THE ETERNAL SOVEREIGN

Tag: DXY

  • Week Ahead: U.S. dollar eases on trade uncertainty as NFP and Eurozone HICP approach

    The U.S. dollar weakened this week amid ongoing geopolitical tensions and renewed uncertainty over U.S. trade policy. The setback followed a ruling by the Supreme Court of the United States declaring the Trump administration’s tariffs illegal, prompting President Donald Trump to announce a fresh round of levies. Even stronger-than-expected Producer Price Index (PPI) data failed to revive the greenback.

    The U.S. Dollar Index (DXY) hovered near the 97.60 area, down about 0.20% on the day and ending the week modestly lower, as traders remained cautious amid trade and geopolitical uncertainty.

    EUR/USD traded around 1.1810, edging higher during the U.S. session after Germany’s flash Harmonized Index of Consumer Prices (HICP) for February came in softer than expected at 2% year-on-year (vs. 2.1% forecast) and 0.4% month-on-month (vs. 0.5%). Investors also evaluated testimony from Christine Lagarde, President of the European Central Bank, before the European Parliament. Lagarde reiterated that inflation is gradually returning to the 2% target and said she intends to complete her term, dismissing speculation about an early departure.

    GBP/USD hovered near 1.3470, rebounding after nearly revisiting a one-month low earlier in February. Meanwhile, Andrew Bailey, Governor of the Bank of England, indicated there is room for rate cuts as inflation is expected to move back toward the 2% target.

    USD/JPY traded near 156.00, stabilizing after recouping most of its intraday losses. Tokyo’s February CPI rose 1.6% year-on-year, with the core measure excluding fresh food falling below the Bank of Japan’s 2% target for the first time since 2024.

    AUD/USD climbed back toward 0.7120, turning positive after reversing earlier declines. Attention now shifts to Australia’s TD-MI Inflation Gauge, due Monday.

    USD/CAD hovered around 1.3630, marking nearly a two-week low, as markets assessed economic data from both sides of the border. According to Statistics Canada, Canada’s GDP contracted at an annualized 0.6% rate in the fourth quarter, following a revised 2.4% expansion in Q3.

    Gold traded near $5,260, reaching a one-month high amid persistent geopolitical uncertainty. The precious metal is attempting to retest its all-time high of $5,598 set earlier this year.

    Anticipating economic perspectives: Key voices in focus

    Sunday, March 1

    • Joachim Nagel – European Central Bank

    Monday, March 2

    • Frank Elderson – European Central Bank
    • Joachim Nagel – European Central Bank
    • Christine Lagarde – European Central Bank
    • Dave Ramsden – Bank of England
    • Michele Bullock – Reserve Bank of Australia

    Tuesday, March 3

    • Kazuo Ueda – Bank of Japan
    • John C. Williams – Federal Reserve
    • Olaf Sleijpen – European Central Bank
    • Martin Kocher – European Central Bank
    • Neel Kashkari – Federal Reserve

    Wednesday, March 4

    • Piero Cipollone – European Central Bank
    • Tiff Macklem – Bank of Canada
    • Luis de Guindos – European Central Bank

    Thursday, March 5

    • Luis de Guindos – European Central Bank
    • Martin Kocher – European Central Bank
    • Christine Lagarde – European Central Bank

    Friday, March 6

    • Piero Cipollone – European Central Bank
    • Mary Daly – Federal Reserve
    • Beth Hammack – Federal Reserve
    • Scott Paulson – Federal Reserve

    Central bank meetings and key data releases set to steer monetary policy outlook

    Monday, March 2

    • Australia: TD-MI Inflation Gauge
    • China: February RatingDog Manufacturing PMI
    • Germany: January Retail Sales
    • Switzerland: January Real Retail Sales
    • Spain: February HCOB Manufacturing PMI
    • Italy: February HCOB Manufacturing PMI
    • Germany: February HCOB Manufacturing PMI
    • Canada: February S&P Global Manufacturing PMI
    • U.S.: February ISM Manufacturing Employment Index
    • U.S.: February ISM Manufacturing New Orders Index
    • U.S.: February ISM Manufacturing PMI
    • U.S.: February ISM Manufacturing Prices Paid
    • New Zealand: January Building Permits (s.a.)
    • Japan: January Unemployment Rate

    Tuesday, March 3

    • Australia: January Building Permits
    • Eurozone: HICP (Harmonized Index of Consumer Prices)
    • Italy: February flash CPI
    • Australia: AiG Industry Index
    • Australia: February S&P Global Composite PMI
    • Australia: February S&P Global Services PMI

    Wednesday, March 4

    • Australia: Q4 GDP
    • China: February NBS Manufacturing PMIs
    • China: February RatingDog Services PMI
    • Switzerland: February CPI
    • Spain: February HCOB PMI
    • Germany: February HCOB PMI
    • Eurozone: February HCOB PMIs
    • Eurozone: January PPI
    • Italy: Q4 GDP
    • U.S.: ADP Employment Change
    • U.S.: February S&P Global Composite PMI
    • U.S.: February ISM Services Employment Index
    • U.S.: February ISM Services New Orders Index
    • U.S.: February ISM Services PMI
    • U.S.: February ISM Services Prices Paid
    • U.S.: Federal Reserve Beige Book

    Thursday, March 5

    • Australia: January Trade Balance
    • Eurozone: January Retail Sales
    • U.S.: February Challenger Job Cuts
    • U.S.: Initial Jobless Claims
    • U.S.: Flash Nonfarm Productivity (Q4)
    • U.S.: Flash Unit Labor Costs (Q4)

    Friday, March 6

    • Germany: January Factory Orders (n.s.a.)
    • Eurozone: Employment Change (Q4)
    • Eurozone: GDP (QoQ) (Q4)
    • U.S.: February Average Hourly Earnings
    • U.S.: February Labor Force Participation Rate
    • U.S.: February Nonfarm Payrolls
    • U.S.: January Retail Sales
    • U.S.: February U6 Underemployment Rate
    • U.S.: February Unemployment Rate
    • Canada: February Ivey PMIs

    Sources: Agustin Wazne

  • The dollar edges higher on upbeat economic data; the euro holds steady while the yuan weakens.

    The U.S. dollar recovered on Tuesday after the prior session’s slide, supported by upbeat economic data, while investors stayed cautious amid fresh volatility tied to President Donald Trump’s tariff policies.

    At 15:24 ET (20:24 GMT), the Dollar Index—measuring the greenback against six major currencies—rose 0.2% to 97.86, after falling as much as 0.5% a day earlier.

    Strong data underpin dollar

    Encouraging economic releases lent the dollar some backing. ADP reported a gain of 12.8K in private payrolls last week, exceeding the previous reading. In addition, the Conference Board’s consumer confidence index for February surprised to the upside at 91.2.

    According to José Torres, senior economist at Interactive Brokers, the stronger-than-expected figures nudged both the dollar and yields modestly higher, with a bear-flattening move led by shorter-dated maturities that are more sensitive to monetary policy.

    He noted that firmer labor data are pushing rates up, as improving employment conditions weaken the case made by dovish Federal Reserve members for interest rate cuts based on softening job trends.

    Trade tensions cloud outlook

    Despite the rebound, uncertainty surrounds the U.S. currency as Trump’s revised tariff plans take shape following a Supreme Court ruling that his use of a 1977 emergency law to impose tariffs overstepped his authority.

    In response, Trump said he would lift a temporary import tariff from 10% to 15% on goods from all countries. The move has cast doubt on the reliability of trade agreements reached prior to the ruling. Reflecting this uncertainty, the European Parliament delayed a vote on the European Union’s trade pact with the United States due to the new import tax.

    Trade concerns have resurfaced at a time when questions are also emerging over the durability of heavy investment in artificial intelligence and the resilience of the U.S. economy after last week’s weak growth data.

    Euro steady; Yen under pressure

    In Europe, EUR/USD slipped 0.1% to 1.1779, with the euro largely steady after ECB President Christine Lagarde reiterated in Washington that the European Central Bank’s rate policy remains in a “good place,” while emphasizing the need for flexibility.

    GBP/USD edged up 0.1% to 1.3501 ahead of parliamentary testimony from four Bank of England rate-setters, which may shape expectations before the March policy meeting.

    In Asia, USD/JPY jumped 1% to 155.76 as expectations for near-term tightening by the Bank of Japan softened. The yen was also pressured by a Nikkei report suggesting U.S. authorities led recent rate-check efforts aimed at supporting Japan’s currency.

    USD/CNY fell 0.4% to 6.8830 after the People’s Bank of China kept its one-year and five-year loan prime rates unchanged, signaling Beijing’s preference for calibrated support while balancing growth and financial stability. Chinese markets reopened Tuesday following the Lunar New Year holiday.

    Elsewhere, AUD/USD rose 0.1% to 0.7060, while NZD/USD advanced 0.2% to 0.5967.

    Sources: Anuron Mitra

  • Dollar dips amid Trump tariff turmoil; euro and sterling tick up

    • The U.S. dollar weakened on Monday as investors assessed the implications of the Supreme Court of the United States decision to strike down tariffs introduced by Donald Trump, along with the administration’s subsequent response.
    • Traders were also monitoring renewed nuclear negotiations between Washington and Tehran.
    • As of 14:12 ET (19:12 GMT), the Dollar Index — which measures the greenback against a basket of six major currencies — was down 0.2% at 97.65. The currency had posted a gain of roughly 1% last week, marking its strongest weekly advance in more than four months.

    Dollar pressured by mounting trade uncertainty

    The Supreme Court of the United States ruled on Friday that sweeping tariffs introduced by Donald Trump exceeded his authority. In response, Trump criticized the court and unveiled a blanket 15% levy on imports.

    The new duties are set to remain in place for 150 days, but it remains unclear whether the U.S. government must reimburse importers for tariffs already collected, as the Court did not address that issue.

    The uncertainty could trigger prolonged legal battles and further confusion as Trump explores alternative mechanisms to reinstate broad-based global tariffs on a more permanent footing.

    Thierry Wizman, global FX and rates strategist at Macquarie, said the firm’s bearish U.S. dollar outlook for 2026 was based on the view that tariffs signal U.S. “disengagement” from the rules-based order underpinning free trade. He added that tariff conflicts themselves generate uncertainty centered on the United States — a negative for the dollar.

