evident as the price remains below the 50 EMA, signaling that sellers dominate the market.
Short-term momentum indicates a potential move toward the $0.61488 support level if the pair fails to reclaim $0.62071.
Traders should monitor the $0.62071 pivot closely. A sustained break below this level would likely accelerate selling pressure, targeting $0.61781 initially, with an extended decline toward $0.61488.
Conversely, a move above $0.62455 could signal a reversal and test higher resistance levels, though the broader outlook remains bearish.
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- GOLD Price Analysis – Jan 16, 2025
GOLD Price Analysis – Jan 16, 2025
Daily Price Outlook
Gold prices (XAU/USD) remain under heavy pressure, with the precious metal trading near the $2,695 level after hitting a low of $2,690 earlier in the day.
The primary factor behind this decline is the growing expectation that the Federal Reserve will hold off on cutting interest rates later this month. This has boosted the US Dollar (USD), which had previously dipped to a one-week low.
Besides this, the signs of easing inflationary pressures in the US are contributing to the downtrend in gold. The latest economic reports have fueled speculation that the Fed might not completely rule out further rate cuts by year-end, a scenario that typically benefits gold.
However, the decline in US Treasury bond yields has relatively restricted the USD’s upward momentum, offering potential relief for gold in the coming sessions.
Gold's losses have been capped by the ongoing geopolitical risks, notably the uncertainty surrounding former President Trump's tariff plans and their potential impact on global economic growth.
These factors have instilled caution in the market, preventing any sharp drops in gold prices as traders await crucial US economic data.
US Economic Data and Fed Policy Drive Market Sentiment
However, the strength of the US dollar has been sustained by market expectations that the Fed will pause its rate-cutting cycle for now. This anticipation has fueled the USD's recent rally, putting pressure on gold (XAU/USD) and limiting its potential gains.
Recent economic data has contributed to the outlook that the Fed may hold off on further rate cuts. The latest inflation report revealed that the Consumer Price Index (CPI) rose by 0.4% in December, pushing the annual rate up to 2.9% from 2.7% the previous month.
Although the core CPI slowed to 3.2%, it still exceeded expectations, leading to renewed hopes that the Fed might ease rates further by year-end.
In response, US Treasury yields dropped from their 14-month highs, which in turn pushed the US dollar lower, creating space for gold to find some support.
However, comments from Richmond Fed President Tom Barkin, noting that rates should remain restrictive until inflation targets are firmly in sight, have kept gold’s upside in check.
Geopolitical Risks and Market Uncertainty Amid Ukraine and Gaza Conflicts
On the other hand, the geopolitical risks, particularly in Ukraine and Gaza, continue to add layers of uncertainty to the market. Meanwhile, the conflict in Ukraine escalates, with military strikes from both sides targeting vital infrastructure, tensions in Gaza remain high despite a recent ceasefire agreement.
Investors remain watchful, particularly with upcoming US economic reports like Retail Sales and Weekly Jobless Claims, which could offer further guidance on market direction.
GOLD (XAU/USD) – Technical Analysis
Gold prices are trading at $2,691.18, down 0.19% on the day, as the market consolidates near key technical levels. The pivot point at $2,680 serves as a critical threshold, dictating short-term market direction.
Immediate resistance is noted at $2,696.72, with further targets at $2,710.98 and $2,724.66 if bullish momentum continues. On the downside, immediate support lies at $2,664.75, followed by $2,645.00 and deeper support at $2,627.99.
The 50-day EMA, currently at $2,666.75, aligns closely with the first support level, reinforcing the bearish outlook below the pivot point.
A recent test of $2,700 failed to sustain, highlighting selling interest at higher levels. Short-term indicators suggest continued bearish pressure if prices fail to break above the pivot.
Traders should monitor price action around $2,680 closely. A decisive break below this level could trigger selling momentum, targeting $2,664.75 initially, with an extended decline toward $2,645.
Conversely, a sustained move above $2,700 may invalidate the bearish bias and open the door for higher resistance levels.
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- USD/JPY Price Analysis – Jan 16, 2025
USD/JPY Price Analysis – Jan 16, 2025
Daily Price Outlook
During the European trading session, the USD/JPY pair has shown notable movement, with the Japanese Yen (JPY) strengthening for the second consecutive day, driven by expectations of a potential rate hike by the Bank of Japan (BoJ).
Earlier this Thursday, the pair touched a four-week low, as the Yen gained traction amid market anticipation of tighter monetary policy from the BoJ.
However, despite the Yen's recent rally, the upside for USD/JPY remains limited, as broader market sentiment and a modest recovery in the US Dollar provide resistance to further JPY appreciation.
