EUR/USD Price Analysis – Jan 03, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair started the 2025 trading year with a sharp decline, dropping by 0.8% and reaching the 1.0250 level, marking its lowest point since November 2022, a nearly 26-month low.
The drop was driven by disappointing European Manufacturing Purchasing Managers Index (PMI) data, which came in below expectations.
This added to the pressure on the euro, as traders were already feeling uneasy after dovish comments from European Central Bank (ECB) policymaker Yannis Stournaras later in the day.
On the flip side, the US dollar continued its upward momentum, climbing to a fresh multi-year high of 109.56 following the release of the latest US Jobless Claims data.
The combination of weaker economic data from Europe and a stronger dollar kept the EUR/USD pair firmly on the back foot, with traders closely monitoring upcoming developments for any signs of a reversal.
EUR/USD Under Pressure Amid Weaker European Data, Dovish ECB Outlook, and Rising Petrol Prices
On the EUR front, the European Manufacturing Purchasing Managers Index (PMI) data missed expectations on Thursday, further adding to the pressure on the euro.
This was followed by a dovish comment from European Central Bank (ECB) policymaker Yannis Stournaras, who stated that the ECB plans to gradually lower interest rates through 2025. He suggested that rates could be around 2% later this year, which signals a more cautious approach from the ECB.
With the Federal Reserve expected to reduce interest rates more slowly than initially anticipated in 2025, the interest rate gap between the Euro and the US dollar is likely to grow, putting additional downward pressure on EUR/USD throughout the year.
This has led some analysts to predict that the euro could reach parity with the dollar in the near future.
In addition, the Pan-European PMI data showed a slight decline in December, coming in at 45.1, just below the expected 45.2.
While the data wasn’t a huge market mover, it highlighted the growing chance that the ECB may speed up its rate cuts to help the struggling European economy.
At the same time, rising petrol prices, reaching two-year highs, are adding to the challenges in Europe. Together, these factors are making it difficult for the euro to gain strength, keeping the pressure on EUR/USD in the long term.
Therefore, the combination of weaker European economic data, dovish ECB signals, and rising petrol prices is likely to keep the EUR/USD pair under pressure.
As interest rate differentials widen, the euro could continue to struggle, possibly pushing EUR/USD towards parity with the dollar.
EUR/USD – Technical Analysis
EUR/USD is trading at 1.0281, down 0.21% as bearish sentiment prevails, with the pair slipping below its pivot point at 1.02977.Immediate resistance is positioned at 1.03399, followed by higher levels at 1.03708 and 1.04122.
On the downside, support is found at 1.01664 and extends to 1.01308, underscoring critical zones for potential rebounds.
The RSI is at 30, signaling oversold conditions, which could attract short-term buyers, though caution is advised as bearish momentum remains dominant.
The pair is trading well below its 50-day EMA at 1.03862, reinforcing the bearish trend and suggesting a challenge to sustain any recovery above key resistance levels.
For a bullish reversal, EUR/USD needs to reclaim the pivot point at 1.02977, which could target the first resistance at 1.03399.
However, failure to hold support at 1.01664 may trigger further declines, exposing the pair to lower levels at 1.01308 or below.
Market participants should monitor price action near the pivot and RSI for signs of a rebound or continued downward pressure.
The current technical setup favors a cautious approach as EUR/USD hovers near critical thresholds.
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S&P500 (SPX) Price Analysis – Jan 03, 2025
Daily Price Outlook
The S&P 500 index is currently facing significant losses, dropping to the 5,868 level and hitting an intra-day low of 5,829.
This downturn marks a sharp shift from its previous bullish performance and has raised concerns among investors.
The bearish trend can be attributed to a combination of factors, including geopolitical tensions, economic data, and uncertainty surrounding future Federal Reserve policies.
Geopolitical Instability Driving Bearish Performance in the S&P 500
However, the major reason behind the bearish performance of the S&P 500 is the ongoing geopolitical instability, particularly the escalating tensions in the Middle East and the ongoing Russia-Ukraine conflict.
These events are creating uncertainty, leading investors to shift their focus toward safe-haven assets like gold and the US dollar. As global risks rise, market sentiment tends to sour, causing stocks in broad indices like the S&P 500 to face significant declines.
These geopolitical risks are not only creating volatility in specific sectors but also clouding the global economic outlook.
The uncertainty surrounding these events makes it difficult for investors to gauge the future direction of the market, resulting in heightened caution and risk aversion.