    “In that sense, while the Supreme Court ruling may have strengthened institutional checks, it also heightens uncertainty, as Trump is likely to revive the tariff war through different — and more legally grounded — channels that have yet to be detailed. We see no reason to revise our broader expectation for a weaker USD in 2026,” Wizman said.

    Beyond trade policy, investors are also watching a U.S. military buildup in the Middle East aimed at pressuring Iran to abandon its nuclear ambitions, with further talks between Washington and Tehran expected later this week.

    Euro advances as confidence in Europe strengthens

    In Europe, EUR/USD rose 0.2% to 1.1799, with the single currency drawing support from trade-driven weakness in the dollar.

    Growing confidence in the region’s economic outlook also underpinned the euro, following data on Friday showing eurozone business activity expanded faster than expected this month, as manufacturing returned to growth for the first time since October.

    Momentum was reinforced on Monday as Germany’s Ifo business climate index climbed to 88.6 from 87.6 the previous month, signaling improving sentiment in Europe’s largest economy.

    Meanwhile, GBP/USD added 0.1% to 1.3497, with sterling firming ahead of key event risks this week — including testimony before the Treasury Committee by Andrew Bailey, governor of the Bank of England, and Thursday’s UK by-election in Gorton and Denton.

    Yen edges higher

    In Asia, USD/JPY fell 0.4% to 154.48, with the Japanese yen supported by its traditional safe-haven appeal as investors remained cautious about the economic impact of higher U.S. tariffs. Trading volumes were thinner due to a public holiday in Japan.

    USD/CNY was little changed at 6.9087, with Chinese markets shut for New Year holidays. Elsewhere, AUD/USD declined 0.3% to 0.7060, while NZD/USD also dropped 0.3% to 0.5961.

    Thierry Wizman of Macquarie said that while the dollar could remain under pressure amid persistent U.S.-driven uncertainty, some currencies — such as the yuan and the euro — may outperform, whereas others, including the Canadian and Mexican pesos, could lag. He added that even in the face of potential credit rating actions, long-term U.S. Treasury yields might rise due to uncertainty over revenue replacement, and equities could come under strain if higher yields lead to valuation compression.

    Sources: Peter Nurse

  • The Dollar dips following the Supreme Court’s tariff decision, yet remains on track for its best weekly performance since November.

    The U.S. dollar edged lower on Friday as investors digested the impact of the Supreme Court’s decision to invalidate President Donald Trump’s broad tariff measures. Despite the pullback, the greenback remained on track for its strongest weekly advance since November, supported by a more hawkish tone from the Federal Reserve and ongoing geopolitical tensions between the U.S. and Iran.

    As of 17:31 ET (22:31 GMT), the Dollar Index slipped 0.2% to 97.72, though it was still poised to post a weekly gain of around 1%, its best showing in nearly three months.

    The Supreme Court ruled 6–3 that Trump lacked authority under the International Emergency Economic Powers Act (IEEPA) to implement sweeping reciprocal tariffs. The president criticized the decision as “deeply disappointing” and indicated that tariffs would remain in effect through alternative legal channels, alongside a new 10% global levy.

    According to Jeff Buchbinder of LPL Financial, removing the tariff overhang eliminates a drag on economic growth that had been expected to lift costs and pressure corporate margins. With that risk easing, growth may stabilize and inflation expectations embedded in bond markets could cool more quickly, potentially prompting a modest reassessment of Fed rate-cut expectations and weighing slightly on the dollar.

    Even so, the dollar had attracted demand earlier in the week, underpinned by resilient U.S. economic data, hawkish Fed meeting minutes, and heightened Middle East tensions.

    Friday’s data, however, delivered mixed signals. Core PCE — the Fed’s preferred inflation measure — rose 0.4% month-over-month and 3.0% year-over-year in December 2025, marking the highest annual reading since November 2023 and remaining well above the 2% target. Meanwhile, preliminary fourth-quarter GDP growth came in at 1.4%, falling short of the 2.8% consensus forecast.

    In Europe, EUR/USD ticked up 0.1% to 1.1781, though the euro was still headed for a 0.7% weekly decline amid uncertainty surrounding ECB President Christine Lagarde’s tenure and softer German producer price data. Analysts at ING noted that while sentiment indicators such as the ZEW survey disappointed, the eurozone composite PMI is expected to stay above the 50 threshold, limiting downside pressure on the euro.

    GBP/USD rose 0.1% to 1.3474, but sterling hovered near a one-month low and was set for a weekly loss of about 1.3%. Strong January retail sales — up 1.8% month-over-month and 4.5% year-over-year — failed to provide sustained support. ING analysts said markets are pricing in a Bank of England rate cut in March, with another possible move in June, while political risks continue to weigh on the pound.

    In Asia, USD/JPY held steady at 155.06 after data showed Japan’s inflation slowed to 1.5% in January, slipping below the Bank of Japan’s target for the first time in nearly four years. Core inflation excluding fresh food and fuel also moderated, reinforcing uncertainty over the timing of the next rate hike. Separate data showed Japanese factory activity expanded at its fastest pace in over four years in February.

    USD/CNY was unchanged at 6.9087, with Chinese markets closed. Meanwhile, AUD/USD climbed 0.5% to 0.70892, although the Australian dollar trimmed some gains after unemployment held at 4.1% in January, signaling a still-tight but gradually cooling labor market.

    Sources: Anuron Mitra

  • Major FX Pairs Face Critical Levels Amid Heightened Macro Volatility

    Macro uncertainty is intensifying just as EUR/USD and GBP/USD test pivotal technical zones. With interest-rate expectations shifting and tail risks mounting, the next directional move may depend more on macro catalysts than chart patterns.

    Both pairs are hovering near critical support and resistance levels, while a dense lineup of U.S. and European data raises the prospect of increased volatility. The dollar continues to trade in close correlation with Treasury yields and evolving Federal Reserve rate pricing, reinforcing the macro-driven backdrop.

    At the same time, tariff developments and geopolitical tensions are injecting additional tail risk ahead of the weekend, leaving markets vulnerable to sharp, sentiment-driven swings.

    Summary

    As the week moves into its final stretch, both Europe and the United States face a heavy slate of economic releases—and this is unlikely to be mere background noise for markets. Recent price action has already underscored how reactive EUR/USD and GBP/USD are to changes in relative rate expectations across the U.S., U.K., and euro area.

    With both currency pairs now positioned near critical technical thresholds, the incoming data flow carries the potential to do more than simply inject volatility. It may ultimately determine whether the latest directional moves gain traction—or begin to lose momentum and reverse.

    Heavy Data Calendar Lifts Volatility Threat

    Flash PMIs rarely fail to generate movement in EUR/USD and GBP/USD, largely because European participants tend to respond far more decisively to the releases than traders elsewhere. In the euro area, the focus is likely to center on price components and new orders, especially in light of the recent resilience in the single currency. In the UK, attention may gravitate toward price pressures, employment trends, and overall activity, reflecting the economy’s persistent softness.

    The more consequential headline risk, however, lies in the United States. The advance Q4 GDP print stands out. While backward-looking and heavily estimate-based, it still carries the potential to influence how the dollar closes the week. An upside surprise would reinforce the narrative of U.S. exceptionalism. A downside miss, on the other hand, could reignite expectations for Federal Reserve rate cuts—expectations that have recently been scaled back after generally firm data and relatively hawkish FOMC minutes.

    December’s core PCE deflator rarely delivers genuine surprises these days. Enhanced data mapping has largely diminished its shock factor, shifting attention toward the consumption and income components instead. Markets will scrutinize the consumption data for signs that recent weakness in goods demand has spilled into services, while income figures should provide a clearer indication of households’ capacity to sustain spending.

    US flash PMIs, meanwhile, have produced inconsistent market reactions and are often overshadowed when more significant releases land on the same day. Broadly speaking, they have tended to exaggerate the signal seen in ISM surveys. As a result, a stronger market response may emerge if there are clear signs of softening—particularly within the services sector.

    Weekend Risk Premium Builds

    Beyond the dense data schedule, traders also face mounting tail risks heading into the weekend. A ruling from the Supreme Court of the United States on the legality of tariffs imposed under the International Emergency Economic Powers Act (IEEPA) could arrive around 10 a.m. U.S. time, although there is no certainty a decision will be issued today. Even the possibility is sufficient to keep markets cautious, given the potential implications for Treasury yields and overall risk sentiment.

    At the same time, Donald Trump has set a 10-day deadline for Iran to reach a deal or face potential military action. Considering the risks to global energy supply—and the United States’ position as a major energy producer—any pre-emptive strike would likely support the dollar against European currencies, particularly if it sparks a renewed wave of risk aversion.

    Regarding tariffs, the market reaction may remain relatively muted regardless of the court’s decision—unless investors begin to question whether any shortfall in government revenues can be covered through alternative channels. Should doubts arise on that front, both the dollar and longer-dated Treasuries could face meaningful downside pressure as fiscal concerns move to the forefront.

    Dollar Catalysts Return to Center Stage

    Underscoring the significance of the upcoming data and event risk, the US Dollar Index (DXY) has shown a notably tight correlation over the past week with Fed rate-cut expectations, front-end yield differentials, US two-year Treasury yields, and even Brent crude, as illustrated in the middle panel of the chart above. In practical terms, the dollar has reverted to trading primarily as a rates-and-yields narrative, with an added layer of sensitivity to energy prices.

    Yet the 20-day correlation metrics shown on the right paint a much less compelling picture. Over the past month, these relationships have been weak and statistically insignificant, serving as a reminder that the recent alignment may prove temporary rather than structural.

    GBP/USD Faces Growing Downside Pressure

    As discussed in earlier analysis this week, the release of key UK labour market and inflation figures acted as the catalyst that pushed GBP/USD out of its consolidation phase. Combined with firm U.S. data, the move triggered a decisive break below multiple technical markers, including the November uptrend and the 50-day moving average, before finding support at the 200-day moving average. Whether assessed through pure price action or momentum indicators, the bias now tilts toward increasing downside risk.