BoJ's Rate Hike Bets Boost JPY, While US Inflation Data Softens USD
The Bank of Japan’s rate hike speculations are pushing the JPY higher. With inflation pressures in Japan showing signs of broadening, the BoJ is expected to tighten its policy further. The yields on Japanese Government Bonds (JGBs) have reached multi-year highs, reinforcing these expectations.
Governor Kazuo Ueda, alongside Deputy Governor Ryozo Himino, has signaled that the BoJ is prepared to raise interest rates if the economic and price conditions remain favorable.
In contrast, US Treasury bond yields experienced a sharp retreat following the release of December’s US inflation data. The Consumer Price Index (CPI) showed a 0.4% rise in December, with the yearly rate accelerating to 2.9%, from 2.7% in November. The core CPI, excluding volatile food and energy prices, came in at 3.2%, slightly lower than the anticipated 3.3%.
The benign inflation reading has led to expectations that the Federal Reserve might pause its rate-cutting cycle later this month. This has weighed on the US Dollar, pushing it to a one-week low and contributing to the USD/JPY's decline.
Risk-On Mood Caps JPY, USD/JPY Benefits from Fed's Pause Outlook
Besides this, the Yen remains supported by BoJ tightening bets, a risk-on market mood has somewhat dampened its gains. The easing of fears regarding potential trade disruptions under US President-elect Donald Trump has reduced the demand for safe-haven assets like the Yen.
Meanwhile, growing acceptance that the Federal Reserve will halt its rate cuts later this month has revived demand for the US Dollar. This resurgence in USD demand helped the USD/JPY pair rebound above the 156.00 mark.
Despite this, the outlook for the US Dollar remains mixed. The softer US inflation figures, coupled with expectations of further policy tightening by the BoJ, are likely to cap the Dollar’s upside. Traders will now turn their attention to the upcoming US macroeconomic data for further direction.
USD/JPY – Technical Analysis
The USD/JPY pair is trading at 156.077, down 0.21% on the day, as the market consolidates below the pivot point of 155.553. Despite this minor decline, the broader trend suggests potential bullish momentum, particularly if the pair sustains trading above the pivot level.
Immediate resistance is located at 156.909, followed by 158.552 and 159.629. On the downside, immediate support is observed at 154.437, with further levels at 153.260 and 151.973.
The 50-day EMA at 157.598 currently acts as a key overhead resistance, aligning with the immediate resistance zone. The pair’s inability to break above this EMA reflects short-term bearish sentiment, though the price remains within a broader upward channel.
A sustained move above 155.553 could trigger buying interest, targeting 157.365 and beyond, while a drop below 154.437 might signal additional bearish pressure.
Traders should closely monitor price action around 155.553. A decisive break above this level would reinforce the bullish outlook, while failure to hold could shift sentiment toward testing deeper support levels.
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GOLD Price Analysis – Jan 15, 2025
Daily Price Outlook
Gold prices (XAU/USD) have been on the rise, showing a bullish trend around the 2,681 level and hitting an intra-day peak of 2,683.
This rally in gold can be largely attributed to the recent weakness in the US dollar, which lost momentum after disappointing US December Producer Price Index (PPI) data. As a result, the dollar weakened, and gold began to gain traction.
On the flip side, investor sentiment improved as US President-elect Donald Trump's economic team hinted at gradually increasing import tariffs, a move that has sparked optimism in riskier assets.
This shift in sentiment has somewhat dampened the demand for gold as a safe-haven investment, as investors feel more confident in taking on riskier positions.
Looking ahead, all eyes are now on the upcoming US Consumer Price Index (CPI) report. This will likely offer further insight into the Federal Reserve’s outlook on interest rates, and in turn, influence the demand for the US dollar.
The CPI report could play a pivotal role in shaping market sentiment and providing momentum for both the US dollar and gold prices, leaving traders keenly awaiting its release for clues on future market movements.
US Dollar Weakens Amid Disappointing Data and Fed's Gradual Rate Cut Outlook
On the US front, the broad-based US dollar, measured by the US Dollar Index (DXY), is currently trading around 109.20. The Greenback has faced some pressure due to disappointing US December Producer Price Index (PPI) data.
The PPI, which tracks changes in prices for goods and services, rose by 0.2% month-on-month in December, falling short of expectations.
On an annual basis, it increased by 3.3%, also below the anticipated 3.4%. This weaker-than-expected data put downward pressure on the dollar, benefiting gold.
In addition, US Nonfarm Payrolls (NFP) rose by 256K in December, well above expectations, which had been set at 160K.
This strong jobs report provided some support to the dollar earlier in the week. However, the overall market remains cautious ahead of the upcoming US Consumer Price Index (CPI) data.
The CPI report, due later this week, will offer further insight into inflation trends and could influence the Federal Reserve's policy decisions, including interest rates.