As a result, investors are pulling back from riskier assets, contributing to the bearish movement of the S&P 500.
US Economic Uncertainty and Strong Dollar Contributing to S&P 500's Bearish Outlook
In addition to geopolitical tensions, there are growing concerns about the state of the US economy. The Federal Reserve's recent projections have raised alarm bells, as they indicate fewer rate cuts in 2025 due to ongoing inflationary pressures.
This uncertainty surrounding future monetary policy has led to a cautious approach among investors. When inflation remains persistent, the central bank may opt for a more aggressive stance on interest rates, which could further weigh on stocks.
Furthermore, positive job data, such as the recent lower-than-expected Jobless Claims report, has led to a stronger US dollar, which, while good for the greenback, is exerting downward pressure on assets like the S&P 500.
As the dollar strengthens, it puts a strain on the global demand for US-based assets, which is another contributing factor to the index’s bearish performance.
S&P 500 – Technical Analysis
The S&P 500 (SPX) is trading at 5868.56, down 0.22%, as it struggles to recover above its pivot point of 5933.60.
The index remains under bearish pressure, with immediate resistance levels at 6011.99 and 6099.55.
On the downside, critical support levels are at 5770.88, 5696.90, and 5617.62, which may help stabilize the index if selling pressure persists.
Technical indicators suggest cautious sentiment. The RSI at 38 indicates oversold conditions, potentially attracting short-term buyers, though a sustained reversal remains uncertain. The 50-day EMA at 5970.89 acts as a key resistance level, reflecting the ongoing downward bias.
A move above the immediate support at 5770.88 could shift the outlook toward consolidation.
However, for a decisive shift to bullish momentum, the SPX must break and sustain above the pivot point at 5933.60. Failure to hold support at 5770.88 may lead to extended losses toward 5696.90 or lower.
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- GOLD Price Analysis – Jan 03, 2025
GOLD Price Analysis – Jan 03, 2025
Daily Price Outlook
Gold prices (XAU/USD) sustained their bullish trend and are still flashing green around the 2,665 level, marking their fourth consecutive session of gains.
This steady upward momentum has been a highlight of 2024, with gold soaring over 27%, its best annual performance since 2010. The ongoing rally is largely driven by strong demand for safe-haven assets, especially with the ongoing geopolitical tensions in the Middle East and the long-standing Russia-Ukraine conflict.
On the flip side, the US Dollar Index (DXY) has climbed to a fresh multi-year high of 109.56, boosted by the latest Jobless Claims data from the United States.
This rise in the USD has somewhat capped gold's further gains, as the dollar's strength puts pressure on other assets, including precious metals. Despite this, gold continues to hold its ground, driven by its appeal as a safe haven in uncertain times.
US Dollar Strengthens Amid Positive Job Data and Geopolitical Tensions, Posing Pressure on Gold Prices
On the US front, the broad-based US dollar managed to recover some ground and turned bullish as the US Dollar Index (DXY) climbed to a fresh multi-year high of 109.56.
This move followed better-than-expected Initial Jobless Claims data for the week ending December 27.
The number of individuals filing for unemployment benefits for the first time was 211K, lower than the expected 222K and the previous figure of 220K. However, the index eased slightly to around 109.20 at the time of writing.
Traders remain cautious about potential economic policies under President-elect Trump, particularly concerns about higher tariffs and the rising cost of living.
The Federal Reserve's recent projections also added to the unease, indicating fewer rate cuts in 2025 due to ongoing inflation.
At the same time, geopolitical tensions, especially in the Middle East and the ongoing Russia-Ukraine war, continue to support the USD, a traditional safe-haven currency.
Analysts pointed out that the greenback is benefiting from growing economic concerns in other parts of the world amid these geopolitical risks.
The strengthening US dollar, driven by positive job data and geopolitical tensions, may put pressure on gold prices.
As the dollar rises, gold becomes more expensive for holders of other currencies, potentially limiting further gains in the precious metal.
China's Economic Recovery and Potential Rate Cut May Boost Gold Prices
On the other hand, gold prices found support from news that the People's Bank of China (PBoC) may cut interest rates this year.
This move is expected to stimulate economic growth in China, a key factor for global demand, including gold.
As a major consumer of gold, any recovery in China’s economy tends to boost gold prices, especially if there’s increased demand for the precious metal.