    The 14-period RSI continues to trend lower below the 50 mark, while MACD has crossed beneath its signal line and moved into negative territory—both reinforcing the build-up of bearish momentum. As a result, selling rallies appears more favorable than buying dips. That said, the pair’s proximity to the 200DMA provides a clearly defined reference point for structuring trades as incoming data and headlines shape sentiment.

    A sustained break below the 200DMA would strengthen the bearish case, opening the door for short positions with stops placed just above the average. Initial downside targets would sit at 1.3371, followed by 1.3300 and 1.3250. Conversely, if price manages to hold above the 200DMA, the setup could shift tactically. Long positions above the level, with stops placed beneath, would target 1.3535—a zone where several technical indicators, including the 50DMA, currently converge. A reclaim of that area would undermine the newly established bearish bias and shift directional risks back toward a sideways-to-higher outlook.

    Triangle Formation Brings Breakout Levels Into View

    With EUR/USD coiling within a descending triangle and momentum indicators drifting lower, downside risks appear to be gradually building. A decisive break beneath the confluence of the 50-day moving average and horizontal support at 1.1768 may prove pivotal in unlocking further weakness. Thursday’s doji candle aligns with that narrative, highlighting a degree of indecision among market participants at a technically sensitive juncture.

    While the bearish case in GBP/USD looks more straightforward—given recent UK data and the repricing of Bank of England rate expectations—the outlook for the euro is less clear-cut. That ambiguity reinforces the importance of upcoming data and headlines in shaping near-term direction. RSI (14) has slipped just below 50, offering a neutral-to-soft signal, while MACD has rolled over but remains marginally above zero, underscoring the lack of decisive momentum so far.

    The descending triangle structure keeps the downside break scenario firmly in focus, but confirmation is still required. A sustained break and close below the 50DMA/1.1768 area would strengthen the bearish case, with short positions targeting 1.1684 initially, followed by the 200-day moving average. Stops could be placed just above the broken support zone for protection.

    Conversely, if the pair manages to hold this confluence area, a tactical long setup may be considered with tight stops below, initially targeting the January downtrend line. Should price test but fail to clear that trendline convincingly, it may favor squaring positions or re-establishing shorts with stops above, aiming for a retest of the 50DMA/1.1768 region. A clean upside breakout, however, would alter the landscape, opening scope toward 1.1837 and potentially 1.1918, shifting directional risks back toward a sideways-to-higher bias.

    Sources: David Scutt

  • Forex Today: PMI Data from Key Economies and US GDP Figures Set to Boost Market Volatility

    Here’s what you need to know for Friday, February 20:

    The US Dollar Index (DXY) maintains its upward momentum, hovering near 98.00 after reaching a near one-month high on Thursday. The economic agenda for Friday features preliminary February Purchasing Managers’ Index (PMI) data from Germany, the Eurozone, the UK and the US. The spotlight, however, will be on the first estimate of fourth-quarter Gross Domestic Product (GDP) growth and the December Personal Consumption Expenditures (PCE) Price Index, both to be released by the US Bureau of Economic Analysis.

    The US Dollar outperformed major peers on Thursday amid a risk-off market tone fueled by rising tensions between the US and Iran. According to BBC, US President Donald Trump warned that Iran must strike a deal or face serious consequences. Iran, in communication with UN Secretary-General Antonio Guterres, stated it does not seek conflict but would not tolerate military aggression. Iranian officials also reportedly cautioned that any US military move over the nuclear issue would be met with a decisive response. Early Friday, US stock index futures were modestly higher.

    The US economy is expected to have expanded at an annualized pace of 3% in Q4, following a 4.4% increase in the prior quarter. Meanwhile, the core PCE Price Index — the Federal Reserve’s preferred inflation gauge — is forecast to rise 2.9% year-over-year in December, up slightly from 2.8% in November.

    EUR/USD, which closed lower on Thursday, remains under pressure early Friday, trading near 1.1750. PMI figures from Germany and the Eurozone are anticipated to continue signaling expansion in private-sector activity for February.

    GBP/USD extended its decline for a fourth straight session on Thursday and trades below 1.3450, marking its weakest level since late January. Data from the UK’s Office for National Statistics showed that Retail Sales climbed 1.8% month-over-month in January, significantly beating the 0.2% consensus estimate.

    USD/JPY continues its weekly advance and holds comfortably above 155.00 in early Friday trading. Japan’s Prime Minister Sanae Takaichi stated that necessary expenditures would largely be financed through the initial budget, adding that efforts would be made to gradually reduce the debt-to-GDP ratio and restore fiscal discipline. Japan’s National Consumer Price Index rose 1.5% in January, down from 2.1% in December.

    Gold benefited from safe-haven demand on Thursday but struggled to build momentum amid broad USD strength. XAU/USD edges higher during the European session on Friday, trading above $5,000.

    In Australia, flash data from S&P Global showed the Composite PMI easing to 52 in February from 55.7 in January. AUD/USD largely brushed off the release and was last seen slightly lower on the day near 0.7050.

    Sources: Eren Sengezer

  • The US Dollar Index (DXY) consolidates around 97.70 near a one-week high, with the broader bullish outlook remaining intact.

    The US Dollar Index (DXY) is taking a breather after climbing to a more than one-week high in the previous session, trading in a tight range around 97.70 during Thursday’s Asian session and holding steady on the day.

    Minutes from the Federal Reserve’s January meeting showed policymakers split over the timing and need for further rate cuts, given lingering inflation concerns. While some officials suggested additional easing could be appropriate if inflation cools as projected, others warned that cutting rates too soon might jeopardize the Fed’s 2% target. The relatively less dovish tone has helped curb expectations for aggressive policy easing and continues to lend support to the US dollar.

    The upbeat January Nonfarm Payrolls report released last week has also reinforced the case for a cautious approach from the Fed, further underpinning the greenback. In addition, reports that the US military could be ready to strike Iran as soon as this weekend are keeping geopolitical risks elevated, sustaining demand for the dollar’s safe-haven appeal.

    However, markets are still pricing in the likelihood of at least two Fed rate cuts in 2026. Softer US consumer inflation data released last Friday, combined with a generally positive risk tone, has limited stronger bullish momentum in the dollar. Attention now turns to Friday’s US Personal Consumption Expenditure (PCE) Price Index, which may offer fresh direction for the DXY.

    Sources: Haresh Menghani

  • FX Markets Quiet Ahead of This Week’s Important Data and Events

    Here’s what you need to know for Monday, February 16:

    Major currency pairs begin the week trading within established ranges, as investors remain cautious ahead of several key events and important macroeconomic releases scheduled for later in the week. In Europe, December Industrial Production figures are due on Monday. Meanwhile, US stock and bond markets are closed for the Presidents Day holiday.

    The US Dollar Index ended last week on a softer note, as below-forecast inflation data prevented the greenback from gaining momentum before the weekend. According to the US Bureau of Labor Statistics, annual Consumer Price Index (CPI) inflation slowed to 2.4% in January from 2.7% in December, undershooting expectations of 2.5%. Early Monday, the USD Index is moving sideways around the 97.00 mark during European trading hours.

    Early Monday, CBS News reported—citing two sources—that US President Donald Trump told Israeli Prime Minister Benjamin Netanyahu he would back Israeli strikes targeting Iran’s ballistic missile program. So far, markets have shown little reaction, with West Texas Intermediate crude trading largely flat near $62.80 per barrel.

    EUR/USD remains in consolidation mode, hovering just above 1.1850 after ending last week slightly higher. European Central Bank policymaker Joachim Nagel is expected to speak later in the day.

    In Asia, Japan’s data showed that fourth-quarter Gross Domestic Product (GDP) expanded at an annualized rate of 0.2%, rebounding from a 2.6% contraction in the prior quarter but missing the 1.6% growth forecast. After dropping nearly 3% last week, USD/JPY is recovering modestly, up 0.4% on the day to trade near 153.30.

    AUD/USD trades in a tight range below 0.7100 in European hours. The Reserve Bank of Australia will release minutes from its February meeting early Tuesday, when it raised the policy rate by 25 basis points to 3.85%.

    Gold surged on Friday and closed the week higher, though XAU/USD is struggling to maintain upward momentum and is trading below the $5,000 level on Monday morning in Europe.

    The UK’s Office for National Statistics is set to publish employment data on Tuesday. GBP/USD remains subdued, edging slightly below 1.3650.

    Finally, Statistics Canada will release January CPI data on Tuesday. USD/CAD trades steadily around 1.3600 in European hours after posting modest losses last week.

    Sources: Eren Sengezer

  • Weekly outlook: US Dollar steadies near 96.80 before PCE data and Fed remarks.

    The US Dollar (USD) posted notable weekly losses, briefly rebounding after stronger-than-expected US jobs data showed 130K new positions added in January and the Unemployment Rate dipping to 4.3% from 4.4%. However, softer January CPI figures pressured the currency.

    The US Dollar Index (DXY) slipped to around 96.80 from 97.15 highs as weak inflation data boosted expectations of a Federal Reserve rate cut later this year. Attention now turns to Friday’s release of the December Personal Consumption Expenditures (PCE) report, the Fed’s preferred inflation measure.

    EUR/USD hovers around 1.1880, erasing earlier losses after Eurozone flash Q4 GDP came in at 1.4% YoY, above the 1.3% forecast. Focus next week includes the Eurogroup Meeting and December Industrial Production on Monday, followed by the EcoFin Meeting and February Eurozone and German ZEW Surveys on Tuesday.

    AUD/USD trades near 0.7080, close to a three-year peak, supported by the hawkish stance of the Reserve Bank of Australia. Upcoming data include NAB Business Confidence and the Wage Price Index on Wednesday, then Australian jobs figures and the February flash S&P Global Composite PMI on Thursday.

    USD/CAD sits near 1.3600, recovering nearly half of its weekly losses after US inflation data. Markets will watch Canada’s December Retail Sales on Friday.

    USD/JPY trades around 152.80 following a sharp sell-off triggered by the election victory of Sanae Takaichi, which raised fiscal policy concerns. Japan’s National CPI is due on Thursday.

    GBP/USD holds near 1.3650, with UK Producer Price Index and Retail Price Index data due Wednesday, and Retail Sales scheduled for Friday.

