Forex News

• EUR/USD remains capped below 1.1640 on Thursday, close to one-month lows at 1.1618.
• Eurozone data showed that Industrial Production grew beyond expectations in November.
• US manufacturing reports and more Fed speakers will grab the focus on Thursday.

EUR/USD remains capped below 1.1640 on Thursday, trading at 1.1635 at the time of writing, and dangerously close to one-month lows, at 1.1618, despite the stronger-than-expected Eurozone Industrial Production figures seen earlier on the day.

Data released by Eurostat on Thursday revealed that the Eurozone's Industrial Production advanced at a steady 0.7% pace in November, against market expectations of a moderate slowdown to 0.5%. Year-on-year, production growth accelerated to 2.5%, from 2% in October and beyond the 2% increase anticipated by the market's consensus.

Looking in perspective, however, the Euro maintains its bearish trend from late- December highs intact as a slate of fairly strong US macroeconomic figures and easing concerns about the US Federal Reserve’s (Fed) autonomy keep underpinning demand for the US Dollar.

US data released on Wednesday showed a larger-than-expected acceleration in producer prices and a strong rebound in retail consumption in November, providing further reasons for the Fed to keep interest rates unchanged in the coming months.

Beyond that, US President Donald Trump calmed markets, stating that he has no plan to oust Fed Chairman Jerome Powell despite the criminal investigation against him. Investors’ concerns about the Fed’s independence sent the US Dollar tumbling earlier in the week and prompted most of the world's central bankers to sign a statement defending Powell.

Investors are now looking to the NY Empire State and the Philadelphia Fed manufacturing reports to confirm the improvement of the US economic outlook in the fourth quarter of 2025. These figures will frame the speeches from Fed policymakers later on the day.

Daily Digest Market Movers: US PPI and Retail Sales data support the US Dollar

• The US Dollar keeps heading higher against most of its peers, as US macroeconomic data endorses the view that the Fed is likely to keep its monetary policy unchanged in the coming months.
• On Wednesday, November's US Producer Price Index (PPI) report showed inflation accelerated to a 3% year-on-year pace from 2.8% in the previous month, compared to expectations of a slowdown to 2.7%. Likewise, the core PPI rose 3% in the year to November, from 2.9%, also against the market consensus of 2.7%.
• These figures come after Tuesday's Consumer Prices Index (CPI), which showed steady readings in December and revealed that price pressures remain high in the US.
• Also on Wednesday, data from the US Census Bureau showed that Retail Sales grew at a 0.6% pace in November, following a 0.1% decline in October, and beating market expectations of a 0.4% increase. The strong consumption figures add to the case of a strong US economic performance in the last quarter of the year and ease pressure on the Fed to lower borrowing costs further.
• Geopolitical tensions have eased somewhat, as President Trump affirmed that he believes the killings of protesters in Iran have subsided, as US experts warned about the risks of a military intervention against the Islamic Republic. Oil and safe havens like precious metals have pulled back following the comments, which are also likely to weigh on the US Dollar's rally.
• In Europe, later on Thursday, Eurostat will release the Eurozone's Industrial Production data. Factory output is expected to have increased 0.5% in November, following a 0.8% increase in October. Year-on-Year, production is seen growing at a steady 2% pace.
• In the US, the NY Empire State Manufacturing Index and the Philadelphia Fed Manufacturing Survey will provide some insight into the sector's activity ahead of speeches from Atlanta Fed President Raphael Bostic, Governor Michael Barr, Richmond Fed President Thomas Barkin, and Kansas City Fed President Jeffrey Schmid.

Technical Analysis: EUR/USD remains close to 1.1618 lows

The EUR/USD trades near 1.1635 at the time of writing, extending its reversal from weekly highs near 1.1700 with price action contained within a descending channel since late December. The Moving Average Convergence Divergence (MACD) indicator holds around the zero line on the 4-hour chart, highlighting a neutral tone, while the Relative Strength Index (RSI) is pointing downwards at 38, suggesting increasing bearish momentum.

Bears are aiming for the January 9 low, in the vicinity of 1.1615. Further down, the area between the channel bottom, now around 1.1600, and the December 2 low, at 1.1590, is likely to be targeted. To the upside, Wednesday's high, at 1.1660, might pose some resistance ahead of the channel top, at 1.1690, and the January 12 high, near 1.1700.