Traders are keeping a close eye on this development, as lower interest rates could lead to more liquidity in the market, potentially pushing gold prices higher.
Moreover, China’s National Development and Reform Commission (NDRC) expressed confidence in the country’s economic recovery for 2025, with plans to increase funding through ultra-long treasury bonds to support key growth programs.
This comes alongside positive manufacturing data from China, showing that supply and demand are expanding, and new orders continue to rise.
This improved economic outlook could support gold as a store of value, with investors seeking safety in the precious metal amid global uncertainties.
President Xi Jinping also reaffirmed his focus on economic growth, promising more proactive policies in 2025, which may further strengthen gold’s appeal.
Therefore, the potential interest rate cut by the People’s Bank of China and the country’s positive economic outlook could boost gold prices.
As China’s economy recovers and demand for gold increases, investors may turn to gold as a safe-haven asset.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,654.42, down 0.15%, reflecting mild bearish pressure as it consolidates below the pivot point at $2,663.01.
The 4-hour chart suggests a cautious outlook, with immediate resistance positioned at $2,676.29, followed by $2,692.86 and $2,707.37.
On the downside, key support levels are found at $2,639.26, $2,621.73, and $2,605.08, acting as critical safety nets for potential pullbacks.
The 50-day Exponential Moving Average (EMA) at $2,627.19 reinforces the bearish sentiment as Gold trades above this level but struggles to maintain upward momentum.
The Relative Strength Index (RSI) at 64 signals moderate bullish bias but warns of nearing overbought territory, limiting aggressive buying activity.
A sustained move below the pivot point at $2,663.01 could invite selling pressure, targeting the immediate support at $2,639.26.
Conversely, a break above $2,676.29 may shift sentiment towards bullishness, potentially aiming for $2,692.86.
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GOLD Price Analysis – Jan 02, 2025
Daily Price Outlook
Gold prices (XAU/USD) continue to climb, staying strong around $2,641 after touching an intra-day high of $2,621.
This bullish momentum is fueled by a mix of factors, including the US adopting looser monetary policies, ongoing geopolitical conflicts, and record-breaking gold purchases by central banks.
Meanwhile, the ongoing Middle East tensions and the Russia-Ukraine war are keeping investors drawn to gold, a reliable safe-haven asset during uncertain times.
Looking ahead, the trend seems likely to continue, especially with a World Gold Council survey hinting that central banks could ramp up their gold buying in 2025, further driving demand.
Impact of a Strong US Dollar and Federal Reserve Policy on Gold Prices
On the US front, the US Dollar Index (DXY), which measures the dollar’s value against six major currencies, has surged to multi-year highs, trading around 108.50. This strength is fueled by the Federal Reserve's hawkish stance on monetary policy.
The Fed has hinted at a cautious approach to rate cuts in 2025 due to persistent inflationary pressures and uncertainties tied to the anticipated economic policies of the incoming Trump administration.
This strong dollar presents challenges for gold prices as it typically dampens demand for the metal by making it more expensive for international buyers.
However, inflation concerns and geopolitical tensions, such as conflicts in the Middle East and Russia-Ukraine, continue to support gold as a safe-haven asset.
Moreover, a World Gold Council survey suggests that central banks may increase their gold purchases in 2025, which could offset the pressure from a stronger dollar and provide further support for gold prices in the long term.
Therefore, the strong US dollar, driven by the Fed's hawkish policy, may put pressure on gold prices by making it costlier for foreign buyers.
However, ongoing inflation concerns, geopolitical tensions, and increased central bank gold purchases could still support gold's demand.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,634.10, marking a 0.38% gain in the last session as bullish momentum persists. On the 4-hour chart, the pivot point at $2,639.79 serves as a critical level. Immediate resistance is positioned at $2,651.73, followed by $2,665.31.
On the downside, support levels are observed at $2,610.53, $2,593.70, and $2,577.23. A break above $2,639.79 could signal continued upside, while failure to sustain this level may invite selling pressure.
Technical indicators reflect a positive bias. The RSI at 67 approaches overbought territory, hinting at strong bullish sentiment but cautioning against possible consolidation.
Gold trades above its 50 EMA at $2,621.94, reinforcing short-term upward momentum. However, the 200 EMA at $2,639.79 aligns closely with the pivot point, underscoring its significance as a decisive threshold.
