Forex News

• Fed speakers stress inflation concerns, reinforcing a wait-and-see stance after Wednesday’s rate cut.
• Market focus turns to delayed US data as policymakers defend their split December decision.
• Eurozone inflation mixed, yet technicals point toward further EUR/USD upside if 1.1762 breaks.

EUR/USD holds firm at around 1.1741 on Friday virtually unchanged, amid a parade of Federal Reserve officials crossing the wires, following last Wednesday's 25 basis points rate cut.

EUR/USD tilted to the upside despite hawkish Fed comments tempering dovish expectations

Despite cutting rates, the Fed hinted that they would pause its easing cycle, entering a wait-and-see period as they digest delayed economic data due to the US government shutdown.

In the meantime, Cleveland Fed Beth Hammack was hawkish saying that “price pressures have been too high,” adding the Fed’s commitment to achieve inflation 2% goal. She added that the Fed decision was complicated and that policy is right around neutral.

At the same time, the Chicago Fed Austan Goolsbee, one of the dissenters at the December meeting, justified his decision because he believed that they should wait for mor information, particularly inflation. He commented that waiting until Q1 2026 for rate cuts would allow the Fed to be assured that inflation is falling

The Kansas City Fed Jeffrey Schmid said that he dissented against the rate cut, because not much has changed in the economy since October when he also dissented. Schmid added that he hears concerns about inflation from the people in the district.

Philadelphia Fed Anna Paulson said that she doesn’t see tariffs translating into widespread price increases adding that she’s more concerned about job risks relative to inflation.

In Europe, German’s Harmonized Index of Consumer Prices (HICP) the European Central Bank (ECB) inflation measure in November, dipped -0.5% MoM, as expected aligned with Octobers print, but on an annual basis remained at 2.6%, as estimated by analysts.

In Spain, the HICP for the same period rose by 3.2% YoY up from estimates and October’s 3.1% print.

EUR/USD Price Forecast: Technical outlook

Given the fundamental backdrop, the ERU/USD technical picture suggests that the pair is neutral to upward biased, which could be cemented if the pair finishes the week above 1.1700. The Relative Strength Index (RSI) shows that buyers are gathering momentum, so further upside lies ahead.

If EUR/USD clears the December 11 high of 1.1762, the next resistance would be 1.1800, followed by the 1.1850 area, ahead of the yearly peak of 1.1918. Conversely, if the pair tumbles below 1.1700, the first support would be the 100-day SMA at 1.1641 ahead of 1.1600.

The Pound Sterling (GBP) remains under pressure heading into 2026 amid flat UK growth and the Bank of England’s ongoing easing cycle. Political uncertainties and ECB rate expectations support a gradual rise in EUR/GBP, projected to reach 0.89 over the next six months, Rabobank's FX analyst Jane Foley reports.

UK growth flatlines as BoE easing persists

"Despite the relief that followed the UK’s November budget, the pound still faces headwinds into 2026. UK growth appears to be flatlining and the BoE is now in a minority of G10 central banks considered by the market to be still in the throes of its easing cycle."

"Another risk for the pound next year could come from UK politics. The tone of Reeves’ November budget appeared to be oriented towards appeasing the left of the Labour party. In turn this may be evidence of the vulnerability of her job and potentially that of PM Starmer."

"ECB rate hike expectations add to the scope for an upside bias in EUR/GBP in 2026. However, this may be tempered by Germany’s struggles with its reform process and its slow growth outlook. Overall, we expect an upward grind in EUR/GBP next year to 0.89 on a 6-month view."

Copper prices surged to nearly $12,000 per ton following the Fed’s rate cut, up 36% year-to-date amid concerns that supply may lag rising demand. In response, Chilean mining companies plan record investments of $105 billion through 2034, including expansions at the Escondida and Collahuasi mines, Commerzbank's commodity analyst Barbara Lambrecht notes.

Expansion plans target Escondida and Collahuasi

"The Copper price continues to set new records: After the Fed cut interest rates, it climbed significantly yesterday and reached almost $12,000 per ton this morning. The price is now 36% higher than at the beginning of the year. The main driver is concern that supply will not be able to keep pace with rising demand."

"However, the massive increase in the Copper price is likely to have an impact on supply. According to analyses by the Chilean Copper Commission Cochilco, investment plans for Chilean mining have been massively increased: according to company plans, almost $105 billion will be invested over the next decade until 2034."

"That would be 26% more than was predicted last year for the period 2024-2033, and the highest investment amount since 2015. The new investments include an expansion of the Escondida mine, the world's largest Copper mine, as well as new concentrate plants at the Collahuasi Copper mine."