Meanwhile, Federal Reserve officials are preparing for a tighter pace of rate cuts in 2025 than initially anticipated.
Kansas Fed President Jeffrey Schmid emphasized that the Fed’s monetary policy is nearing its long-term equilibrium, suggesting any future rate cuts should be gradual and data-driven.
This approach is creating uncertainty in the market, leaving traders focused on inflation data to guide future expectations for the dollar and gold.
China's Efforts to Support Yuan and Boost Economic Growth May Impact Global Market Sentiment and Gold
Apart from this, the China Foreign Exchange Committee (CFXC) met in Beijing on Monday and pledged to support the Chinese Yuan. The meeting was guided by the People’s Bank of China (PBOC), showing the country’s efforts to stabilize its currency.
In a separate announcement, the PBOC and China’s FX regulator, the State Administration of Foreign Exchange (SAFE), revealed that they would increase the macro-prudential adjustment parameter for cross-border financing from 1.5 to 1.75. This change, effective January 13, 2025, is designed to manage capital flows and support the yuan.
PBOC Governor Pan Gongsheng also spoke on Monday, highlighting that the central bank will use tools like interest rate adjustments and reserve requirement ratios (RRR) to maintain adequate liquidity in the financial system. This is part of China's broader strategy to keep the economy stable and manage inflation.
Moreover, Governor Gongsheng reaffirmed China’s plans to increase its fiscal deficit, indicating more government spending in the future. He also emphasized that China will continue playing a key role in driving global economic growth.
This support for the yuan and China’s economic policies could have an indirect impact on gold, as traders monitor how these developments affect global market sentiment and the demand for safe-haven assets like gold.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,684.31, up 0.18%, reflecting continued bullish momentum within a well-defined ascending channel on the 4-hour chart. The price has breached the critical pivot point at $2,676.98, now acting as strong support.
Immediate resistance is seen at $2,696.72, followed by $2,710.98. A sustained breakout above these levels could push gold prices toward the channel's upper boundary at $2,724.66.
On the downside, immediate support is positioned at $2,664.75, with further declines potentially testing $2,645.00 and $2,627.99. The 50-day EMA, currently at $2,661.06, reinforces short-term support, while the broader bullish outlook is underscored by the 200-day EMA at $2,663.98.
Technically, the breakout above $2,676 confirms buyer strength, with a bullish engulfing candle further validating this sentiment. The upward channel suggests room for continuation if resistance levels are decisively breached.
Traders should monitor price action near $2,696, as failure to hold above $2,676 could signal corrective moves toward lower support zones.
The calculated entry point above $2,676 aligns with a favorable risk-to-reward ratio of 1:1.8. This setup targets a profit of $2,400 per standard lot, while limiting downside exposure to $1,300. Such conditions make gold an attractive asset for short-term bullish strategies.
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EUR/USD Price Analysis – Jan 15, 2025
Daily Price Outlook
Despite the upbeat Eurozone Industrial Production data, the EUR/USD currency pair struggled to maintain its bullish momentum and shifted bearish around the 1.0311 level, hitting an intra-day low of 1.0287.
The downward shift could be attributed to cautious market sentiment ahead of the release of key US economic data.
Investors are eagerly awaiting the US Consumer Price Index (CPI) for December, due at 13:30 GMT, which will likely have a significant impact on market expectations for the Federal Reserve’s monetary policy.
Apart from this, the Euro faced pressure as investors adopted a wait-and-see approach before the return of President-elect Donald Trump to the White House.
Market participants are concerned that higher import tariffs under his administration may hurt Eurozone exports, making them more expensive for US buyers.
This uncertainty over trade policies contributed to the Euro’s weakness against the Dollar on Wednesday. As a result, the EUR/USD pair is consolidating near the 1.0300 level, reflecting the cautious mood among investors as they monitor developments on both sides of the Atlantic.
EUR/USD Struggles to Gain Momentum Amid Economic Concerns and US Trade Uncertainty
On the EUR front, the Euro remains weak against its major peers on Wednesday. Investors are cautious as they await the return of President-elect Donald Trump to the White House.
Meanwhile, the concerns are rising that his administration may introduce higher import tariffs, which could negatively affect Eurozone exports, making them more expensive for US importers. This uncertainty is putting pressure on the Euro, causing it to underperform.
In addition, worries about Eurozone economic growth and the potential for further interest rate cuts from the European Central Bank (ECB) are contributing to the Euro’s weakness.
The ECB has already cut its Deposit Facility rate by 100 basis points in 2024, and further rate cuts are expected.
ECB Chief Economist Philip Lane mentioned that inflation in the services sector is likely to decrease in the coming months, which could bring inflation closer to the ECB's 2% target.
However, some ECB policymakers, like Austrian Central Bank Governor Robert Holzmann, believe that the path to lower rates may not be as straightforward as it seems.