The immediate outlook suggests that a move above $2,651.73 could attract further buying, targeting $2,665.31. Conversely, a failure to hold above $2,639.79 may lead to a test of the $2,610.53 support level, potentially extending to $2,593.70. Traders are advised to monitor volume and RSI levels for clearer directional cues.
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AUD/USD Price Analysis – Jan 02, 2025
USD/JPY Price Analysis – Jan 02, 2025
Daily Price Outlook
The USD/JPY pair has been showing signs of weakness in recent session, trading below 157.20 level.
One of the main reasons behind this downward trend is the shifting market expectations regarding the Federal Reserve's (Fed) interest rate decisions.
Earlier, the market believed that the Fed might continue to cut interest rates, which weakened the US dollar (USD) and provided some strength to the Japanese yen (JPY).
However, the current situation is different. There is a growing expectation that the Fed might take a more cautious approach with rate cuts in the future, leading to a mixed outlook for the USD/JPY pair.
In addition to this, market participants are also closely watching global economic developments, particularly in the US.
The slowing down of global growth and geopolitical tensions may weigh on market sentiment, affecting the performance of both the USD and JPY.
Despite the Fed's more hawkish stance, the pair's movement remains subdued, indicating a delicate balance between the two currencies.
US Dollar Strengthens Against Japanese Yen Amid Fed's Cautious Rate Cut Approach
On the US front, the broad-based US dollar has been gaining strength recently, which has provided support to the USD/JPY pair.
The recent bet on fewer interest rate cuts by the Federal Reserve this year has driven the USD higher against the Japanese yen.
The Federal Reserve's cautious approach to rate cuts has kept the US dollar elevated, despite some concerns about inflation and economic growth.
The anticipation of the US keeping interest rates higher for longer is a key factor in strengthening the USD.
Furthermore, the possibility of inflationary pressures stemming from proposals such as tariffs could also keep the Fed from making aggressive cuts in rates.
This higher interest rate difference between the US and Japan continues to provide support for the USD/JPY pair, driving the pair toward levels around 157.30.
Japanese Yen Faces Pressure Amid Gradual Economic Recovery and BOJ's Accommodative Policies
On the other side, the Japanese yen is facing pressure due to Japan’s ongoing economic situation. Recently, Bank of Japan (BOJ) Governor Kazuo Ueda mentioned that Japan is moving closer to achieving its 2% inflation target.
This has led to optimism in the market about Japan’s economic recovery. However, the progress toward this inflation target is still gradual, and the BOJ’s policies remain accommodative.
As a result, the JPY is finding it difficult to gain significant strength against the USD. The Japanese authorities are closely monitoring the exchange rate movements, with verbal interventions from officials like Finance Minister Katsunobu Kato, who has suggested that Japan may take measures to combat excessive currency movements. Such interventions aim to limit the yen’s losses, but their effectiveness remains to be seen.
USD/JPY – Technical Analysis
USD/JPY is trading at 156.743, down 0.36% in the last session, reflecting continued selling pressure. On the 4-hour chart, the pivot point is positioned at 157.401, serving as a critical level for directional movement.
Immediate resistance is noted at 158.065, followed by stronger hurdles at 158.742 and 159.672. On the downside, key support levels are seen at 155.965, 155.004, and 154.152, offering protection against deeper declines.
The Relative Strength Index (RSI) at 40 signals bearish momentum but suggests the pair is approaching oversold territory, which may limit further downside in the short term. The 50 EMA at 157.404 indicates that USD/JPY is trading below its short-term trend, reinforcing a bearish outlook.
A break below the immediate support at 155.965 could accelerate selling pressure toward 155.004. Conversely, a move above the pivot point at 157.401 may attract buyers, targeting resistance at 158.065.
Overall, the pair’s trajectory remains influenced by technical levels, with a cautious approach advised near the pivot. Traders should watch for decisive moves either above 157.401 for bullish momentum or below 155.965 for further declines.
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AUD/USD Price Analysis – Jan 02, 2025
Daily Price Outlook
Despite the downbeat Chinese Manufacturing PMI putting pressure on the Aussie Dollar, the AUD/USD currency pair managed to maintain its upward trend, staying well-supported around the 0.6215 level and even reaching an intra-day high of 0.6223.
However, the reason behind this rise can be traced back to the Reserve Bank of Australia's (RBA) comments.
The RBA board suggested that if future economic data aligns with or falls below expectations, it would strengthen confidence in inflation and create the right conditions to begin easing policy restrictions.