(The technical analysis of this story was written with the help of an AI tool.)

• USD/CHF remains bid, testing resistance in the 0.8020 area.
• Strong US data strengthens the odds for a Fed pause and underpins demand for the USD.
• The pair is trading within a small ascending triangle pattern.

The US Dollar remains bid against a somewhat softer Swiss Franc, weighed by a brighter market sentiment on Thursday. The Greenback keeps its bullish trend from late December lows in play, but has so far been unable to find acceptance above the 0.8020 area.

In the US, strong November Producer Price Index (PPI) and Retail Sales figures added to the case of a significant recovery of the US economy in the past quarter of 2025, and cemented the view of a Federal Reserve monetary policy pause in the coming months.

Easing geopolitical concerns are weighing on safe assets, as the CHF, following US President Trump’s comments, about the receding repression against demonstrators in Iran, which has calmed concerns about a military action against the Islamic Republic.

Technical Analysis: USD/CHF is forming a small triangle pattern   

In the 4-hour chart, USD/CHF trades at 0.8012, with resistance around the 0.8020 area holding bulls and a sequence of higher lows forming an ascending triangle pattern, a figure often leading to a positive outcome.

Technical indicators are showing a mild bullish momentum. The Relative Strength Index (14) sits at 59.6, above the 50 midline, while the Moving Average Convergence Divergence (MACD) flattens around the zero line, reinforcing a neutral tone.

A confirmation above the mentioned 0.8020 area would give bulls hopes to retest December's peak, in the area of 0.8080, which is coincident with the triangle pattern's measured target. On the downside, trendline support is at 0.8000. Further down, a breach of Wednesday¡'s low, at 0.7985, cancels the bullish view and brings the weekly lows, at 0.7956, into focus.

(The technical analysis of this story was written with the help of an AI tool.)

• Gold holds above $4,600 after pulling back from fresh record highs.
• Easing Iran tensions have slightly reduced safe-haven demand, though geopolitical and Fed uncertainty persist.
• Technically, overbought conditions cap near-term upside as XAU/USD enters consolidation mode.

Gold (XAU/USD) holds firm above the $4,600 psychological mark on Thursday after coming under modest pressure earlier in the day, as traders book mild profits following Wednesday’s surge to a fresh record peak near $4,643. At the time of writing, XAU/USD trades around $4,615, rebounding from an intraday low near $4,581.

The modest retreat in Gold also reflects slightly reduced safe-haven flows, following reports that anti-government protests across Tehran have eased somewhat and US President Donald Trump has signaled he will hold off on any immediate military action for now.

However, the broader geopolitical backdrop remains fragile, and ongoing unease over the Federal Reserve’s (Fed) independence continues to support the metal, keeping it anchored near record territory.

Beyond geopolitical and political risks, sustained expectations of lower US interest rates are adding another layer of support to the non-yielding metal. While recent hawkish remarks from Fed officials suggest policymakers are in no rush to cut rates, markets continue to price in two rate cuts later this year.

Looking ahead, attention turns to a light US data docket, with weekly Initial Jobless Claims, the Empire State Manufacturing Index and the Philadelphia Fed Manufacturing Survey due later in the day. Markets will also digest remarks from Fed officials for fresh clues on the monetary policy outlook.

Market movers: Geopolitical risks and Fed outlook in focus

• US President Donald Trump said on Wednesday that he has been told “on good authority” that the killing in Iran is “stopping” and that there are “no plans for executions.” Speaking to reporters in the Oval Office, Trump added that he would “watch it and see” when asked whether threatened US military action was now off the table.
• In an interview with Reuters, US President Donald Trump said he has no plans to fire Fed Chair Jerome Powell despite a Justice Department criminal investigation. Asked whether the probe gave him grounds to do so, Trump said the administration is “in a little bit of a holding pattern” and will determine what to do, adding that it is “too soon” to make any decision.
• Fed Chair Jerome Powell is under criminal investigation by US prosecutors over his June 2025 testimony on the Fed’s headquarters renovation, drawing sharp criticism from global central bankers and other Fed officials. Powell has described the move as politically motivated.
• Minneapolis Fed President Neel Kashkari said on Wednesday that it is “entirely plausible” inflation could remain well above the Federal Reserve’s 2% target for another two to three years, according to an interview with The New York Times. He added, “Then we’re looking at seven or eight years of elevated inflation. That’s very concerning to me.”
• Philadelphia Fed President Anna Paulson said that she sees further rate cuts later this year if the forecast is met. Paulson added that inflation is expected to moderate in 2026 and the labor market to stabilize, noting that the job market is “bending but not breaking.”
• St. Louis Fed President Alberto Musalem said on Tuesday there is “little reason for further easing of policy in the near term” and that policy is “well positioned to balance risks on both sides.” He added that the latest inflation reading was encouraging and supports the view that inflation could converge toward 2% this year.