    Gold trades around $5,038, rebounding from Thursday’s drop but still below January’s record high of $5,598, as easing geopolitical tensions push investors toward riskier assets.

    Looking ahead to the economic outlook: Key voices take center stage.

    Saturday, February 14

    • Christine Lagarde (ECB President)

    Sunday, February 15

    • Christine Lagarde (ECB President)

    Monday, February 16

    • Michelle Bowman (Fed)
    • Joachim Nagel (ECB)

    Tuesday, February 17

    • José Luis Escrivá (ECB)
    • Michael Barr (Fed)
    • Mary Daly (Fed)

    Wednesday, February 18

    • Piero Cipollone (ECB)
    • Isabel Schnabel (ECB)
    • Michelle Bowman (Fed)

    Thursday, February 19

    • Piero Cipollone (ECB)
    • Luis de Guindos (ECB)
    • Raphael Bostic (Fed)
    • Michelle Bowman (Fed)
    • Neel Kashkari (Fed)
    • Christian Hawkesby (rbnz official)

    Friday, February 20

    • Christine Lagarde (ECB President)
    • Raphael Bostic (Fed)

    Central bank meetings and upcoming economic data releases are set to guide the next moves in monetary policy.

    Sunday, February 15

    • Japan flash Q4 GDP

    Tuesday, February 17

    • Reserve Bank of Australia (RBA) Meeting Minutes
    • Germany January Harmonized Index of Consumer Prices (HICP)
    • UK January Claimant Count Change
    • UK December Employment Change
    • UK December ILO Unemployment Rate
    • Canada January CPI

    Wednesday, February 18

    • Reserve Bank of New Zealand (RBNZ) Interest Rate Decision
    • UK January CPI
    • Federal Open Market Committee (FOMC) Minutes

    Thursday, February 19

    • Australia January Employment Change
    • Australia Unemployment Rate

    Friday, February 20

    • UK January Retail Sales
    • Germany February flash HCOB Composite PMIs
    • Eurozone PMIs
    • UK flash February S&P Global PMIs
    • US December Core Personal Consumption Expenditures (PCE)
    • US February S&P Global PMIs

    Sources: Agustin Wazne

  • Austan Goolsbee said rates may fall if services inflation eases.

    Austan Goolsbee said in a Friday interview with Yahoo Finance that while interest rates are likely to decline further, any additional cuts will depend on continued progress in bringing down services inflation.

    He described the latest CPI report as mixed, with both positive signals and lingering concerns, noting that services inflation remains elevated and above target. Goolsbee expressed hope that the peak effects of tariffs have passed and pointed to strong January employment data as evidence of a broadly stable labor market with only modest cooling. Although he believes rates could be reduced further, he stressed the need for clearer improvement in inflation before accelerating cuts, warning that persistently high services inflation is a risk.

    He added that the U.S. consumer remains the economy’s strongest pillar and should stay resilient if the job market holds steady and inflation eases. If inflation returns to 2%, he said, the Fed would have room to implement several more rate cuts.

    Sources: Joshua Gibson

  • US: NFP rebound reinforces expectations of a gradual recovery – Standard Chartered

    Standard Chartered analysts Steve Englander and Dan Pan note that the latest US Nonfarm Payrolls report delivered a stronger-than-expected rebound in hiring, with job growth accelerating and the unemployment rate declining.

    Although substantial downward benchmark revisions were made to prior data, they believe the latest figures signal a gradual labour-market recovery extending into 2025 and 2026.

    NFP strength suggests continued stabilization

    The January employment report surprised to the upside, exceeding nearly all forecasts and indicating renewed momentum in the labour market.

    Faster job creation, a lower unemployment rate, and a rise in the employment-to-population ratio all point to improving labour conditions toward late 2025 and into 2026, despite significant downward revisions to historical data.

    While health care and social assistance remained the primary contributors to job growth, other sectors are beginning to show early signs of recovery.

    That said, uncertainties remain regarding the durability of this improvement. The analysts caution that one month of stronger data is not enough to eliminate broader labour-market concerns, particularly amid weak sentiment indicators and potential disruptions related to artificial intelligence.

    Sources: Fxstreet

  • USD: Concerns over Fed independence limit reaction to jobs data – Commerzbank

    Commerzbank’s Antje Praefcke suggests that the delayed January U.S. jobs report is unlikely to significantly move the Dollar, with Nonfarm Payrolls projected at about 70,000 and the unemployment rate holding at 4.4%. She notes that investors are likely to pay closer attention to the outlook for Federal Reserve policy under Kevin Warsh and to ongoing concerns about the Fed’s independence, which she views as the main medium-term risk facing the Dollar.

    Employment report takes a back seat to Fed-related risks

    “I’m not convinced this will trigger any significant moves in the US dollar, for two reasons.”

    “In that context, a reading of roughly 70,000 – or even 60,000 – should not unsettle markets, as it would still point to a labor market that is softening but not collapsing. As such, there is little justification for making substantial changes to interest rate expectations tied to the Fed’s employment mandate.”

    “While key data releases will likely continue to drive short-term swings in the dollar, the overriding issue remains the Fed’s independence, which is effectively the sword of Damocles hanging over the currency.”

    “Ultimately, the future independence of the Fed is the central question and the greatest risk for the greenback. Clarity on this matter is unlikely before spring.”

    Sources: Fxstreet

  • Why fears of dollar debasement appear premature despite the recent hype

    Concerns that the U.S. dollar is heading into a phase of rapid debasement look exaggerated, despite ongoing longer-term headwinds. Although the currency has been volatile recently and briefly hit multi-year lows—reviving “Sell America” narratives—Bank of America says market evidence does not yet point to a structural shift away from U.S. assets.

    While BofA remains bearish on the dollar over the long run, it expects any depreciation to play out gradually through 2026 and 2027 rather than through an abrupt decline. Investor positioning and capital flow data show little sign of a coordinated move out of U.S. assets. Dollar risk premia have risen only modestly, and options markets indicate that short-dollar positioning is not meaningfully larger than it was three months ago.

    Cross-asset flows reinforce this view, with equity and bond data showing no substantial foreign capital flight from the U.S. Notably, there has been just one session this year in which both the dollar and U.S. equities sold off sharply at the same time—an outcome inconsistent with a broad debasement scenario.

    Instead, BofA suggests that increased currency hedging is the more likely adjustment. European investors may hedge their U.S. exposure more actively, which could place steady, incremental pressure on the dollar without triggering a disorderly selloff.

    Macro indicators also fail to signal rising debasement risks. Inflation expectations remain well anchored, and although fiscal concerns are widely discussed, they have not produced market stress indicative of eroding confidence in the dollar. Part of the expected dollar weakness may simply reflect improving conditions elsewhere, particularly in Europe, where stronger growth prospects, German fiscal stimulus, potential spillovers from Chinese stimulus, and longer-term structural factors such as higher defense spending and trade agreements could support the euro and other non-U.S. assets.

    Sources: Pratyush Thakur

  • Yen edges higher from two-week low against dollar but upside remains limited

    Japanese yen bears trimmed positions ahead of Japan’s snap election on Sunday, allowing the currency to recover modestly. Growing speculation of an imminent Bank of Japan rate hike, combined with a broader risk-off mood, has also supported the safe-haven yen. Meanwhile, the U.S. dollar paused its recent rebound from a four-year low, adding further downside pressure on USD/JPY.

    The Japanese yen attracted modest buying during Asian trading on Friday, appearing to snap a five-day losing streak against the U.S. dollar after touching a two-week low in the previous session. Traders remain alert to the possibility of coordinated Japan–U.S. intervention to curb further yen weakness, while a shift in global risk sentiment and elevated market volatility have boosted demand for the currency’s safe-haven appeal. Expectations for a more hawkish Bank of Japan have also provided underlying support to the yen.

    Data released earlier showed Japan’s household spending fell sharply in December, highlighting the impact of higher prices on consumer activity and reinforcing expectations that the BoJ could move toward a rate hike sooner rather than later. That said, concerns about Japan’s fiscal position and ongoing political uncertainty may limit aggressive bullish positioning in the yen. In addition, the U.S. dollar’s recent recovery from a four-year low could help cap further declines in USD/JPY as markets look ahead to Japan’s snap lower house election on February 8.

    Yen finds support from hawkish BoJ outlook and improving risk sentiment

    Data released earlier on Friday showed that Japan’s Household Spending fell 2.6% YoY in December 2025, reversing a 2.9% increase in the previous month. The sharp contraction highlights the drag from elevated living costs on consumption and reinforces the Bank of Japan’s resolve to tackle inflation, strengthening the case for an earlier interest rate hike.

    This view is supported by the Summary of Opinions from the BoJ’s January meeting, which revealed that policymakers discussed rising price pressures stemming from a weak Japanese Yen and agreed that further rate hikes would be appropriate over time. These factors helped the JPY attract modest buying during the Asian session.

    The Yen also benefited from a risk-off impulse, as Asian equities extended losses for a second straight day following a deepening selloff in global tech stocks. Meanwhile, the US Dollar paused its recent advance to a two-week high, prompting traders to trim USD/JPY long positions ahead of Japan’s snap lower house election on Sunday, February 8.

    Japan’s Prime Minister Sanae Takaichi’s Liberal Democratic Party (LDP) is widely expected to secure a decisive victory, which would strengthen her control over parliament and provide greater scope to pursue aggressive pro-stimulus policies. However, markets remain concerned that expansionary fiscal plans could further strain Japan’s already fragile public finances, limiting the Yen’s upside.

    From the US, data released Thursday showed that Initial Jobless Claims rose to 231K for the week ending January 31, up from 209K and above expectations of 212K, adding to weak private-sector employment data released earlier in the week. Further evidence of labor market softening came from the JOLTS report, which showed job openings falling to 6.542 million in December from a downwardly revised 6.928 million previously.

    The softer labor backdrop has reinforced expectations for additional Federal Reserve easing, with markets currently pricing in two more rate cuts in 2026. This has capped the US Dollar’s rebound from a four-year low and contributed to USD/JPY pulling back modestly from the two-week high above the 157.00 level touched on Thursday.

