Forex News

• EUR/USD slips toward a one-week low as the US Dollar rebounds from recent lows.
• Markets await the Fed's interest rate decision on Wednesday, with expectations leaning toward another rate cut.
• Technical setup highlights strong resistance at 1.1650, while the 21-day and 50-day SMAs cushion the downside.

The Euro edges lower against the US Dollar on Monday, with EUR/USD reversing earlier gains as the Greenback stages a rebound from recent lows, weighing on the shared currency. At the time of writing, EUR/USD is trading near 1.1623, close to a one-week low, after touching an intraday high of 1.1672 during the European session.

The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, is trading around 99.20, after dipping to 98.79 earlier in the Asian session.

Despite the pullback, the broader fundamental backdrop remains supportive for the Euro. The Federal Reserve (Fed) is widely expected to deliver another interest rate cut on Wednesday, while the European Central Bank (ECB) is seen keeping rates unchanged at its upcoming policy meeting later this month. The diverging central-bank outlook keeps downside in EUR/USD somewhat contained, even as short-term flows favour the Dollar.

From a technical perspective, the daily chart shows EUR/USD posting consecutive green candles in recent days, steadily climbing above the 21-day and 50-day Simple Moving Averages (SMAs).

The advance followed a clean double-bottom formation around the 1.1500 psychological zone in late November. However, bulls continue to struggle at the neckline of that pattern, where the 100-day SMA intersects, creating a strong confluence barrier near 1.1650.

A decisive close above this region would reinforce bullish momentum and open the door toward 1.1700 and 1.1750. On the downside, the 21-day and 50-day SMAs provide immediate support.

Sustained trade above these averages keeps the near-term bias constructive, while a break below them would expose fresh downside pressure, potentially dragging EUR/USD back toward 1.1500.

Momentum signals remain broadly supportive but lack strong conviction. The Moving Average Convergence Divergence (MACD) histogram stays positive, indicating the MACD line above the Signal line, though its recent contraction suggests moderating momentum.

Meanwhile, the Relative Strength Index (RSI) sits near 54, reflecting a neutral bias after cooling from recent highs. A shift toward the 60 level would suggest strengthening buying interest and could help validate a continued push higher if price action breaks above the key 1.1650 resistance zone.

• The New Zealand Dollar pulls back at the start of the week as risk appetite softens.
• Strong Chinese trade data fails to generate sustained demand for cyclical currencies.
• Diverging monetary paths between the RBNZ and the Fed nevertheless help limit the downside.

NZD/USD declines on Monday, trading around 0.5770 at the time of writing, down 0.10% on the day. After briefly touching 0.5790, the pair erased its earlier gains as market sentiment turned more cautious.

China’s trade surplus largely exceeded expectations in November, reaching $111.68 billion. This result, driven by a 5.9% YoY increase in exports, highlights the resilience of Chinese external demand. However, the improvement was not enough to sustain the New Zealand Dollar's (NZD) upward momentum, as markets trimmed risk exposure in the absence of additional catalysts.

The US Dollar (USD) remains indecisive ahead of Wednesday’s Federal Reserve (Fed) meeting. Markets are pricing nearly a 90% chance of a 25-basis-point rate cut, while also considering further reductions in 2026. Recent inflation readings, combined with mixed labour indicators, have encouraged caution and limited directional positioning across risk-linked currency pairs.

The Reserve Bank of New Zealand (RBNZ), for its part, has signaled the end of its easing cycle after a rate cut in November. Governor Anna Breman reiterated last week that the institution remains “fully focused on inflation,” reinforcing the view of a stable monetary stance in the coming months. This stance, relatively more restrictive than what is expected from the Fed, helps cushion the downside in NZD/USD.

In this environment, the pair’s next moves will largely depend on Fed President Jerome Powell’s remarks on Wednesday, as well as the Fed’s updated economic projections outlining the policy path into 2026.

• GBP/USD needs a daily close above 1.3350 to challenge the 1.3400 handle.
• The Federal Reserve is expected to announce a 'hawkish cut' this week.
• Bank of England rate cut likely as UK labor market shows weakness.