Technical analysis: XAU/USD range-bound near record highs

From a technical standpoint, XAU/USD appears to be entering a consolidation phase near record highs, with price action capped between the $4,580-$4,640 zone. Overbought conditions are discouraging buyers from aggressively chasing further gains for now, even as the broader structure remains firmly bullish.

On the 4-hour chart, price is holding above the 21-period Simple Moving Average (SMA) near $4,608, which provides immediate dynamic support. A clear break below this level would expose the 50-period SMA at $4,528.

On the upside, a sustained move above the $4,650 area could revive bullish momentum and open the door for a push toward the $4,700 psychological level.

Momentum signals support a pause rather than a reversal. The 4-hour Relative Strength Index (RSI) sits near 59, easing from overbought territory. The Moving Average Convergence Divergence (MACD) remains below the signal line and in negative territory, though the histogram is narrowing, suggesting limited downside and reinforcing the near-term consolidation bias.

• The New Zealand Dollar trades without a clear direction against the US Dollar on Thursday.
• Solid US macroeconomic indicators reinforce the higher-for-longer interest rate narrative.
• Trade tensions between Washington and Beijing weigh on China-linked currencies.

NZD/USD hovers around 0.5740 on Thursday at the time of writing, virtually unchanged on the day, as investors digest another round of strong US economic data and remain cautious ahead of the weekly US Initial Jobless Claims figures due later in the day.

The New Zealand Dollar (NZD) finds it difficult to gain ground against the US Dollar (USD), which remains underpinned by robust economic releases from the United States (US). On Wednesday, the US Census Bureau reported that Retail Sales rose by 0.6% in November to $735.9 billion, following a 0.1% contraction in October and beating market expectations. At the same time, the Producer Price Index (PPI) surprised to the upside, with both headline and core inflation printing at 3% YoY, confirming that price pressures remain persistent.

These figures strengthen the view that the Federal Reserve (Fed) may keep its monetary policy restrictive for longer. Minneapolis Fed President Neel Kashkari said that the US economy appears resilient and noted that inflation, while still too high, is moving in the right direction. In this context, Morgan Stanley analysts pushed back their expectations for the first interest rate cuts to June and September, from January and April previously.

On the international front, the New Zealand Dollar is pressured by renewed trade-war concerns between the United States (US) and China, New Zealand’s main trading partner. US President Donald Trump signed two executive orders imposing 25% tariffs on certain semiconductors and authorizing potential levies on critical minerals. The White House highlighted the United States’ heavy reliance on imports in this sector, a factor that strengthens China’s leverage in bilateral discussions and fuels risk aversion in the markets. However, recent data on China's trade balance is easing concerns about the real impact of tariffs on the Chinese economy, which is helping to limit downward pressure on the Kiwi.

Meanwhile, easing concerns over the independence of the Fed, after US President Donald Trump said he has no intention of removing Fed Chair Jerome Powell, has helped stabilize the US Dollar after the turbulence seen earlier in the week.

Investors now turn their attention to the US Initial Jobless Claims, the New York Empire State Manufacturing Index and the Philadelphia Fed Manufacturing Survey, as well as speeches from several Federal Reserve officials later in the day, to assess the momentum of the US economy and its implications for the interest rate outlook.

UK economic growth surprised on the upside in November, with real GDP rising 0.3% month-on-month, led by gains in services and manufacturing despite continued weakness in construction, BBH FX analysts report.

BOE rate cuts priced in as policy room remains

"UK economic growth overshot expectations in November. Real GDP rose 0.3% m/m (consensus: 0.1%) vs. -0.1% in October, driven by services and production. Services output increased 0.3% m/m vs. -0.3% in October while production output increased 1.1% m/m vs. 1.3% in October on a solid pick-up in manufacturing activity. The construction sector remains a drag on the economy falling -1.3% m/m following a decline of -1.2% in October."    

