Yesterday we saw a negative reversal in risk sentient after Trump’s comments, helping the USD, while today the US employment and FOMC minutes might send the USD even higher.

The European session saw relatively quiet trading activity, with the Swiss and Eurozone CPI inflation data standing out as the main events. Both figures came in line with expectations, leaving little impact on the markets. In the US session, equity markets started strong following a speech by Donald Trump, during which he reiterated plans for action regarding Mexico and Canada. The upbeat sentiment initially pushed the S&P 500 and Nvidia to new all-time highs, but those gains were later reversed as the session progressed.

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Meanwhile, Treasury markets continued to experience a bear steepening trend, characterized by long-term rates rising faster than short-term yields—a pattern often associated with periods of economic strength. The US dollar strengthened on the back of positive economic data releases. The JOLTS report revealed an increase in job vacancies from 7.7 million to 8.1 million, pointing to a possible surge in employment.

Additionally, the ISM services index improved from 53.3 to 54.1, indicating expansion in the sector, although rising prices paid raised some concerns about inflation. In the commodities market, gold saw an upward trend before Trump’s remarks but showed no major reaction to news of China increasing its gold reserves for the second consecutive month. Crude oil prices, however, rose nearly 1% after Russia announced a reduction in December production below OPEC+ targets.

Today’s Market Expectations

Looking at the Australian market, the Monthly CPI Y/Y is expected to rise to 2.3% from the previous 2.1%. The Reserve Bank of Australia (RBA) has adopted a more dovish stance, with the market pricing in a 52% chance of a 25-basis-point rate cut as early as February. Key data releases, including Q4 CPI and employment statistics, will play a critical role in shaping the market’s expectations ahead of the February meeting.

In the US, additional employment data is set to be released. Weekly unemployment claims are forecasted at 214,000, while the ADP Non-Farm Employment Change is expected to come in at 139,000. Later in the day, the Federal Open Market Committee (FOMC) minutes from the December meeting will provide more insight into monetary policy. At the December meeting, the Fed cut rates by 25 basis points, bringing the range to 4.25–4.5%. The statement signaled a slower pace of easing going forward, with the committee emphasizing the need to assess incoming data and risks when determining future rate adjustments.

The updated Summary of Economic Projections (SEPs) revealed a more hawkish outlook, with median projections for the federal funds rate in 2025 and 2026 rising to 3.9% and 3.4%, respectively, compared to previous estimates of 3.4% and 2.9%. Projections for longer-term rates also increased slightly to 3.0%. The FOMC displayed greater consensus this time, with most members aligning closely with the median projections. The 2025 outlook now suggests only two 25-basis-point rate cuts for that year.

Yesterday the market started the week pretty volatile, with the USD losing more than a cent during the European session after the rummours on tariffs, only to reverse most of the losses in the US session after Trump denied the rumours. We were caught on the wrong side in the first move, being long on the USD, but made up with some winning forex signals during the reversal.

Gold Rejected by the 50 Daily SMA

Last week, gold failed to break the critical resistance level of $2,725, resulting in a sharp $100 decline. The drop was driven by strong US services PMI data and heightened expectations of a Fed rate cut, which shifted market sentiment. Recovery attempts were limited as the 100-day Simple Moving Average (SMA) turned into resistance after the price dropped below it. Despite falling below $2,600, gold managed a partial recovery but remains constrained as buyers struggle to hold the price above the yellow 50-day SMA.

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XAU/USD – Daily Chart

EUR/USD Can’t Hold Gains Above 1.04

In the forex market, the EUR/USD pair faced continued bearish pressure. After forming a base around 1.0330–1.0350 following the hawkish Fed rate cut in November, support held into December. However, late 2024 brought bullish momentum for the US dollar and heavy selling pressure for the euro, pushing the pair down by two cents and breaking key support levels, setting the stage for parity at 1.00. Recent retracements have been met with selling pressure, and the pair fell below 1.04, solidifying a bearish strategy of selling on upward retraces.

EUR/USD – Daily Chart

Cryptocurrency Update

Bitcoin Reversed Back Down Below $100K 

BTC/USD – Daily chart

Ethereum Approaches the $4,000 Level Again

Ethereum experienced even greater volatility, rising from $3,000 to nearly $4,000 midweek. However, the cryptocurrency struggled to maintain levels above $4,000, eventually falling below $3,500. Over the last two weeks, Ethereum recovered some lost ground, finding solid support at the yellow 50-day SMA. Despite this recovery, negative sentiment returned, and Ethereum dropped below $3,500 once again.

ETH/USD – Weekly Chart

Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank’s local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.