GBP/USD holds firm on Monday at around 1.3325, below the 200-day Simple Moving Average (SMA) of 1.3329 as investors wait for the Federal Reserve’s (Fed) monetary policy decision, which kept the US Dollar (USD) steady across the G10 FX board.

GBP/USD tests key resistance zone as Investors await central bank moves

On Wednesday, the Fed will unveil its last policy decision of the year, with traders pricing in an 86% chance of a 25-basis-point (bps) rate cut. Most analysts expect a possible Fed 'hawkish cut' in the statement language. The members of the Federal Open Market Committee (FOMC) will update their economic projections for the next year, laying the path for interest rates for the future.

In the UK, Gross Domestic Product (GDP) figures for October are due on Friday, with economists expecting 1.4% YoY growth and a 0.1% MoM expansion from the September reading.

Despite this, the labor market has shown signs of weakening, which keeps money markets pricing in an 87% chance of the Bank of England (BoE) cutting rates at the December meeting.

In the meantime, an earthquake hit Northeastern Japan, according to Nikkei Asia. They wrote, “A powerful quake with a preliminary magnitude of 7.6 struck northeastern Japan late Monday night, with the weather agency issuing a tsunami warning for coastal areas of Hokkaido as well as Aomori and Iwate prefectures.”

GBP/USD Price Forecast: Technical outlook

GBP/USD retreated from around the 200-day SMA, an indication that sellers are leaning towards that key resistance level. Although momentum remains bullish as depicted by the Relative Strength Index (RSI), buyers must achieve a daily close above 1.3350 to challenge the 1.3400 handle.

On the flip side, if GPBP/USD drops below 1.3300, expect further losses, with traders eyeing the 50-day SMA at 1.3262 ahead of the 20-day SMA at 1.3193.

• Gold consolidates near $4,200 as traders turn cautious ahead of Wednesday’s Federal Reserve interest rate decision.
• US Dollar steadies and Treasury yields climb, limiting upside for XAU/USD while keeping the metal confined to its one-week range.
• Technically, XAU/USD remains trapped in a tight range, with consistent dip-buying interest emerging around the $4,200-$4,180 zone.

Gold (XAU/USD) kicks off the week on a quiet note, with traders reluctant to take fresh positions ahead of the Federal Reserve’s (Fed) interest rate decision on Wednesday. At the time of writing, XAU/USD is trading around $4,190, easing after rising to an intraday high of $4,219.

Attention remains squarely on the Fed’s monetary policy meeting, with markets gearing up for another interest rate cut at the final policy decision of 2025, which would bring the Federal Funds Rate down to the 3.50%-3.75% range.

However, the latest Personal Consumption Expenditures (PCE) data and mixed labour indicators are prompting markets to consider that the Fed may opt for a more measured approach to additional monetary policy easing heading into 2026, which in turn is helping the US Dollar (USD) stabilise and pushing Treasury yields higher.

Beyond monetary policy, geopolitical risks also remain in focus, as the Russia-Ukraine war and renewed tensions between Thailand and Cambodia continue to provide a supportive backdrop for Gold.

Market movers: Dollar steadies, yields rise as stalled PCE urges Fed caution

• The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, is trading around 99.10, staging a modest recovery after dipping to 98.79 earlier in the Asian session. Meanwhile, Treasury yields are edging higher across the curve, with the benchmark 10-year hovering near 4.186%, its highest level since September 26.
• US data released on Friday showed that PCE inflation continues to stall, signalling that disinflation progress is slowing. Core PCE, the Fed’s preferred gauge, rose 0.2% MoM in September, matching expectations, while the annual rate eased only slightly to 2.8% from 2.9%. Headline PCE also held steady at 0.3% MoM and 2.8% YoY.
• Labour data released last week painted a mixed picture. ADP Employment Change unexpectedly declined by 32,000 in November, sharply missing expectations for a 5,000 increase after a revised 47,000 gain in October. Challenger Job Cuts dropped to 71.3K from 153.1K, while Initial Jobless Claims declined to 191K, beating expectations for 220K and down from 218K the previous week.
• According to the CME FedWatch Tool, markets assign around an 87% probability of a 25 basis point (bps) rate cut at the upcoming Fed meeting.
• According to the World Gold Council (WGC) report published on December 5, global Gold ETFs recorded their sixth consecutive month of inflows in November, adding US$5.2 billion as assets under management climbed to a record US$530 billion.