On the other hand, stronger-than-expected data might mean that restrictive policies need to stay in place longer.
RBA Governor Michele Bullock also pointed out that the continued strength of the labor market has made the RBA slower than other countries in beginning its monetary easing cycle.
Weaker Chinese Manufacturing PMI Puts Pressure on AUD/USD Amid Global Economic Uncertainty
On the data front, China's Caixin Manufacturing PMI unexpectedly dropped to 50.5 in December, down from 51.5 in November.
The market had expected a reading of 51.7 for the month. Despite the decline, the data still indicates expansion, with manufacturers' output and demand continuing to grow.
The output gauge stayed in expansion for the 14th straight month, and new orders increased for the third consecutive month.
However, growth in both output and new orders slowed compared to November, as production and sales of investment goods fell, and exports were weaker due to ongoing uncertainties in the global economy and trade.
In addition to the Caixin PMI data, China's official Manufacturing PMI, released by the National Bureau of Statistics (NBS), also showed a slowdown, easing to 50.1 in December from 50.3 in November.
This missed market expectations of 50.3. On a positive note, the Non-Manufacturing PMI rose to 52.2, higher than the 50.0 in November and the forecast of 50.2.
Overall, while manufacturing growth slowed, the non-manufacturing sector showed stronger performance, pointing to mixed economic conditions in China as it faces challenges from both domestic and international factors.
Therefore, the weaker-than-expected Chinese Manufacturing PMI data signals economic challenges, which could dampen demand for commodities and impact Australia's export-driven economy.
As a result, the AUD/USD pair may face downward pressure, reflecting concerns about slowing global growth.
US Dollar Strengthens Amid Fed's Hawkish Stance and Global Uncertainties
On the US front, the US Dollar Index (DXY) has surged to multi-year highs, trading around 108.50. This rise is largely due to the US Federal Reserve’s hawkish stance on interest rates.
The Fed has signaled that it may take a more cautious approach to rate cuts in 2025, which has strengthened the US Dollar.
The shift in policy comes as the market anticipates economic strategies from the incoming Trump administration, which creates uncertainty about future policy changes.
In addition to the Fed's stance, rising geopolitical tensions in the Middle East and the ongoing Russia-Ukraine war are expected to support the US Dollar in the short term.
As a safe-haven currency, the USD tends to strengthen during times of global instability. Traders are also cautious about President-elect Trump’s economic policies, particularly the possibility of higher tariffs, which could increase the cost of living.
These concerns, along with the Fed’s recent projections indicating fewer rate cuts in 2025, suggest that the US Dollar will continue to hold its strength due to ongoing inflationary pressures and global uncertainties.
AUD/USD – Technical Analysis
The AUD/USD pair is trading at $0.62044, up 0.24% in the last session, showing a modest recovery from recent lows. The 4-hour chart positions the pivot point at $0.62433, serving as a key level for traders.
Immediate resistance is seen at $0.62755, followed by $0.63058 and $0.63393, highlighting potential upside targets. On the downside, key support levels are positioned at $0.61845, $0.61496, and $0.61208, providing safety nets against selling pressure.
The Relative Strength Index (RSI) at 46 suggests a neutral stance, signaling room for directional moves. The 50 EMA at $0.62185 reinforces a short-term bearish bias as the price remains below this level.
A sustained move below the $0.62203 entry point may trigger additional selling, with a potential target at $0.61693. Conversely, a break above $0.62433 could open the door to a recovery, targeting the $0.62755 resistance zone.
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GOLD Price Analysis – Jan 02, 2025
GOLD Price Analysis – Jan 01, 2025
Daily Price Outlook
Gold (XAU/USD) entered 2025 with bullish momentum after its exceptional performance in 2024. The precious metal gained more than 26% throughout the year, marking its highest annual increase since 2010.
This surge was driven by a combination of factors, including strong demand from central banks, persistent geopolitical instability, and loose global monetary policies. These trends pushed gold to new heights, with the price hitting an all-time record of $2,790.15 on October 31, 2024.
Gold to Remain Supported in 2025 Amid US Dollar Pressure and Geopolitical Risks
Despite a stronger US Dollar and slower Fed rate cuts, gold is expected to remain supported in 2025. The Federal Reserve's cautious stance on rate cuts and uncertainty surrounding economic strategies under the incoming Trump administration are putting pressure on the US Dollar.