"Leading indicators point to soggy UK economic activity with real GDP growth tracking the Bank of England’s (BOE) Q4 projection of 0.3% q/q. As such, the BOE has room to ease policy further, which remains a drag for GBP. The UK swaps curve fully price-in a total of 50bps of BOE rate cuts to 3.25% over the next twelve months."

• The Pound Sterling weakens against its peers despite stronger-than-expected UK GDP data for November.
• UK monthly GDP expanded 0.3%, beating estimates of 0.1% and the previous reading of -0.1%.
• The US Dollar gains on expectations that the Fed will hold interest rates steady in the meeting later this month.

The Pound Sterling (GBP) trades lower against its major currency peers, falls 0.2% to near 1.3420 against the US Dollar (US) on Thursday, following the release of the United Kingdom (UK) monthly Gross Domestic Product (GDP) data for November.

The Office for National Statistics (ONS) has reported that the economy is back in the black strongly. The data showed that GDP growth was 0.3%, faster than estimates of 0.1%. In September and October, the UK economy declined by 0.1% after remaining flat in August.

A strong UK GDP figure is expected to impact the Bank of England (BoE) dovish expectations negatively. At the December meeting, the BoE guided that the monetary policy will remain on a gradual downward path.

On Wednesday, BoE policymaker Alan Taylor stated that he expects “monetary policy to normalise at neutral sooner rather than later,” and “at-target inflation from mid-2026 is likely to be sustainable”.

Meanwhile, UK factory data has also come in stronger than projected. Month-on-month (MoM) Manufacturing Production grew at a robust pace of 2.1% against estimates of 0.5% and the October reading of 0.4%, revised lower from 0.5%. In the same period, Industrial Production rose 1.1%, stronger than expectations of 0.1%, but slower than the prior reading of 1.3%. On an annualized basis, both Manufacturing and Industrial Production unexpectedly gained at a strong pace.

Daily Digest Market Movers: Pound Sterling trades lower against US Dollar

• Earlier in the day, the Pound Sterling was under pressure as market sentiment remained risk-off due to renewed tariff tensions. On Wednesday, United States (US) President Donald Trump imposed 25% tariffs on imports of some advanced computing chips by the White House, which include the Nvidia H200 AI processor and a similar semiconductor from AMD called the MI325X.
• Still, Sterling trades lower against the US Dollar around 1.3425 during the European trading session on Thursday as the US Dollar strengthens on expectations that the Federal Reserve (Fed) will hold interest rates steady in the next meeting.
• During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.15% higher to near the monthly high of 99.26.
• According to the CME FedWatch tool, the Fed is certain to leave interest rates unchanged in the range of 3.50%-3.75% at the January policy meeting, indicating a pause in the monetary-easing campaign. In the last three meetings, the Fed delivered three consecutive 25-basis-point interest rate cuts (bps) amid weak job market conditions.
• The speculation that the Fed will leave interest rates steady is backed by expectations that the impact of the latest cuts is yet to be seen in the economy. Also, the US Consumer Price Index (CPI) data for December showed on Tuesday that price pressures grew steadily.
• On Wednesday, Atlanta Fed Bank President Raphael Bostic emphasized the need to maintain a restrictive monetary policy stance in the near term, citing that the “inflation challenge has not been won yet".

Technical Analysis: GBP/USD holds 50% Fibonacci retracement at 1.3400

GBP/USD trades lower to near 1.3420 at the time of writing. The 20-day Exponential Moving Average (EMA) at 1.3438 has flattened after a steady ascent, with price hovering around it.

The 14-day Relative Strength Index (RSI) at 49.23 is neutral, indicating balanced momentum.

Measured from the 1.3793 high to the 1.3009 low, the 61.8% Fibonacci retracement at 1.3494 caps the rebound, while the 78.6% Fibonacci retracement at 1.3625 looms overhead. A topside breach could extend the recovery toward the September 2025 high of 1.3726, whereas rejection would keep range-bound trade around the 20-day EMA.

(The technical analysis of this story was written with the help of an AI tool.)

The Swedish Krona (SEK) remains strong in early 2026, trailing only the AUD among G10 currencies, supported by positive growth data, attractive interest-rate differentials, and expectations of future Riksbank hikes, Rabobank's FX analyst Jane Foley reports.

