Yesterday there were no major events, but there were some large moves in the EUR and GBP due to thin liquidity, which might repeat today again, with most traders being on holidays until Monday.

The US dollar started 2025 bullish, likely driven more by shifts in capital flows than by economic data, as the manufacturing PMIs had little impact. Initial unemployment claims came in lower than expected, a positive sign for the labor market, though recent PMI and construction spending figures were slightly weaker. However, these factors don’t seem to have played a major role in today’s market moves.

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The dollar’s strength was broad and robust, propelled by capital flows, with major tech stocks and AI stocks—all denominated in dollars—dominating the landscape in 2024 and 2025. Commodity currencies showed resilience despite a rough start in Chinese markets, further highlighting capital flows as the key driver. Global growth prospects remain viable even without China’s full support, as reflected in the steady performance of gold and oil.

Meanwhile, the pound and euro both lost ground, each dropping about a cent. The pound slid to 1.2352 after breaching December lows, while the euro dipped to 1.0223 before a late recovery. US stocks ended the day near their lows, with the S&P 500 down 35 points (0.6%), mostly due to late-session selling. Tesla fell 6.8% after disappointing sales, and Apple dropped 3.1%, partly due to price cuts in China. against SEC.

Today’s Market Expectations

Today Japan is on bank holiday again, although we have some data from Europe, with the Spanish employment change which is expected to show a decent decline in December, while the German employment change is expected to show a slight improvement. The Swiss Manufacturing PMI is expected to show little changed.

The highlight of the day will be the US, ISM manufacturing which comes after the improvement in the manufacturing PMI we saw yesterday and the lower unemployment claims. ISM manufacturing is expected to remain little changed at 48.2 points, which means contraction, while the ISM Manufacturing Prices are expected to show an increase.

Yesterday started with a lot of volatility and some massive moves, which we warned our follower in the previous forex signals update, although we were on the right side in most of the trades, as we remained long on the USD. So, we opened six trading signals yesterday, with five of them ending up as winning forex signals.

Gold Testes the 50 SMA after Breaking the 100 Daily SMA

Gold’s volatile pricing continues to mirror evolving monetary policy expectations. Last week, prices dropped $100 after failing to surpass the critical $2,725 resistance level. This decline was driven by strong U.S. services PMI data and anticipation of a Federal Reserve rate cut, both of which fueled bearish sentiment. The drop below the 100-day Simple Moving Average (SMA) added to the selling pressure, turning the SMA into a resistance level that thwarted multiple recovery attempts, including one on Friday. Gold prices fell below $2,600, extending the downtrend amid persistent sell-offs, but we have seen a reversal higher recently, pushing XAU above the 100 SMA (green) and testing the 50 SM A(yellow).

XAU/USD – Daily Chart

EUR/USD Breaks Below Support

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EUR/USD formed a base around 1.0330-50 in November after the tumble lower following the hawkish FED rate cut, and that support held again in December. However, the last two days of 2024 and yesterday were very bullish for the USD and quite bearish for the Euro, sending the price around 2 cents lower, breaking the previous support and opening the door for parity at 1.00. We have been selling retraces higher in EUR/USD and will continue as long as sellers remain in control.

EUR/USD – Daily Chart

Cryptocurrency Update

The $100K Turns Into Resistance for Bitcoin 

BTC/USD – Daily chart

Ethereum Heads Toward $3,500 Again

Ethereum also showed significant price swings, rallying from $3,000 to nearly $4,000 midweek. Despite the strong start, it struggled to sustain gains above the $4,000 level after Monday’s initial rise. By the end of the week, Ethereum had dropped below $3,500, deepening its losses.

ETH/USD – Daily 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.