However, gold has benefited from rising geopolitical risks, central bank demand, and global monetary easing in 2024. Analysts predict that gold could reach $3,000 per ounce due to continued demand from central banks and the gradual impact of Fed rate cuts.
China's Mixed Economic Data Boosts Gold's Safe-Haven Appeal
On the other hand, China's official Non-Manufacturing PMI showed improvement in December, rising to 52.2 from 50.0 in November, surpassing expectations.
This indicates stronger growth in services and other non-manufacturing sectors, which could be a sign of economic recovery despite the manufacturing slowdown.
However, the official Manufacturing PMI slipped slightly to 50.1, down from 50.3 in November, reflecting weaker performance in the manufacturing sector, although still above the 50.0 mark that separates expansion from contraction.
Meanwhile, home prices in China showed a slight increase in December, with new home prices rising by 0.37% from the previous month. On a year-on-year basis, prices rose by 2.68%, higher than November's growth of 2.40%.
This indicates that the property market is stabilizing, helped by government measures to support homebuying, such as cutting mortgage rates and reducing down payments.
Despite the challenges faced by the property sector, these efforts suggest that China is working to revive the market after a tough period following the debt crisis in 2021.
The mixed economic data from China, including weaker manufacturing and improving services, may increase uncertainty, potentially supporting gold. Gold often benefits from economic slowdowns or instability, as investors seek safe-haven assets during periods of market volatility.
GOLD (XAU/USD) – Technical Analysis
Gold (XAU/USD) is trading at $2,624.26, marking a modest 0.71% gain, as cautious optimism prevails in the precious metals market.
On the 4-hour chart, the pivot point at $2,626.95 is pivotal for defining short-term momentum. Immediate resistance stands at $2,638.91, followed by $2,651.73 and $2,665.31.
On the downside, immediate support lies at $2,593.70, with deeper levels at $2,577.23 and $2,561.89, providing crucial stability if bearish sentiment intensifies.
Gold's technical indicators offer mixed signals. The RSI is at 58, indicating moderate bullish momentum, while the price holds above the 50 EMA at $2,620.66, suggesting near-term strength.
However, the market faces resistance near $2,638.91, making this a critical threshold for further upward movement.
A sustained break above this level could open the path toward higher resistance zones, while failure to breach may reinforce a consolidation or bearish retracement.
Traders should monitor the $2,626.95 pivot point closely, as a decisive move below this level could trigger bearish sentiment, with potential targets at $2,605 and $2,593.70.
Conversely, a break above $2,638.91 would likely attract buyers, setting the stage for further gains.
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EUR/USD Price Analysis – Jan 01, 2025
EUR/USD Price Analysis – Jan 01, 2025
Daily Price Outlook
During the European trading session, the EUR/USD currency pair saw some bullish movement, trading around the 1.0358 level and even reaching an intra-day high of 1.0358. This rebound was largely driven by a weaker US Dollar, which has been under pressure due to declining Treasury yields.
Despite this short-term gain, the Euro faces ongoing challenges as the European Central Bank (ECB) has kept its stance on interest rates dovish for the coming year, which weighs on the Euro. Meanwhile, safe-haven outflows have added pressure to the Euro, especially as global uncertainty grows.
Moreover, the ongoing Russia-Ukraine conflict and tensions in the Middle East have spiked geopolitical risks, making investors more cautious and putting further strain on the Euro. These factors combined are likely to limit the EUR/USD pair's momentum in the near term.
Euro Faces Pressure from Geopolitical Risks and Safe-Haven Flows
On the EUR front, the European Central Bank (ECB) is taking a cautious approach with its interest rate policy for next year, which is weighing on the Euro and the EUR/USD pair. This year, the ECB lowered its Deposit Facility rate by 100 basis points (bps) to 3%.
Looking ahead, it’s expected that the ECB will reduce the rate further to 2% by June 2025, which policymakers consider a neutral rate.
This indicates that the ECB may cut its borrowing rates by 25 bps at each meeting in the first half of 2025, signaling a more dovish stance. As a result, the Euro faces downward pressure, limiting its potential to rise against the US Dollar.
On the other hand, the Euro is facing more challenges due to increased geopolitical risks. The ongoing Russia-Ukraine conflict and tensions in the Middle East are creating uncertainty in the global markets.
Recently, Israel's ambassador to the United Nations warned Yemen's Iran-backed Houthi militants to stop their missile attacks on Israel.