Riksbank expected to follow RBA with gradual rate hikes

"The SEK was the best performing G10 currency in 2025, by a decent margin and it remains on the front foot so far this year. Measured against its G10 peers, the SEK is the second-best performer behind the AUD in the year to date. While the AUD will have taken some encouragement from the strength of regional equities and metal prices this year, it has also found support in speculation that the RBA may be the first G10 central bank to hike rates this cycle."

"Market pricing suggests the Riksbank may not be too far behind. Indeed, on the back of an encouraging growth outlook, market pricing also expects that the next policy move from the Riksbank will likely be a hike, albeit not for some months. Although the market is currently only priced for around 15 bp of Riksbank rate hikes on a 1-year view, this is more hawkish than market expectations for the ECB."

"In view of attractive of interest rate differentials and Sweden’s positive growth and budget backdrop, we expect the SEK to have another good year in 2026 and look for EUR/SEK to continue its descent to 10.50 with downside risk in the year ahead."

• The US Dollar Index trades firmly near its monthly high of 99.25.
• Investors expect the Fed to hold interest rates steady later this month.
• Fed’s Bostic supports a restrictive monetary policy stance as inflation is still higher than the 2% target.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally higher to near its monthly high at 99.25. The US Dollar (USD) trades broadly firm as the Federal Reserve (Fed) is expected to pause its monetary-easing campaign in the policy meeting later this month.

According to the CME FedWatch tool, the Fed is certain to leave interest rates unchanged in the range of 3.50%-3.75% in the January policy meeting. In the last three policy meetings, the Fed delivered three interest rate cuts of 25 basis points (bps) amid weak job market conditions.

The Fed is unexpected to cut interest rates again as the impact of the latest cuts is yet to come into the economy. Also, sticky United States (US) Consumer Price Index (CPI) data for December has propelled speculation for the Fed holding borrowing rates steady this month.

Atlanta Fed Bank President Raphael Bostic said in an event on Wednesday that monetary policy needs to be “restrictive as inflation remains still quite far from the Fed’s target level”.

US Dollar Index technical analysis

The US Dollar Index Spot trades slightly higher to near 99.16 at the time of writing. Price holds above the 20-day Exponential Moving Average (EMA) at 98.73, and the EMA has begun to slope higher, supporting a short-term bullish tone.

The 14-day Relative Strength Index (RSI) at 59.87 remains above its 50 midline, confirming improving momentum.

The rising trend line from 96.21 offers support near 98.11, keeping pullbacks shallow while buyers defend the advance. On the upside, the horizontal resistance at 100.27 will be a key hurdle.

(The technical analysis of this story was written with the help of an AI tool.)

US Dollar (USD) is mixed near this week’s highs. The run of Goldilocks-type US economic data continues to offer USD support. Consumer spending activity is holding up well. The policy-relevant retail sales control group matched consensus at 0.4% m/m in November and October growth was revised down -0.2pts to 0.6%. In parallel, the January Fed Beige Book highlighted that outlooks for future economic activity 'were mildly optimistic' with most districts 'expecting slight to modest growth in coming months', BBH FX analysts report.

DXY struggles above 100 amid easing inflation

"Still, we doubt the Dollar Index (DXY) will sustain a break above 100.00 in part because easing inflation pressures leave plenty of room for the Fed to deliver additional rate cuts. Trade Services PPI dropped to a 15-month low at 1.0% y/y vs. 1.3% in October, suggesting businesses are absorbing costs rather than passing them on to consumers. Indeed, the January Fed Beige Book noted that 'firms expect some moderation in price growth'."

"Fed funds futures price little chance of a cut at the next three FOMC meetings (January 28, March 18, and April 29). The next full 25bps cut isn’t priced until the June 17 meeting, while a total of 50bps of cuts remains fully priced by year-end. For reference, the FOMC median rate forecast implies just one 25bps cut in 2026."

"Political pressure targeting the Fed is a structural drag for USD. Yesterday, Poland said it was closely watching for any market fallout from the US Department of Justice investigation into the Fed ahead of planned US dollar debt issuances later this year. Immediate market effects are negligible, but the signal is powerful and feeds into the gradual erosion of the dollar’s reserve-currency dominance. Policy predictability is key factor a country monitors when choosing a borrowing currency."