Holzmann pointed out that core inflation is still relatively high, and energy-related issues could complicate the ECB's decisions.
On the economic data front, Eurozone industrial output showed steady performance in November, with a slight 0.2% month-on-month increase.
This was slightly below the expected 0.3% rise, but it was consistent with the previous month’s performance.
However, the annual rate of industrial production dropped by 1.9% in November, which was a larger decline compared to October's 1.1% fall, in line with market expectations.
The combination of cautious investor sentiment, concerns over higher US import tariffs, and expectations of further ECB rate cuts is weighing on the Euro, leading to a weaker EUR. This is limiting EUR/USD's upside potential, keeping it near the 1.0300 level.
EUR/USD – Technical Analysis
EUR/USD is trading at $1.03006, up 0.07%, as the pair consolidates below the critical pivot point at $1.03187. This level marks a key threshold for market direction.
The 50-day EMA at $1.03032 reinforces near-term resistance, aligning with a descending trendline. Immediate resistance stands at $1.03187, with further levels at $1.03683 and $1.04338. A failure to breach these levels could invite selling pressure.
On the downside, immediate support lies at $1.02392, followed by $1.01867 and $1.01288. A break below $1.02392 could open the door for further declines toward the $1.01867 level, intensifying bearish momentum.
The pair is currently trading within a downtrend, with lower highs and lows indicating continued bearish sentiment. The risk-to-reward setup favors selling at $1.03187, targeting $1.02392, with a stop loss at $1.03683.
This scenario presents a potential profit of $795 per standard lot against a risk of $496. The alignment of technical resistance levels with a bearish trendline further validates the downside bias.
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GBP/USD Price Analysis – Jan 15, 2025
Daily Price Outlook
During the European trading session, the GBP/USD pair struggled to gain positive momentum, staying relatively subdued around the 1.2223 mark and even dipping to an intra-day low of 1.2161.
This hesitation can largely be attributed to the cautious sentiment among investors, who are now focusing on the upcoming high-impact Consumer Price Index (CPI) data from both the UK and the US.
Another factor putting pressure on the GBP/USD pair is the recent surge in UK borrowing costs, which has contributed to a weakening outlook for the GBP. This has become a key factor weighing down the GBP/USD pair as investors remain wary of the potential impact on the UK economy.
On the flip side, the US Dollar (USD) is also struggling, lingering near its weekly low after softer US producer prices were released on Tuesday.
This slowdown in inflation has provided some relief to the dollar, limiting any significant downside moves for the GBP/USD pair.
As the market looks ahead to these important data releases, the currency pair is likely to remain in a state of uncertainty, with the next major price movement contingent on the outcomes of these economic reports.
GBP/USD Struggles Amid Rising UK Borrowing Costs and Fed's Hawkish Stance
On the GBP front, the recent rise in UK borrowing costs has created a negative sentiment around the British Pound.
This has become a key factor pressuring the GBP/USD pair, as higher borrowing costs can weigh on economic activity and investor confidence. As a result, the pound remains under pressure, struggling to recover strongly in the market.
Meanwhile, the US Dollar (USD) is hovering near its weekly low after weaker-than-expected US producer price data earlier this week.
This has limited further losses for the GBP/USD pair. However, the Federal Reserve’s increasingly hawkish stance is providing support for the dollar.
The Fed’s position suggests it may not reduce interest rates anytime soon, helping maintain higher US Treasury bond yields and boosting the dollar’s appeal.
Market participants are now confident that the Fed will pause its rate-cutting plans during its next meeting. This belief was reinforced by last Friday’s strong US Nonfarm Payrolls (NFP) report, which signaled a healthy job market.
These developments support USD bulls and suggest that any recovery attempt in the GBP/USD pair could face selling pressure, keeping gains limited. Traders are likely to watch upcoming economic data closely for further direction.
GBP/USD – Technical Analysis
GBP/USD is trading at $1.22109, up 0.10%, as the pair consolidates below a critical resistance zone.
The key pivot point at $1.22439 marks a significant level for market direction. A failure to break above this level could invite further selling pressure, aligning with the broader downtrend.
Immediate resistance lies at $1.22439, with additional hurdles at $1.23155 and $1.23335. Conversely, a decisive break below the support level of $1.21019 may trigger sharper declines, with subsequent support levels at $1.20194 and $1.19346.
The bearish bias is supported by the descending trendline and the 50-day SMA at $1.23335, which caps upside potential.
The risk-to-reward setup favors selling below $1.22439, with a target of $1.21019 and a stop loss at $1.23155.
This trade setup offers a potential profit of $1,420 per standard lot against a risk of $716, with a favorable risk-to-reward ratio of 1:1.9.
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