    Traders now await the preliminary Michigan Consumer Sentiment Index and inflation expectations, along with remarks from key FOMC members, for fresh directional cues later in the North American session. However, market reactions are likely to remain subdued ahead of Japan’s closely watched political event.

    USD/JPY buyers remain in control after breaking above the 200-period SMA resistance on the H4 chart.

    The overnight move above the 156.50 barrier, which aligns with the 200-period SMA on the 4-hour chart, marked an important catalyst for USD/JPY bulls. The gently rising SMA reflects a stable underlying uptrend, and prices remaining above it preserve a bullish tone. However, the MACD has dipped below its Signal line around the zero level, with the histogram turning negative and widening, pointing to a loss of upside momentum. Meanwhile, the RSI has retreated to 63 from overbought territory, highlighting a more tempered momentum backdrop.

    As long as USD/JPY holds above the rising 200-period SMA, upside risks remain favored. A sustained break below this level would shift the focus toward a corrective pullback. From a momentum perspective, continued expansion of the negative MACD histogram would strengthen downside risks, while a swift move back above zero would negate the bearish crossover. The RSI staying above 50 continues to support the bullish case, whereas a slide toward that level would signal weakening buying interest.

    Sources: Haresh Menghani

  • Dollar Index slips below 98.00 as U.S. labor data signals cooling job market

    The U.S. Dollar Index edged lower as recent labor market data pointed to cooling employment conditions, reinforcing expectations of a more dovish Federal Reserve. CME FedWatch data showed markets pricing in a 77.3% probability that the Fed will keep rates unchanged at its March meeting, with the first rate cut now expected in June. Despite the dip, the DXY remained near two-week highs as investors continued to factor in a slower pace of potential rate cuts.

    The U.S. Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, edged lower on Friday after posting gains over the previous two sessions, hovering around 97.90 during Asian trading hours. Market participants are awaiting the preliminary February Michigan Consumer Sentiment Index, due later in the North American session, for fresh direction.

    The dollar softened as recent U.S. labor market data signaled cooling employment conditions, reinforcing expectations of a more dovish Federal Reserve stance. Markets are now pricing in two rate cuts this year, beginning in June and potentially followed by another in September. CME FedWatch data indicate a roughly 77.3% probability that the Fed will keep rates unchanged at its March meeting, with expectations centered on a first cut in June.

    Labor Department figures showed initial jobless claims climbed to 231,000 in the week ended January 31, exceeding forecasts of 212,000 and the prior reading of 209,000. Meanwhile, ADP data revealed private payroll growth slowed sharply to 22,000 in January, well below expectations of 48,000 and the previous month’s revised 37,000.

    Despite the pullback, the DXY remained near two-week highs, supported by expectations for a slower pace of Fed easing. Fed Governor Lisa Cook said she would not support further rate cuts without clearer evidence of easing inflation, highlighting greater concern over stalled disinflation than labor market softness.

    Traders also assessed the implications of Kevin Warsh’s nomination as the next Fed chair, with markets noting his preference for a smaller balance sheet and a more restrained approach to rate cuts, while also easing concerns over the central bank’s independence.

    Sources: Akhtar Faruqui 

  • The dollar edged higher, extending recent gains, while the euro slipped after inflation data.

    The U.S. dollar held steady on Wednesday after a sharp rebound from near four-year lows, while the euro weakened following the release of key regional inflation data.

    By 11:54 ET (16:54 GMT), the Dollar Index was up 0.3% at 97.69 and has gained more than 1% since Kevin Warsh was nominated as the next Federal Reserve chair.

    The dollar remained resilient despite softer labor market data.

    The dollar got a lift late last week after Kevin Warsh was nominated to succeed Federal Reserve Chair Jerome Powell, with markets viewing him as more hawkish and supportive of shrinking the Fed’s balance sheet.

    Attention has now turned to Warsh’s Senate confirmation and the potential implications of his appointment for U.S. interest rates when he is set to take over from Powell in May.

    A brief government shutdown had little impact on the greenback, as lawmakers approved additional funding this week, though it did delay the release of key employment data originally due on Friday.

    Traders also shrugged off a soft ADP payrolls report for January released on Wednesday.

    Eurozone consumer prices fall.

    In Europe, the euro slipped slightly, with EUR/USD down 0.1% at 1.1802, despite the release of weaker-than-expected preliminary eurozone inflation data. Consumer prices eased to an annual rate of 1.7% last month, below the ECB’s 2% target and down from 2% in December.

    The data did little to alter expectations that the European Central Bank will keep interest rates unchanged at 2% for a fifth consecutive meeting. Policymakers have recently expressed concern about the euro’s rapid rise against the dollar and its dampening effect on inflation. The euro touched a 4½-year high of 1.2084 last week.

    According to Macquarie strategist Thierry Wizman, the euro is being pulled by opposing forces. Falling inflation could pave the way for policy easing in 2026, potentially weighing on the currency as euro area rates lag those elsewhere. However, this is being offset by improving growth prospects, supported by stronger survey data and a more favorable political backdrop, including eased budget tensions in France and renewed reform momentum in Germany. Wizman said stronger growth could ultimately provide greater support for the euro than lower rates would undermine it.

    GBP/USD fell 0.3% to 1.3657, as the Bank of England was also expected to leave interest rates unchanged at its policy meeting on Thursday.

    The yen remained under pressure.

    In Asia, USD/JPY rose 0.5% to 156.55, leaving the pair near a two-week high.

    The yen faced renewed pressure this week after comments from Prime Minister Sanae Takaichi cast doubt on whether Tokyo would step in to support the currency. Attention has shifted to a snap lower house election on February 8, with Takaichi’s party expected to secure a strong victory and strengthen her grip on parliament.

    Elsewhere, USD/CNY edged up to 6.9415, hovering near its lowest level since mid-2023. AUD/USD slipped 0.4% to 0.6988 after rallying earlier in the week on a hawkish Reserve Bank of Australia meeting. The RBA raised interest rates by 25 basis points and lifted its growth and inflation forecasts for the year.

    Sources: Anuron Mitra

  • Australian dollar steady after China services PMI release

    • The Australian dollar strengthened after the Composite PMI surged to 55.7 in January, marking the fastest pace of expansion in nearly four years.
    • The Aussie also benefited as markets priced in an 80% probability of an interest rate hike in May, along with around 40 basis points of additional policy tightening.
    • Meanwhile, the U.S. dollar remained subdued for a second straight session.

    The Australian dollar strengthened against the U.S. dollar on Wednesday, extending gains of more than 1% from the previous session. The AUD/USD pair held firm after China’s Services Purchasing Managers’ Index (PMI) rose to 52.3 in January from 52.0 in December, beating market expectations of 51.8. As China is Australia’s largest trading partner, improvements in Chinese economic activity tend to support the Aussie.

    The AUD also drew support from upbeat domestic PMI data. Seasonally adjusted figures from S&P Global showed Australia’s Composite PMI climbed to 55.7 in January from 51.0 in December, marking the strongest expansion in 45 months. The Services PMI jumped to 56.3 from 51.1, its highest reading since February 2022, exceeding the flash estimate of 56.0 and remaining well above the 50.0 threshold. This extended the run of expansion in services activity to two years.

    The Reserve Bank of Australia raised its Official Cash Rate by 25 basis points to 3.85% on Tuesday, pointing to stronger-than-expected economic growth and persistently elevated inflation. As the tightening cycle gathers momentum, markets have increased the odds of another rate hike in May to around 80% and are now pricing in roughly 40 basis points of additional tightening through the rest of the year.

    Speaking at the post-meeting press conference, RBA Governor Michele Bullock said inflationary pressures remain uncomfortably high, warning that a return to the target range will take longer than previously expected and is no longer acceptable. She emphasized that the board will remain data-dependent and avoid providing forward guidance.

    U.S. dollar little changed after recent losses

    The U.S. Dollar Index (DXY), which tracks the greenback against six major currencies, remained subdued for a second straight session, trading near 97.40 at the time of writing.

    Data released on Monday showed an unexpected rebound in U.S. manufacturing activity, underscoring economic resilience. The ISM Manufacturing PMI rose to 52.6 in January from 47.9 in December, comfortably beating expectations of 48.5.

    Markets have also been assessing President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve chair, a move widely interpreted as signaling a more disciplined and cautious approach to monetary easing. The dollar found some support earlier as risk sentiment improved after the U.S. Senate reached an agreement to advance a government funding package, averting a shutdown, according to Politico.

    Producer-side inflation in the U.S. remained firm, reinforcing the Fed’s policy stance. Headline PPI held steady at 3.0% year-over-year in December, unchanged from November and above expectations for a slowdown to 2.7%. Core PPI, which excludes food and energy, accelerated to 3.3% from 3.0%, defying forecasts for a decline to 2.9% and highlighting persistent upstream price pressures.

    Fed officials struck a cautious tone. St. Louis Fed President Alberto Musalem said additional rate cuts are not warranted at this stage, describing the current 3.50%–3.75% policy rate range as broadly neutral. Atlanta Fed President Raphael Bostic echoed this view, urging patience and arguing that policy should remain modestly restrictive.

    In Australia, inflation data showed mixed signals. The RBA’s trimmed mean inflation rose 0.2% month-over-month and 3.3% year-over-year, while the monthly CPI jumped 1.0% in December, exceeding forecasts of 0.7%. Export prices climbed 3.2% quarter-on-quarter in Q4 2025—the first increase in three quarters and the strongest gain in a year—while import prices rose 0.9%, beating expectations for a decline.

    China’s RatingDog Manufacturing PMI edged up to 50.3 in January from 50.1 in December, in line with expectations and marking the fastest pace of factory expansion since October.

    Additional Australian indicators pointed to easing inflation momentum and improving labor demand. The TD-MI Inflation Gauge rose 3.6% year-over-year in January, while monthly inflation increased just 0.2%, the weakest pace since August. Meanwhile, ANZ Job Advertisements surged 4.4% month-over-month in December, posting the strongest increase since February 2022 and signaling renewed momentum in hiring toward year-end.

    Australian dollar rebounds toward three-year highs near 0.7100

    The AUD/USD pair was trading near 0.7030 on Wednesday. Analysis of the daily chart shows the pair remains within an ascending channel, pointing to a sustained bullish bias. The 14-day Relative Strength Index (RSI) stands at 73.30, signaling strong upward momentum, though conditions appear increasingly stretched.