The price of Silver is currently skyrocketing. Yesterday, the price reached a new record high of $64.3 per ounce, Commerzbank's commodity analyst Carsten Fritsch notes.

Prices surge 120% YTD, strongest gain since 1979

"Since the beginning of the week, the price has risen by almost 10%, and by 27% over the last three weeks. The increase since the beginning of the year now stands at 120%. This means that Silver is on track for its strongest annual gain since 1979. The Gold/Silver ratio fell below 67 yesterday, its lowest level since June 2021, putting it only slightly above the average for the past 50 years."

"The rise is being driven by a combination of tense market conditions, reflected in low inventories in China and a decline in Silver inventories on the Comex, even though these are still higher than at the beginning of the year. In addition, ETF purchases have recently picked up again, as reflected in the 1,145-ton increase in Silver ETF holdings within a month as recorded by Bloomberg."

"However, the price increase has become excessive, which calls for caution. In the longer term, the fundamental outlook for Silver remains positive. This week, the Silver Institute published a report on Silver demand for industrial applications, which forecasts a sharp rise in Silver demand for photovoltaics, electromobility, and data centers/artificial intelligence in the coming years."

The Japanese Yen (JPY) is slightly weaker versus the US Dollar (USD), underperforming most G10 currencies, as markets await next week’s BoJ meeting where a 25bps rate hike is widely expected. Policymakers signal the potential for further tightening in 2026, keeping USD/JPY range-bound between 154 and 157, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD/JPY stays range-bound amid hawkish BoJ signals

"The yen is entering Friday’s NA session with a 0.2% decline vs. the USD and underperformance against all of the G10 currencies with the exception of the Skandies SEK and NOK."

"Reports of a constructive, hawkish shift at the BoJ have failed to deliver strength—so far—with media suggesting that policymakers are expecting an extension of the tightening cycle beyond 0.75%. Next week’s BoJ policy decision is widely expected to deliver a 25bpt hike, to 0.75%, and policymakers appear to be paving the way for further tightening in 2026."

"We are neutral USD/JPY awaiting a break of the recent range bound between the mid-154 and upper-157 areas."

• WTI remains under pressure as oversupply concerns continue to weigh on market sentiment.
• The technical setup stays tilted to the downside, as prices remain below key moving averages after repeated failures near $60.00.
• Momentum indicators reinforce the bearish bias, suggesting sellers remain in control.

West Texas Intermediate (WTI) Crude Oil remains under pressure on Friday, with prices struggling to find traction as persistent oversupply concerns continue to dominate market sentiment. At the time of writing, WTI is trading around $57.10, hovering near recent lows and on track to post a weekly decline of more than 4%.

The broader tone in the oil market remains cautious as investors focus on signs that global supply continues to outpace demand. Geopolitical developments are also shaping sentiment. Markets remain attentive to Russia-Ukraine peace-talk optimism, with traders viewing any meaningful progress toward a deal as a potential pathway for additional Russian crude to return to global markets.

From a technical perspective, WTI’s broader outlook remains bearish, with prices facing repeated rejections near the $60.00 psychological level. The daily chart shows prices trading below their key moving averages, underscoring the prevailing downside bias and suggesting that seller remains firmly in control.

On the downside, immediate support is located in the $56.50-$56.00 zone, which marks the October swing low. A daily close below this area would reinforce the bearish trend and open the door for deeper losses toward the year’s low near $54.80.

On the upside, overhead resistance from the descending moving averages continues to cap recovery attempts, with any rebound likely to face selling interest ahead of the $60.00 handle. Unless prices manage a sustained move back above this level, the near-term outlook remains tilted to the downside.

Momentum indicators also favour bears. The Relative Strength Index (RSI) remains below the neutral 50 mark, reflecting weak upside momentum, while the Moving Average Convergence Divergence (MACD) has slipped below its signal line and remains in negative territory, with the histogram pointing to strengthening bearish momentum.

Gold rose above $4,300 per ounce as the Fed delivered a widely expected 25bps rate cut, with Chairman Powell signaling that labor market weakness and tariffs may prompt further easing. Investors now watch for additional rate moves, especially under the Fed chair succeeding Powell in May, Commerzbank's commodity analyst Carsten Fritsch notes.

Fed cuts rates by 25bps, decision not unanimous

"The Gold price rose back above the $4,300 per troy ounce mark today. The last time this happened was less than two months ago, when the Gold price reached its latest record high. The Fed meeting in the middle of the week provided tailwinds. The 25 basis point interest rate cut had been expected and therefore came as no surprise. The decision was not unanimous."