These geopolitical risks are pushing investors to move away from riskier assets, leading to outflows from the Euro. As a safe-haven currency, the US Dollar benefits in such times, further putting pressure on the Euro and the EUR/USD pair.
In addition to the ECB's actions, the Euro is facing more challenges due to rising geopolitical risks. The ongoing Russia-Ukraine conflict and increasing tensions in the Middle East are causing uncertainty in the global markets.
Recently, Israel’s ambassador to the United Nations, Danny Danon, warned Yemen's Houthi militants, backed by Iran, to stop their missile attacks on Israel.
Such geopolitical events tend to drive investors away from riskier assets, including the Euro, and into safe-haven assets like the US Dollar. This added risk further pressures the Euro, limiting its strength against other currencies.
EUR/USD – Technical Analysis
The EUR/USD pair is trading at $1.03549, down 0.49% as bearish sentiment dominates the short-term market outlook. On the 4-hour chart, the pivot point at $1.03441 is critical, acting as a key threshold for near-term momentum.
Immediate resistance is observed at $1.03826, with higher levels at $1.04236 and $1.04581. Conversely, support is positioned at $1.03100, with further protection at $1.02750 and $1.02355, offering potential stabilization in case of extended selling pressure.
Technical indicators highlight bearish conditions, with the RSI at 33, signaling an oversold market ripe for a potential corrective bounce. However, the pair is trading below the 50 EMA at $1.04066, reinforcing a bearish bias in the short term.
A break below the pivot point of $1.03441 could accelerate selling, targeting the $1.03100 support level. On the upside, reclaiming $1.03826 resistance may encourage buyers, potentially driving the price toward $1.04236.
Market participants should closely monitor the $1.03441 pivot point, as sustained trading above it could signal a reversal of the bearish trend.
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GBP/USD Price Analysis – Jan 01, 2025
Daily Price Outlook
During the European trading session on Wednesday, the GBP/USD pair continued its upward momentum, trading around the 1.2523 level, with an intra-day high of 1.2526. This recent rise in the pair can be mainly attributed to a weaker US Dollar (USD), driven by lower US Treasury yields.
Meanwhile, the British Pound (GBP) might face some challenges ahead, especially given the ongoing geopolitical tensions. The Russia-Ukraine conflict and the rising uncertainties in the Middle East are keeping traders cautious.
On top of that, the Pound came under pressure as market participants slightly ramped up their bets on a more dovish Bank of England (BoE) stance for 2025. These factors may challenge the bullish trend for GBP in the near term.
US Dollar Weakness Supports GBP/USD Strength Amid Fed Caution and Lower Treasury Yields
On the US front, the broad-based US Dollar has been under pressure recently. This weakness comes as US Treasury bond yields have dropped by about 2%, with the 2-year and 10-year yields standing at 4.24% and 4.53%, respectively.
The decline in yields has made the US Dollar less attractive to investors, contributing to its subdued performance.
In addition, the Federal Reserve has signaled that it may take a more cautious approach to rate cuts in 2025. This shift in the Fed’s policy outlook adds more uncertainty, as investors are unsure about the direction of future monetary moves.
These factors have contributed to a weaker US Dollar, which in turn has supported the recent rise in other currencies like the British Pound.
Meanwhile, the ongoing uncertainty about future economic strategies, especially with the potential changes under the incoming Trump administration, is adding to the overall volatility in the markets.
Therefore, the weakness of the US Dollar, driven by lower Treasury yields and the Fed's cautious stance on rate cuts, has supported the GBP/USD pair. This has allowed the British Pound to strengthen against the Dollar, driving the pair higher.
British Pound Under Pressure Amid BoE Rate Cut Expectations and Geopolitical Risks
On the flip side, the British Pound has faced some pressure due to traders adjusting their expectations about the Bank of England’s (BoE) policy in 2025. Market predictions now suggest a potential interest rate cut of 53 basis points next year, slightly higher than the 46 basis points expected after the BoE’s December 19 policy meeting.
At that time, the BoE decided to keep rates steady at 4.75%, with a 6-3 vote split. This change in expectations reflects concerns about the UK economy, which could weigh on the Pound in the future.
Moreover, the risk-sensitive Pound faces further challenges due to rising geopolitical tensions. The ongoing Russia-Ukraine conflict and the instability in the Middle East, particularly the situation in Israel and Yemen, are increasing global uncertainty.