    AUD/USD recently rebounded toward 0.7094, its highest level since February 2023, reached on January 29. A decisive break above this resistance could open the way for a move toward the upper boundary of the ascending channel around 0.7210. On the downside, initial support is seen at the nine-day Exponential Moving Average (EMA) near 0.6964, which coincides with the channel’s lower boundary. A deeper pullback could bring the 50-day EMA at 0.6759 into focus.

    AUD/USD: Daily Chart

    Sources: Akhtar Faruqui

  • Looking ahead to the week ahead: Warsh takes center stage alongside central banks

    The US Federal Reserve experienced an eventful week. On Monday, it contacted New York–based banks to assess their USD/JPY exposure, sparking speculation that Washington could be coordinating with Japan to address the Japanese Yen’s weakness. This development prompted a sharp sell-off in the US Dollar early in the week.

    The Fed’s midweek policy meeting resulted in no change to the federal funds rate, which was kept within the 3.50%–3.75% range, in line with expectations. During his press conference, Chair Jerome Powell avoided questions related to politics, his tenure, and the subpoena. However, he pointed to improving economic momentum and reduced risks to both inflation and the labor market.

    The US Dollar Index (DXY) has since rebounded toward the 96.90 level, recovering most of its weekly losses after President Donald Trump nominated former Fed Governor Kevin Warsh as the next Fed Chair on Friday. The nomination now awaits Senate approval. Looking ahead, the US is set to release several key data points next week, including the ISM Manufacturing PMI for January, MBA mortgage applications, Challenger job cuts, and weekly initial jobless claims.

    EUR/USD is hovering around the 1.1880 area after the US Dollar rebounded and recovered nearly all of its weekly losses. In the coming week, Hamburg Commercial Bank (HCOB) will release Manufacturing, Services, and Composite PMIs for both Germany and the Eurozone. Additional Eurozone data include the ECB Bank Lending Survey and December Producer Price Index (PPI), while Germany will publish December Factory Orders and Industrial Production figures.

    GBP/USD is trading near 1.3600 ahead of the Bank of England’s monetary policy announcement on Thursday. Governor Andrew Bailey’s subsequent press conference is expected to shed further light on the central bank’s outlook for interest rates. UK data releases include the final January S&P Global PMIs and the Halifax House Price Index.

    USD/JPY is holding close to the 154.50 level, paring earlier gains after Tokyo CPI data indicated easing inflation in January. Headline inflation slowed to 1.5% year-over-year from 2% in December, while core measures eased to 2%, undershooting forecasts. The softer inflation profile reduces pressure on the Bank of Japan to tighten policy.

    USD/CAD is trading around 1.3580, with the Canadian Dollar maintaining a slight edge against the greenback despite data showing economic stagnation in November. Monthly GDP was flat following a 0.3% contraction in the prior month and fell short of expectations for modest growth. Upcoming Canadian releases include January S&P Global PMIs and the Ivey PMI.

    Gold is trading near the $4,880 area after surrendering all weekly gains. Prices retreated from a record high of $5,598 as profit-taking emerged and the US Dollar strengthened sharply.

    Looking ahead: Emerging views on the economic outlook

    Scheduled central bank speakers for the week:

    Monday, February 2:
    – Bank of England’s Breeden
    – Federal Reserve’s Bostic

    Tuesday, February 3:
    – Federal Reserve’s Barkin

    Wednesday, February 4:
    – Federal Reserve’s Cook

    Thursday, February 5:
    – Bank of England Governor Andrew Bailey
    – Federal Reserve’s Bostic
    – Bank of Canada Governor Tiff Macklem

    Friday, February 6:
    – European Central Bank’s Cipollone
    – European Central Bank’s Kocher
    – Bank of England’s Pill
    – Federal Reserve’s Jefferson

    Central bank meetings and upcoming data set to influence monetary policy decisions

    Key economic data and policy events for the week:

    Monday, February 2:
    – Germany’s December Retail Sales
    – US ISM Manufacturing PMI

    Tuesday, February 3:
    – Reserve Bank of Australia monetary policy decision
    – US December JOLTS job openings

    Wednesday, February 4:
    – Eurozone January Harmonized Index of Consumer Prices (HICP)
    – US January ADP employment report

    Thursday, February 5:
    – Australia’s December trade balance
    – Eurozone December retail sales
    – Bank of England monetary policy decision
    – European Central Bank monetary policy decision

    Friday, February 6:
    – Canada’s January employment change
    – US January nonfarm payrolls
    – US February Michigan consumer sentiment

    Sources: Fxstreet

  • Forex Today: US Dollar surges, Gold tumbles amid focus on Trump’s Fed Chair choice

    Here is what you need to know on Friday, January 30:

    Markets were driven early Friday by the latest political and geopolitical developments linked to US President Donald Trump, as investors focused on the announcement of his pick for Federal Reserve Chair. Bloomberg reported that the Trump administration is preparing to nominate former Fed Governor Kevin Warsh for the role as early as Friday morning in the US.

    At the same time, the Wall Street Journal noted that President Trump and Senate Democrats have reached an agreement to avoid a government shutdown.

    Together with profit-taking and the Federal Reserve’s recent decision to keep interest rates unchanged, these developments helped revive demand for the US Dollar (USD), pushing it up from four-year lows against its major counterparts.

    Despite the rebound, the US Dollar remains on course for a second consecutive weekly decline, weighed down by concerns over President Trump’s unpredictable foreign policy stance and repeated challenges to the Federal Reserve’s independence.

    On Thursday, Trump threatened to levy a 50% tariff on all aircraft exported from Canada to the United States, accusing Ottawa of unfairly restricting the certification of Gulfstream business jets.

    Reuters also reported that Trump plans to hold talks with Iran, even as the Pentagon readies for potential military action and the US steps up its naval presence in the Middle East.

    In addition, the White House confirmed that Trump signed an executive order authorizing tariffs on countries that supply oil to Cuba.

    Looking ahead, market attention remains firmly on Trump’s nomination of the next Fed Chair, along with the upcoming US Producer Price Index (PPI) release, which could shape the Dollar’s next move.

    Before that, preliminary fourth-quarter 2025 GDP data from Germany and the Eurozone are expected to draw investor interest.

    In G10 currencies, AUD/USD remains under heavy pressure below the 0.7000 mark amid profit-taking ahead of a likely Reserve Bank of Australia (RBA) rate hike next week. USD/JPY hovers near 154.00, with the Japanese Yen staying weak after softer Tokyo CPI data reduced expectations for an early Bank of Japan (BoJ) rate increase.

    EUR/USD pares losses to reclaim the 1.1900 level, though downside risks persist ahead of key German and Eurozone GDP releases. GBP/USD continues to consolidate around 1.3750, weighed down by the ongoing recovery in the US Dollar.

    In commodities, Gold slides nearly 4% to trade around $5,200 in early European hours after briefly testing the $5,100 level during the Asian session. Meanwhile, WTI crude oil extends its retreat from five-month highs near $66.25, trading close to $64 as Trump signals openness to talks with Iran.

    Sources: Fxstreet

  • When will the German and Eurozone Q4 GDP figures be released, and what impact could they have on EUR/USD?

    Overview of German and Eurozone Q4 GDP

    Germany’s Federal Statistics Office will publish preliminary fourth-quarter GDP figures at 09:00 GMT on Friday, followed by Eurostat’s release of flash Eurozone GDP data at 10:00 GMT for the same period.

    Germany’s economy is expected to expand by 0.2% quarter-over-quarter in Q4, rebounding from stagnation in the previous quarter, while annual growth is forecast to remain unchanged at 0.3%. At the Eurozone level, seasonally adjusted GDP is projected to grow by 0.2% QoQ in the fourth quarter, down from 0.3% previously, with year-over-year growth seen moderating to 1.2% from 1.4%.

    How might Germany and the Eurozone’s Q4 GDP data influence the EUR/USD exchange rate?

    The EUR/USD pair may face downside pressure if Germany and Eurozone GDP figures come in line with forecasts. Investors will also closely monitor December unemployment data from both regions, as well as Germany’s Consumer Price Index (CPI for January).

    ECB policymaker Martin Kocher cautioned that additional strength in the Euro could lead the central bank to restart interest-rate cuts. After his remarks, market expectations for a summer rate reduction edged higher, with the implied probability of a July cut increasing to roughly 25% from around 15%. The ECB is set to meet next week and is broadly expected to leave interest rates unchanged.

    Meanwhile, EUR/USD is under strain as the US Dollar gains traction amid speculation that US President Donald Trump may nominate former Federal Reserve Governor Kevin Warsh as the next Fed Chair. Trump indicated late Thursday that he would reveal his decision on Friday morning, with markets leaning toward Warsh, who is perceived as relatively hawkish.

    From a technical perspective, EUR/USD is hovering near 1.1920 at the time of writing. Daily chart analysis continues to point to a bullish bias, with the pair holding within an ascending channel. A move toward the upper channel boundary near 1.2050 is possible, followed by 1.2082, the highest level since June 2021. On the downside, initial support is seen at the nine-day Exponential Moving Average (EMA) around 1.1870, with further support near the lower boundary of the channel at approximately 1.1840.

    Sources: Fxstreet

  • U.S. Dollar Index Hits 2008 Levels: Breakdown or Crowded Trade Trap?

    Markets absorbed last night’s FOMC decision without much surface reaction, but the takeaway was straightforward: the Fed is content to keep financial conditions accommodative. That stance weighed on the U.S. dollar and pushed yields lower, while gold and equities edged higher on solid earnings. In essence, the Fed did nothing to challenge the prevailing market narrative. Attention now shifts back to the charts, which are beginning to tell a compelling story.

    Is It Possible? DXY Slips Back to Its 2008 Trendline

    The DXY has drifted back into a long-term monthly trendline zone that has previously served as a key structural floor. For now, this move represents a test rather than a confirmed breakdown.

    What matters next:

    A decisive weekly close below this support area would confirm a genuine structural breakdown. Conversely, if the DXY stabilizes and rebounds, it would be an early signal that the crowded “short USD” trade may be vulnerable to a squeeze.