Technical analysis: XAU/USD holds range as $4,250 caps upside

Gold (XAU/USD) remains range-bound, with repeated dip-buying interest emerging in the $4,200-$4,180 zone. On the 4-hour chart, the 50-period Simple Moving Average (SMA) is acting as immediate dynamic support near $4,201, while the 100-period SMA around $4,143 provides a deeper cushion.

On the upside, $4,250 continues to cap advances and stands as a firm barrier that bulls must clear to regain momentum. A sustained break above this ceiling would shift the bias more decisively in favour of buyers and open the door for a retest of the all-time highs.

Momentum signals remain muted. The Relative Strength Index (RSI) is hovering near 52, reflecting a neutral stance and aligning with the current consolidation phase. Meanwhile, the Average Directional Index (ADX) at 12.7 indicates very weak trend strength, confirming that XAU/USD lacks directional conviction and remains stuck in a sideways structure.

• USD/CHF climbs to a one-week high as traders position ahead of the Fed and SNB interest rate decisions.
• Markets are firmly pricing an 87% chance of a 25 bps Fed rate cut on Wednesday.
• SNB is seen holding rates at 0.00% on Thursday, with policymakers signalling a high bar for any return to negative rates.

The Swiss Franc (CHF) trades on the back foot against the US Dollar (USD) on Monday as markets reposition ahead of this week’s key monetary policy decisions from the Federal Reserve (Fed) and the Swiss National Bank (SNB).

At the time of writing, USD/CHF is trading around 0.8072, its highest level since November 26, as the Greenback stages a modest rebound. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, is trading around 99.10, after dipping to 98.79 earlier in the Asian session.

The Franc is struggling to find support even as markets remain firmly positioned for a Fed rate cut on Wednesday. According to the CME FedWatch Tool, traders assign an 87% probability of a 25 bps move, which would bring the Federal Funds Rate down to the 3.50%–3.75% range.

With the December rate cut almost fully priced in, investors will closely watch Fed Chair Jerome Powell’s press conference and the updated economic projections, which are expected to set the tone for the monetary policy path into 2026.

However, the latest PCE inflation figures and mixed labour indicators suggest the Fed may take a more cautious approach to further easing heading into 2026. US data released on Friday showed that disinflation is losing momentum, with Core PCE rising 0.2% MoM in September and easing only slightly to 2.8% YoY. Headline PCE held steady at 0.3% MoM and 2.8% YoY.

Labour signals were uneven as well. ADP Employment Change fell by 32,000 in November, missing expectations, while Challenger Job Cuts dropped sharply to 71.3K. Initial Jobless Claims also came in lower at 191K, highlighting resilience despite broader signs of cooling.

On the Swiss side, the focus is on the SNB’s interest rate decision scheduled for Thursday, where policymakers are expected to leave rates unchanged at 0.00%. Inflation has eased toward the lower end of the SNB’s 0–2% target range, but despite the unexpected slowdown, policymakers have indicated that returning to negative rates remains a high bar.

The central bank also expects inflation to edge slightly higher in the coming quarters, supporting the case for maintaining its current stance.

Recent reports suggest economists do not anticipate a move back into negative territory in 2026 either. According to the latest BHH Market View report, the swaps market assigns less than a 50% chance of a 25 bps cut to -0.25% over the next twelve months.