Israel’s warning to Yemen on Monday further escalated concerns, adding to the volatility in the markets. These geopolitical risks could negatively affect the Pound, as investors tend to avoid riskier assets in uncertain times, putting pressure on GBP.
GBP/USD – Technical Analysis
GBP/USD is trading at $1.25048, down 0.30% as bearish momentum persists in the market. On the 4-hour chart, the pivot point at $1.25431 serves as a critical threshold for price action, with immediate resistance at $1.26068.
Further resistance levels are observed at $1.26586 and $1.27292, marking potential upside targets if sentiment shifts. On the downside, support is located at $1.24776, with additional levels at $1.24302 and $1.23889 providing safety nets against extended declines.
Technical indicators reflect bearish sentiment. The RSI stands at 38, signaling mildly oversold conditions that could prompt a corrective rebound. However, the pair is trading below its 50 EMA at $1.25438, reinforcing a bearish bias in the short term.
A decisive break below the $1.24776 support level could pave the way for deeper losses, potentially targeting $1.24302. Conversely, reclaiming the pivot point and breaking above $1.26068 resistance may reignite bullish momentum.
Traders should monitor the $1.25431 pivot point closely, as sustained trading below this level suggests continued downward pressure.
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USD/CAD Price Analysis – Dec 31, 2024
Daily Price Outlook
The Canadian dollar (CAD) strengthened slightly against the U.S. dollar (USD) on Monday as the greenback experienced modest losses during light holiday trading.
The USD/CAD pair is trading near 1.4362, reflecting the broader market’s reaction to declining U.S. Treasury yields and shifting investor expectations for Federal Reserve policies in 2025.
While the U.S. dollar has performed strongly throughout 2024, rising by 6.6% on the Dollar Index (DXY), recent geopolitical uncertainties and Canadian resilience have capped USD/CAD’s upward momentum.
The U.S. Federal Reserve’s surprise move to reduce its projected interest rate cuts for 2025—from 100 to 50 basis points—has bolstered the dollar against most global currencies.
However, Canada’s robust economic data, including strong job numbers and steady oil prices, provided support for the CAD, keeping USD/CAD fluctuations limited.
Federal Reserve Policies and Trump Administration Outlook
The Federal Reserve’s cautious stance on rate cuts reflects ongoing concerns over persistent inflation. U.S. Treasury yields dropped by roughly 2% this week, with the 2-year yield settling at 4.24% and the 10-year yield at 4.53%.
Meanwhile, President-elect Donald Trump’s policy agenda—centered on tariffs, tighter immigration rules, and increased fiscal spending—has added further uncertainty to global markets, driving USD gains.
Traders are also eyeing upcoming economic reports, including U.S. unemployment claims and Canadian manufacturing PMI data, which could influence USD/CAD’s trajectory. A favorable outcome for Canada could strengthen the CAD further, while disappointing data may bolster the greenback.
Geopolitical Risks and Canadian Dollar Stability
The Canadian dollar has weathered external pressures better than many emerging-market currencies, which remain vulnerable to the stark interest rate disparity between the U.S. and other economies. Meanwhile, geopolitical tensions, such as the ongoing Russia-Ukraine conflict, have weighed on global risk sentiment, supporting the safe-haven dollar.
USD/CAD – Technical Analysis
The USD/CAD pair is trading at $1.43622, up 0.05%, as it navigates a cautious upward trajectory. The pivot point at $1.44133 serves as a critical marker for directional momentum.
Immediate resistance is positioned at $1.44365, with higher targets at $1.44970 and $1.45508, representing potential barriers for sustained bullish momentum. On the downside, support levels lie at $1.43044, followed by $1.42583 and $1.42108, essential for preventing a deeper pullback.
The pair's price action remains underpinned by its proximity to the 50 EMA at $1.43874, which signals near-term consolidation.
The Relative Strength Index (RSI) at 43 reflects mildly bearish conditions, indicating that the pair is neither oversold nor poised for immediate upside strength.
A break above the pivot point at $1.44133 could validate bullish sentiment, targeting the next resistance at $1.44365. Conversely, slipping below the immediate support at $1.43044 may lead to a decline toward $1.42583.
Economic sentiment surrounding oil prices continues to influence the Canadian dollar, adding volatility to the pair.
Thin year-end liquidity and trader caution could magnify short-term movements. Watch for a decisive break above or below the pivot point to determine the pair's next directional move.
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