    This is precisely the kind of setup where long-term sentiment can be right, yet short-term positioning gets punished.

    EUR/USD Points to a Near-Term Pause as the Dollar Regains Some Strength

    EUR/USD is pushing into a dense resistance cluster, including the 1.20 psychological level, a multi-year trendline, channel alignment, and a bearish divergence on the weekly RSI.

    That combination typically leads to at least a pause or pullback, even if the longer-term bias remains bullish for EUR/USD (and bearish for the dollar). If EUR/USD does roll over, it would offer the cleanest “risk-on USD bounce” setup without having to guess.

    Key takeaway: A stall in EUR/USD here gives the DXY room to breathe.

    USD/CHF Is Also Trading at Extreme Levels

    USD/CHF is one of the clearest expressions of U.S. dollar pessimism. When it reaches extreme levels, two patterns typically emerge: downside momentum begins to fade as the trade becomes crowded, and volatility increases as even minor catalysts trigger repositioning.

    Even if dollar weakness persists, this is a zone where smooth continuation should no longer be assumed.

    USD/JPY: A Key Pressure Zone for a Potential Dollar Reversal

    USD/JPY is where macro theory collides with market reality. If a meaningful USD squeeze is going to materialize, this pair is almost certain to play a role.

    On the weekly chart, USD/JPY is interacting with a major structural pivot, pulling back into a former resistance area that is now attempting to act as support around 151–153. For now, price has printed a wick at this support zone, suggesting USD/JPY may pause here before any further downside acceleration.

    If this support holds, a rotation higher becomes increasingly plausible, with upside targets back toward the prior supply zones at 157.7–158.7, followed by 160.7–161.8.

    That wouldn’t imply the start of a new USD bull market, but rather a crowded-trade unwind, especially with the current consensus loudly focused on a yen carry unwind and broad USD bearishness.

    Bank of Japan Policy Decision

    The next Bank of Japan policy meeting is scheduled for 18–19 March 2026, with market expectations largely aligned:

    • No rate hike is expected in March
    • Attention will center on guidance, messaging, and any indications of follow-through later in 2026
    • A continued bias toward verbal intervention and tactical signaling, rather than immediate or aggressive FX action

    In short, the BOJ meeting is unlikely to be the catalyst itself. More often, it serves as the narrative justification after price has already picked a direction.

    That’s why USD/JPY should be viewed as a leading indicator rather than a reactive trade. Focus on the key levels, and let positioning and price action do the talking.

    Sources: Lee Yang

  • USD: Politics take center stage over monetary policy – Commerzbank

    The U.S. dollar showed a limited reaction to the latest Federal Reserve meeting, with EUR/USD pushing toward the 1.20000 level. While the Fed’s messaging pointed to a low likelihood of a key rate cut in March—given that economic growth is now characterized as “solid”—market attention during the press conference shifted toward political issues.

    This focus, according to Commerzbank analysts Volkmar Baur and Michael Pfister, suggests a growing change in how investors perceive the Federal Reserve’s independence.

    Fed meeting weighs on US dollar

    Overall, the market appeared to place greater emphasis on the Fed’s slightly hawkish tone and policy tweaks. Expectations for additional rate cuts were trimmed marginally, but the adjustment was too small to have a meaningful impact on the currency.

    “The perception that political considerations are gradually influencing the Fed—or at least that markets believe this to be the case—was also reflected in Christopher Waller’s vote in favor of another cut to the key policy rate.

    Ultimately, even if the Fed remains capable of conducting an independent monetary policy, this perception alone could become problematic. If markets lose confidence in that independence, the U.S. dollar is likely to come under pressure.”

    Sources: Fxstreet

  • Gold shrugs off all pullback signals — a sign the next leg higher may be building

    Gold has climbed beyond $5,100, underpinned by a softer US dollar and strong, persistent structural demand. Solid technical momentum and ongoing global policy uncertainty continue to favor hard assets such as gold and silver. While the focus on potential FX intervention raises the risk of near-term profit-taking, the broader rally still shows little sign of losing steam.

    Gold surged to a fresh record of $5,100 an ounce, while silver extended its rally with another 5% jump to around $110. The latest advance has been fueled by persistent US dollar weakness, signs of yen intervention, and broader unease over fiat currencies—long a structural pillar of gold’s appeal. Ongoing global policy uncertainty is also channeling capital into hard assets.

    With such an extensive list of supportive factors, even the most bullish investors may question how long the rally can continue without at least a pause, especially given how stretched valuations have become. The temptation for profit-taking at these levels is clear. Yet prices continue to refuse to roll over, and that resilience is becoming the key narrative. Despite a fading geopolitical risk premium and last week’s tariff U-turn by Trump—which, in theory, should have dampened safe-haven demand—gold barely reacted and instead pushed even higher, underscoring the strength of the current trend.

    US dollar remains under pressure amid easing rate expectations and declining investor confidence.

    At first glance, the explanation seems simple: the US dollar has weakened, giving gold a natural boost. A softer greenback makes gold more affordable for non-US buyers, and that effect is clearly visible. However, this move goes beyond a straightforward FX translation. Gold prices have also been rising in euro and sterling terms, pointing to broader, more structural demand rather than just currency-driven gains.

    That said, dollar weakness is still playing an important role. The greenback has slid amid recent geopolitical fractures, and suspected Japanese intervention in USD/JPY has added further pressure. Markets are increasingly convinced that Japanese authorities stepped in when USD/JPY pushed beyond 159. What really caught investors’ attention were reports that the Federal Reserve was “rate-checking” banks in New York around the London close. The idea that this may have been more than unilateral action by Tokyo—potentially involving coordination with Washington—is significant, as joint Japan–US intervention would send a far stronger signal than Japan acting alone.

    Bullish momentum remains firmly intact, with strong follow-through buying and little sign of exhaustion despite overextended conditions.

    Momentum is clearly carrying much of the move. The uptrend remains firmly intact, with trend-following behavior dominating as traders continue to buy dips rather than sell into strength. As long as that pattern persists, it is difficult to make a convincing case against further near-term gains.

    From a psychological standpoint, the $5,000 threshold has now been decisively cleared. It may have seemed ambitious only a few sessions ago—much like $4,000 did not long before—but strong technical momentum, a weakening US dollar narrative, and rising anxiety in global bond markets have made these once-distant milestones appear increasingly attainable.

    That said, macro fundamentals still deserve attention. Real yields, growth expectations, and inflation dynamics have not vanished, and eventually they will reassert influence. When they do, gold may find it harder to sustain these elevated levels without a renewed or deeper systemic risk backdrop.

    Key Levels to Monitor

    For now, the bias remains to the upside. The next resistance target is near $5,182, corresponding to the 261.8% Fibonacci extension of the major October downswing, with the $5,200 psychological level just above. On the downside, multiple support zones are in focus, starting with $5,000. Other round-number levels such as $4,900 and $4,800 may also provide support, while more significant longer-term support is seen around $4,500–$4,550.

    As long as the dollar stays weak, central banks continue to be net buyers of gold, and governments openly signal a willingness to intervene in FX markets, it is difficult to identify a catalyst that would meaningfully reverse gold’s advance at this stage, aside from bouts of profit-taking.

    Sources: Fawad Razaqzada

  • Looking Back at the First 25 Years of the 21st Century

    Reflecting on the start of this century, the first striking observation is our national shortsightedness. After surviving Y2K and the dot-com crash in 2000, our leaders assumed the path ahead would be smooth sailing from year one onward.

    However, reality proved otherwise, beginning with a series of black swan events, notably the attacks on the World Trade Center and Pentagon on September 11. While such events are inherently unpredictable, it’s remarkable that the Congressional Budget Office (CBO) economists confidently forecasted in 2001 a future of continuous budget surpluses, anticipating the complete elimination of national debt by 2011.

    For reasons unknown, the CBO issues 10-year federal spending and revenue projections, despite having no solid factual or practical foundation to accurately forecast beyond a year or two—akin to trying to predict the weather a year in advance.

    The January 2001 CBO report highlights this myopia. Their projections simply extended current trends indefinitely without grounding in reality. Under this unrealistic mandate, the CBO projected a cumulative surplus of $5.6 trillion for 2002–2011.

    In reality, deficits over that decade totaled $6.1 trillion—a swing of $11.7 trillion. It would have been much simpler to just flip a plus sign to a minus. The projections failed to account for the soaring costs of Bush’s “War on Terror” post-9/11, which led to prolonged wars in Afghanistan and Iraq, the bursting of the real estate bubble, and massive TARP bailouts to rescue large banks.

    In short, this is a summary of CBO’s flawed foresight:

    The first takeaway from this bleak forecast is that the CBO economists assumed deficits would increase in a smooth, predictable fashion—almost as if they were drawing a straight line with minor fluctuations, rather than reflecting the unpredictable realities of economic growth.

    A second point is that the 2003 Bush tax cuts were not the main driver of the deficits. In fact, annual deficits dropped significantly—from $413 billion in fiscal year 2004 (which began October 1, 2003) to just $161 billion in fiscal year 2007. This means the deficit shrank by more than half during the four years following the tax cuts and before the 2007 real estate crash.

    While much of this now feels like distant history, the ongoing wars and the Federal Reserve’s drastic response to the 2008 financial crisis—keeping interest rates near zero for eight years, essentially through the entire Obama administration—contributed to massive deficits that have persisted through to today, especially in the five years following the COVID-19 pandemic.

    Since 2001, U.S. federal deficits have averaged about $1 billion annually, but that figure has surged to over $2 trillion per year since 2020, according to the U.S. Treasury.

    Today, the total federal deficit stands at $38 trillion, which amounts to roughly $110,000 owed per American—far from the anticipated surpluses once projected.

    Following a Challenging 2000–2009, Markets Surged in the First Quarter

    What about the markets? After nearly a “lost decade” lasting nine years from March 2000 to March 2009, all major market indexes have experienced remarkable growth—particularly gold relative to the U.S. dollar.