"Two regional Fed presidents voted against an interest rate cut, while Governor Miran, appointed by US President Trump, again voted for a 50 basis point cut. At the subsequent press conference, Fed Chairman Powell said that the situation on the labor market was worse than the data currently shows. This is an argument for further interest rate cuts. Powell attributed the elevated inflation to the tariffs."

"This is assumed to be a one-off effect on the price level. Powell also referred to stable inflation expectations. Although there are signs of a pause at the next meeting in January, the door remains open for further interest rate cuts after that. We expect more significant interest rate cuts than the market, especially after Powell's successor as Fed chair takes office in May. Trump's economic advisor Hassett, who has repeatedly spoken out in favor of more significant interest rate cuts, is considered the favorite."

The Pound Sterling (GBP) trades slightly lower but retains most of its weekly gains as UK data show mixed industrial performance and a wider trade deficit. Attention now shifts to next week’s jobs, CPI, and the Bank of England meeting, with markets closely watching guidance on future easing, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

UK industrial and manufacturing data offer mixed signals

"The pound is soft, trading with a marginal 0.1% decline from Thursday’s close while holding on to most of its weekly (0.35%) gain vs. the USD."

"Friday’s domestic releases included a mixed set of industrial and manufacturing production releases, with a modest surprise in the former outshined by a slightly greater disappointment in the latter. UK trade figures revealed a wider than expected trade deficit, albeit one that was highly impacted by the price of precious metals. The ex-metals balance surprised to the upside coming in with narrower than expected deficit."

"Focus now turns to next week’s events and releases, including jobs data on Tuesday, CPI on Wednesday, and the BoE on Thursday. A 25bpt cut is widely expected and fully priced, and we see risk in the statement tone and messaging around the outlook with markets pricing in a significant amount of easing and looking somewhat vulnerable to a neutral/marginally hawkish adjustment."

Lower European Gas prices (TTF) are having an impact: according to an analysis of ship tracking data by Bloomberg, LNG shipments from Qatar have recently been diverted away from Europe to India, Commerzbank's Head of FX and Commodity Research Thu Lan Nguyen notes.

U.S. supply risks loom as winter Gas demand uncertain

"Overall, European LNG imports between December 1 and 9 fell compared to the same period in November. The fact that Gas storage levels in the EU have not declined more rapidly so far is likely due to the recent mild temperatures. However, if heating demand rises and LNG imports continue to weaken at the same time, storage withdrawals could reach a critical level."

"There are also risks with regard to supply: in particular, supply from the US could be less generous than previously thought. This could be the case, for example, if domestic demand turns out to be higher than assumed so far. The EIA, for example, expects US Gas prices to rise this winter due to an impending cold spell."

"Recently, however, prices have fallen again as temperatures have been milder in mid-December. In the medium term, increasing electricity consumption by data centers could also significantly increase Gas demand. This was one of the reasons why the IEA raised its forecasts for US electricity consumption at the beginning of this year."

The Euro (EUR) trades defensively after modest weekly gains versus the US Dollar (USD), with short-term rates and ECB messaging offering fundamental support. EUR momentum remains bullish as it nears 1.18, setting the stage for further potential upside ahead of next Thursday’s ECB meeting, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

Euro supported by ECB-Fed policy divergence

"The EUR is trading somewhat defensively into Friday’s NA session, fading a slight portion of its 0.7% weekly gain vs. the USD. Overnight data have been limited to the final releases of CPI data from France and Germany, both unchanged from their preliminary prints. We remain bullish into next Thursday’s ECB meeting, where President Lagarde is expected to pair a widely anticipated hold (2.00% deposit rate) with an upgraded forecast and a relatively more hawkish tone."

"The outlook for relative central bank policy remains supportive as we consider the ECB’s constructive messaging and contrast it with a decidedly dovish Fed. Interest rate differentials are climbing from deeply negative levels and are offering the EUR fundamental support. We see scope for additional EUR gains as short-term rates markets have only just unwound their dovish bias, now leaning toward modest tightening with 4bpts priced by October 2026."

"This week’s gains have been important as they have delivered a push to fresh two-month highs and received confirmation from momentum indicators. The RSI is bullish, and at levels just shy of the overbought threshold at 70. We note the absence of any material resistance ahead of 1.18, a level that halted the EUR’s rally in both June and September. We look to a near-term range bound between 1.1680 and 1.1780."