Expectations are rising that the Reserve Bank of Australia (RBA) will confirm a pivot toward tightening in its final decision of the year. Governor Michele Bullock’s recent testimony to the Australian Senate affirmed greater vigilance against inflation, and the central bank is not alone in this regard: market pricing for several G10 names such as Norges Bank and even the BoC has shifted away from the Fed and other majors, BNY's Head of Markets Macro Strategy Bob Savage reports.

AUD/USD outperforms amid strong inflows

"Widening in rate differentials can only help with flow performance, and this is very much in play for AUD, which is sitting on a very comfortable net inflow average since the beginning of October. Outflows have been very limited since that month in both frequency and magnitude. The question is how much of this represents good news already 'in the price', and whether AUD is actually being set up for an adjustment if the RBA dampens expectations of speedy hikes."

"We also observe that AUD/USD is outperforming AUD by some distance, which normally would not be the case in iFlow, given that there aren’t many crosses, which traditionally would have a strong impact on flow scores. The pair has not seen an outflow session in two weeks, and the flow scores have been very strong throughout the last two months."

"The figures imply that there is also a strong level of outflows in AUD, which we believe could indicate onshore investors removing forward AUD purchases on U.S. assets (i.e. unwinding AUD forward longs). For the crosses, we see a stronger case for outright AUD longs being adopted, due to even wider rate differentials and the prospect of further gains with a more hawkish RBA."

• AUD/USD stabilizes around 0.6640 on Monday after four consecutive days of gains.
• Expectations of a less dovish RBA continue to support the Australian Dollar.
• The US Dollar remains weak ahead of Wednesday’s Federal Reserve decision.

AUD/USD trades steadily around 0.6640 at the time of writing on Monday, after a four-day rally that pushed the pair to two-month highs. The consolidation comes as investors turn cautious ahead of Tuesday’s Reserve Bank of Australia (RBA) decision and Wednesday’s Federal Reserve (Fed) announcement.

The Australian Dollar (AUD) maintains a bullish tone, supported by a sharp shift in market expectations. Traders no longer anticipate additional rate cuts from the RBA. Instead, the bank may signal that it is done easing monetary policy for now, given persistent inflation pressures. In the third quarter, the Consumer Price Index (CPI) increased 3.2% YoY, up from 2.1% in the second quarter, confirming that inflation remains sticky.

Expectations are firmly aligned with the RBA keeping its policy rate unchanged at 3.6%, but the key driver for the Aussie will be the monetary policy guidance. Markets no longer foresee a reduction in the Official Cash Rate (OCR) in the near term, and some now anticipate a rate hike as early as 2026, encouraged by strong household spending up 1.3% in October versus 0.3% in September.

However, Commerzbank notes that “despite a higher-than-expected inflation print in November, the RBA is unlikely to signal any imminent rate hikes”, which could disappoint a portion of AUD bulls and hurt the Aussie.

Additional support for the Australian Dollar comes from China. The National Bureau of Statistics of China reported a much larger-than-expected trade surplus for November, rising to $111.68 billion, driven by a sharp rebound in exports (5.7% in Chinese Yuan terms after a 0.8% drop in October). As Australia is heavily dependent on Chinese demand for its exports, these upbeat trade figures reinforce underlying AUD demand.

In the United States (US), the US Dollar (USD) remains under pressure ahead of the Fed decision. Markets assign an 87% chance to a 25-basis-point rate cut, according to the CME FedWatch tool, which would bring the target range to 3.50%-3.75%, as evidence of a cooling labor market continues to accumulate. The US Dollar Index (DXY) trades near a five-week low around 98.90 at the time of writing, reflecting investor caution.

Recent comments from Fed officials, including John Williams, underline weakening labor demand and slower economic growth, reinforcing expectations for further easing. However, a potentially more hawkish tone from Jerome Powell, combined with an unusually divided committee, could limit USD losses if the Fed signals increased caution about the pace of rate cuts in early 2026.