    By March 9, 2009, three of the four major indexes—the S&P 500, NASDAQ, and Russell 2000—had fallen by 50% since the decade began (while the Dow was down 40%), but they bounced back strongly from 2009 through 2025:

    Over the same 25-year period, the Consumer Price Index (CPI) increased by 83%, which means the real market gains were somewhat diminished.

    The U.S. dollar performed even worse, losing about 10% in value overall (and 8% against the euro), while gold and silver surged more than 15 times in value:

    The first-quarter returns were decent, but the strong performance of gold and silver signals that the dollar—and the CBO’s deficit forecasts—cannot be relied on in the long run. In fact, President Trump has set a goal for 2026 to deliberately weaken the dollar against the Chinese yuan to “help” exporters boost overseas sales. Much of the talk about the dominance of the “King Dollar” is just rhetoric. In reality, many politicians aim to devalue their currencies to encourage trade, turning paper money into a “race to the bottom,” while gold quietly holds its value, watching from the sidelines.

    This brings us to the 2025 summary—a major victory for precious metals as the dollar dropped by 10%.

    2025 Brought Massive Gains for Precious Metals

    The year 2025 exemplified the key trends seen over the past 25 years—while the stock market continued to climb, gold and silver surged even faster. Although inflation is easing, gold today serves less as an inflation hedge and more as a safeguard against crises, a hedge against the dollar, and increasingly, a hedge against cryptocurrency volatility.

    In 2025, the U.S. Dollar Index (DXY) dropped by 10%, allowing major global currencies to gain between 5% and 15%. Meanwhile, the poorest-performing investments of 2025 brought good news for consumers through lower food and energy prices:

    So, if 2026 mirrors the gains of 2025, it will surely be a rewarding year for most investors.

    Sources: Investing

  • Gold: $4,500 Holds as a Base, Opening the Way to $5,000

    Expect a wave of higher gold-price forecasts to dominate headlines in the near future, while the metal continues to rebuild positions along the way. Not because strategists have suddenly become bullish, but because the market itself is forcing a reassessment. Price action has led. Positioning is simply following the trend. Conviction, as always, comes last.

    Gold did not merely break through $4,500. It paused, consolidated, and is now poised to resume its advance once the current round of technically driven profit-taking fades. This has never been a momentum-driven rally. Instead, it has unfolded through a steady sequence of advances, orderly consolidations, and renewed accumulation.

    Each pullback has drawn in fresh buyers rather than triggering forced liquidation—an unmistakable feature of a durable trend. Viewed through that lens, $4,800 appears less like an ambitious bank upgrade and more like the next logical level of support. $5,000 is no longer a distant target; it is increasingly taking on a structural character.

    The primary force behind this move is monetary gravity. As the Federal Reserve progresses further into its easing cycle, the traditional opportunity-cost argument against holding gold continues to weaken. Gold does not require aggressive rate cuts—it only needs persistent uncertainty around real returns. When policy becomes conditional and forward guidance loses clarity, gold becomes a place where capital waits rather than withdraws.

    The White House–backed shift toward more dovish Fed leadership is therefore important, not for political reasons but for its mechanical implications. Questioning central bank independence may be the most underpriced risk in the gold market today, and markets will adjust accordingly. They trade anticipated reaction functions, not individual personalities.

    A clearer shift toward policy accommodation is reshaping expectations about both the depth and duration of easing. That adjustment filters through real yields, term premia, and currency assumptions—and gold tends to react well before these changes are fully reflected in interest-rate markets.

    The second force is structural demand, which is where the rebuilding becomes self-reinforcing. For the first time since the mid-1990s, gold has surpassed U.S. Treasuries as a share of global central-bank reserves. This is not cyclical accumulation; it is balance-sheet reallocation. Reserve managers are reducing concentration risk in a system that feels increasingly politicized and less predictable. Demand of this kind does not fade on pullbacks—it intensifies.

    ETF flows and private capital then follow, adding exposure gradually rather than chasing price surges.

    Geopolitics provides the backdrop rather than the trigger. Venezuela is not the catalyst—it is the reminder. Energy security, trade frictions, and political alignment are no longer episodic shocks; they are enduring conditions. Gold performs well in such an environment because it does not require crisis to justify ownership. It thrives on the steady build-up of uncertainty, encouraging investors to maintain positions and rebuild as volatility subsides.

    The U.S. dollar completes the feedback loop. Its near double-digit decline over the past year reflects more than a typical cycle; it points to a subtle reassessment of dollar primacy. Capital is no longer assuming permanence. Gold naturally absorbs that hesitation, functioning less as an inflation hedge and more as balance-sheet insurance. Dollar strength tends to stall gold; dollar weakness reignites it. The cadence itself invites repeated re-entry.

    What lends credibility to this cycle is that gold is not moving in isolation. Silver has already repriced on the back of genuine supply constraints layered onto sustained industrial demand. Copper, now at record levels, is not a product of speculative excess—it reflects the physical market asserting itself. Aluminum and nickel echo the same signal more quietly. Together, they point to a broader shift across metals, with gold at the core.

    In simple terms, gold is likely to keep rebuilding positions throughout the year because the market structure supports it. Rallies are absorbed rather than rejected. Pullbacks are met with demand, not fear. Analysts will continue to raise their targets because price action is already pulling them in that direction.

    $5,000 is not an audacious forecast. It represents the market sketching out a new equilibrium—and repeatedly inviting capital to re-enter, one rebuilt position at a time.

    Sources: Investing

  • The Australian Dollar reaches new 14-month highs, shrugging off easing inflation pressures

    • The Australian Dollar gains ground amid a hawkish outlook on the Reserve Bank of Australia (RBA).
    • Australia’s CPI slowed to 3.4% year-over-year in November, below expectations but still above the RBA’s target range.
    • Traders now turn their attention to Wednesday’s US ISM Services PMI and JOLTs job openings reports for further market cues.

    The Australian Dollar (AUD) extended its winning streak for the fourth consecutive session on Wednesday, gaining against the US Dollar (USD) despite easing inflation figures for November. Traders are now focused on the upcoming full fourth-quarter inflation report due later this month. Analysts caution that a core inflation increase of 0.9% or more could prompt the Reserve Bank of Australia (RBA) to consider further tightening at its February meeting.

    Meanwhile, the Australian Financial Review (AFR) highlighted that the RBA may not be finished with its rate hikes this cycle. A recent poll suggests inflation is likely to remain persistently high over the coming year, supporting expectations for at least two more rate increases.

    The Australian Bureau of Statistics (ABS) reported on Wednesday that Australia’s Consumer Price Index (CPI) rose 3.4% year-over-year (YoY) in November, easing from 3.8% in October. This figure missed market expectations of 3.7% but stayed above the Reserve Bank of Australia’s (RBA) target range of 2–3%. It marked the lowest inflation rate since August, with housing costs rising at their slowest pace in three months.

    Month-on-month (MoM), Australia’s CPI remained flat at 0% in November, matching October’s reading. Meanwhile, the RBA’s Trimmed Mean CPI increased 0.3% MoM and 3.2% YoY. In a separate report, seasonally adjusted building permits surged 15.2% MoM to a near four-year high of 18,406 units in November 2025, bouncing back from a downwardly revised 6.1% decline the previous month. Annual approvals jumped 20.2%, reversing a revised 1.1% drop in October.

    US Dollar declines ahead of ISM Services PMI

    The US Dollar Index (DXY), which tracks the US Dollar’s value against six key currencies, is slightly declining after posting small gains in the previous session, currently hovering near 98.50. Market participants are awaiting US economic releases that may influence Federal Reserve (Fed) policy outlooks. Later today, attention will be on the ISM Services Purchasing Managers’ Index (PMI) and JOLTs job openings data. The upcoming US Nonfarm Payrolls (NFP) report, due Friday, is forecasted to show an increase of 55,000 jobs in December, a decrease from 64,000 in November.

    Fed Governor Stephen Miran stated on Tuesday that the central bank should pursue aggressive interest rate cuts this year to bolster economic growth. Conversely, Minneapolis Fed President Neel Kashkari cautioned that unemployment could unexpectedly rise. Richmond Fed President Tom Barkin, who is not voting on this year’s rate decisions, emphasized that rate changes will need to be carefully calibrated to incoming data, pointing to risks affecting both employment and inflation targets, per Reuters.

    According to CME Group’s FedWatch tool, futures markets assign roughly an 82.8% chance that the Fed will keep rates steady at the January 27–28 meeting.

    On the geopolitical front, the US launched a significant military strike on Venezuela last Saturday. President Donald Trump announced that Venezuelan President Nicolas Maduro and his wife were captured and removed from the country. However, Maduro pleaded not guilty on Monday to US narcotics-terrorism charges, signaling a high-stakes legal confrontation with wide geopolitical consequences, Bloomberg reports.

    Traders anticipate two more Fed rate cuts in 2026. Markets also expect Trump to nominate a new Fed chair to succeed Jerome Powell when his term expires in May, potentially steering monetary policy toward lower rates.

    In China, the Services PMI from RatingDog fell slightly to 52.0 in December from 52.1 in November, while Manufacturing PMI rose to 50.1 from 49.9 the previous month. Given China’s close trade ties with Australia, shifts in the Chinese economy may affect the Australian Dollar.

    The Reserve Bank of Australia’s December meeting minutes revealed readiness to tighten monetary policy further if inflation does not ease as expected. Greater attention is now on the Q4 Consumer Price Index report scheduled for January 28, with analysts warning that a stronger-than-anticipated core inflation figure could prompt a rate hike at the RBA’s February 3 meeting.

    The Australian Dollar has reached new 14-month highs, climbing above the 0.6750 level

    On Wednesday, AUD/USD is trading near 0.6750. Technical analysis of the daily chart shows the pair moving upward within an ascending channel, indicating a continued bullish trend. However, the 14-day Relative Strength Index (RSI) at 70 signals that the pair may be overbought.

    Since October 2024, AUD/USD has hit new highs and is now aiming for the upper boundary of the ascending channel around 0.6830.

    Initial support is found at the nine-day Exponential Moving Average (EMA) near 0.6708, followed by the lower boundary of the ascending channel at about 0.6700. A drop below this combined support zone could push the pair down toward the 50-day EMA level at approximately 0.6625.

    AUD/USD: Daily Chart

    Sources: Fxstreet