The Japanese Yen (JPY) slips 0.2% versus the US Dollar (USD), underperforming the G10, as rising US yields and firm domestic rate expectations weigh on the currency. Disappointing Japanese earnings, GDP revisions, and a narrower trade balance add to the pressure, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

USD/JPY gains as US yields climb

"The yen is soft, down 0.2% vs. the USD and underperforming all of the G10 currencies as we head into Monday’s NA session. Interest rate differentials are dominating as US yields climb back to the upper end of their range from September and threaten a bullish break, halting the recent JPY-supportive narrowing of US-Japan spreads."

"Domestically, rate expectations remain firm with markets now pricing 32bpts of tightening for December and a cumulative 50bpts by September. Overnight data have been soft, with disappointing real cash earnings and a weaker revision to the final Q3 GDP figures, along with a narrower than expected trade balance for October."

• USD/CAD trades near its lowest level since late September after Friday’s strong Canadian jobs data.
• Traders expect the BoC to hold rates on Wednesday as recent data support a steady stance.
• Markets also look ahead to the Fed decision, with expectations leaning toward a rate cut on Wednesday.

The Canadian Dollar (CAD) edges higher against the US Dollar (USD) on Monday, extending gains as investors continue to favour the Loonie on diverging expectations for the Bank of Canada (BoC) and the Federal Reserve (Fed).

At the time of writing, USD/CAD is trading near 1.3807, its lowest level since September 22, after falling nearly 0.95% on Friday following Canada’s stronger-than-expected employment report.

The BoC is widely expected to keep interest rates unchanged at 2.25% at Wednesday’s policy meeting, with recent economic data reinforcing the case for a steady stance.

Canada’s latest employment report showed another month of solid job creation and a noticeable drop in the Unemployment Rate. Statistics Canada reported that the economy added 53.6K jobs in November, well above expectations for a small decline, after a 66.6K increase in October. The unemployment rate fell to 6.5% from 6.9%, defying forecasts for a rise toward 7.0%.

Inflation trends remained mixed. Canada’s headline Consumer Price Index (CPI) eased to 2.2% YoY in October, slightly above the 2.1% consensus but lower than September’s 2.4%. On a monthly basis, CPI rose 0.2%, matching expectations and coming in just above the 0.1% increase recorded in September.

The BoC’s preferred underlying measures remained firm, with core CPI rising 0.6% MoM in October after a 0.2% increase in the previous month, while the annual rate edged up to 2.9% from 2.8%.

Growth indicators pointed to a modest rebound, with Gross Domestic Product (GDP) showing the economy regained some momentum in the third quarter. Statistics Canada reported that the economy expanded modestly in Q3, with September GDP rising 0.2% MoM in line with expectations.

Overall, real GDP rose 0.6% in Q3, reversing the -0.5% contraction in the second quarter, while the annualized growth rate jumped to 2.6%, far above the 0.5% consensus and a sharp improvement from the -1.8% recorded in Q2.

In the United States, the Fed will also announce its interest rate decision on Wednesday, with markets pricing in nearly an 87% probability of a 25 bps cut following mixed labour data, steady Personal Consumption Expenditures (PCE) inflation and a series of dovish-leaning remarks from policymakers.

Against this backdrop, USD/CAD remains biased lower as policy divergence continues to favour the Canadian Dollar ahead of mid-week central bank decisions.

The Pound Sterling (GBP) trades slightly lower versus the US Dollar (USD), consolidating after a strong budget-driven rally. With key UK data due later in the week and the December 18 BoE meeting approaching, market attention remains on guidance for the 2026 rate path, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.

BoE rate outlook adds uncertainty

"The pound is entering Monday’s NA session with a fractional decline vs. the USD as it trades somewhat defensively from the mid-1.33s following its impressive budget-driven rally from late November. Fundamental releases have been limited, and this week’s data are concentrated toward the end of the week with industrial production and trade scheduled for Friday."

"BoE headline risk is elevated ahead of the December 18 rate decision, despite broad expectations for a 25bpt cut, as market participants consider the outlook and guidance around the rate path for 2026. Markets are currently pricing in one additional 25bpt cut by June however the latest communication from policymakers has highlighted risk to both sides."