Forex News

• EUR/USD climbs to its highest level since October 3, as the US Dollar weakens after softer Jobless Claims data.
• US Initial Jobless Claims rise to 236K, exceeding expectations and reinforcing signs of a cooling labour market.
• The Fed’s latest interest rate cut and cautious monetary policy stance leave the Greenback vulnerable across the board.

The Euro (EUR) extends its advance against the US Dollar (USD) on Thursday as the Greenback slides to multi-week lows following the latest US Initial Jobless Claims release. At the time of writing, EUR/USD is trading around 1.1748, its highest level since October 3.

US data published earlier showed that Initial Jobless Claims rose to 236,000 in the week ending December 6, overshooting forecasts of 220,000 and sharply above the prior week’s revised 192,000. The 4-week moving average also edged higher to 216,750, while Continuing Jobless Claims eased to 1.838 million for the week ending November 29.

The latest claims data added to signs of labour-market cooling, aligning with the Federal Reserve’s assessment in its monetary policy announcement on Wednesday. Policymakers highlighted rising downside risks to employment, a key factor behind their decision to deliver another 25 basis point (bps) interest rate cut.

The US Dollar Index (DXY) remains under sustained pressure, slipping toward 98.25, its lowest level since October 17. Softer labour data combined with the Fed’s cautious policy stance is weighing on broader Dollar sentiment, allowing EUR/USD to extend gains for a second consecutive day.

• GBP/JPY under pressure as the Yen strengthens on growing expectations of a BoJ rate hike next week.
• Markets now widely price a BoJ rate increase to 0.75%, according to the latest Reuters poll.
• BoE decision is also in focus as easing inflation and sluggish growth strengthen the case for a December rate cut.

The British Pound (GBP) trades on the backfoot against the Japanese Yen (JPY) on Thursday, as the Yen strengthens broadly on growing expectations of a Bank of Japan (BoJ) rate hike next week. At the time of writing, GBP/JPY is trading around 208.40, easing slightly after climbing to its highest level since August 2008 earlier this week.

After a period of fading conviction, markets are once again largely pricing in a BoJ rate hike. According to the latest Reuters poll, 90% of economists, or 63 of the 70 surveyed, expect the Japanese central bank to raise short-term interest rates to 0.75% from 0.50% at next week's meeting. That marks a sharp increase from 53% in the previous poll conducted last month.

The poll also found that about two-thirds of analysts, 37 of 54, see the rate moving to at least 1.00% by the end of next September.

The shift in expectations comes as Japan’s inflation readings remain well above the BoJ’s 2% target. Governor Kazuo Ueda recently said the central bank is getting closer to achieving its inflation objective in a more sustainable way.

Earlier this month, he also signalled that policymakers will actively weigh the pros and cons of a rate increase at the December monetary policy meeting. Ueda cautioned that waiting too long to raise rates could allow inflation to accelerate sharply.

In the UK, the Bank of England (BoE) will also announce its interest rate decision next week, with markets widely anticipating a quarter-point cut. According to a Reuters poll, most economists expect the BoE to reduce the Bank Rate to 3.75% at the December 18 meeting as inflation continues to ease and economic growth remains modest.

Attention now turns to the UK Gross Domestic Product (GDP) data due on Friday, which could influence expectations ahead of the BoE decision. Alongside GDP, markets will also assess Industrial Production, Manufacturing Production and Consumer Inflation Expectations.

• GBP/USD extends gains as weak US jobless data amplifies expectations for deeper Federal Reserve easing next year.
• Traders shift focus to upcoming UK GDP and next week’s BoE rate decision, where a 25 bps cut is heavily priced in.
• Technical outlook turns bullish, with GBP/USD eyeing 1.3450 once a sustained daily close above 1.3400 is achieved.

The Pound Sterling (GBP) rallies during the North American session on Thursday, up over 0.68% after the Federal Reserve (Fed) delivered a 25-basis-point rate cut and a softer-than-expected jobs report, which weighed on the US Dollar (USD). At the time of writing, GBP/USD trades at 1.3417, its highest level in the last six weeks.

Pound rallies after the Fed delivers a widely expected rate cut, soft US labor data deepens bets on further easing

US Initial Jobless Claims for the week ending December 6 increased by 236K, up from the previous week's upwardly revised figure of 192K, reported the Department of Labor. Continuing Claims for the week ending November 29 dipped from 1.937 million to 1.838 million.

The data highlights the ongoing weakness of the labor market. Now, eyes are set on next week’s Nonfarm Payrolls report. Other data showed an unexpected shrink in the US Goods and Services Trade Balance from $-59.3 billion in August to $-52.8 billion in September.

In the meantime, the Federal Reserve rate cut weakened the US Dollar, which, according to the US Dollar Index, is testing levels last seen in mid-October, down 0.40% at 97.73. This despite the fact that the dot plots showed that the median wanted the Fed funds rate to end 2025 within the 3.75%-4% range.

In the UK, the docket has remained light except for Friday’s release of Gross Domestic Product (GDP) figures, which are expected to show an increase of 0.1% MoM in October, above September’s 0.1% contraction.

GBP/USD traders are eyeing next week’s Bank of England (BoE) monetary policy decision. A Reuters survey revealed that economists expect a rate cut of 25 basis points on December 18, which would leave the Bank Rate at 3.75%.

On Friday, the Fed parade begins, with speeches by Paulson, Hammack and Goolsbee.

GBP/USD Price Forecast: Technical outlook

The GBP/USD trend has shifted from neutral to neutral-upwards, with buyers regaining control, but they must achieve a daily close above 1.3400. This will expose the 1.3450 area, followed by the October 17 peak ahead of 1.3500. On the flip side, the first support is 1.3400, followed by the 100-day SMA at 1.3358.

(This story was corrected on December 11 at 16:31 GMT to say that the US Goods and Services Trade Balance print in August was $-59.3 billion, not $-59.8 billion.)

• US Initial Jobless Claims jump to 236,000, signalling further weakening in the labor market.
• Expectations of additional Federal Reserve rate cuts weigh on the US Dollar.
• The Japanese Yen remains supported by rising expectations of a BoJ rate hike.

USD/JPY trades sharply lower on Thursday around 155.10 at the time of writing, down 0.50% on the day. The move reflects increasing pressure on the US Dollar (USD) following labor-market data pointing to a gradual slowdown, while the Japanese Yen (JPY) continues to benefit from expectations of monetary tightening in Japan.

According to the latest figures from the US Department of Labor, Initial Jobless Claims rose to 236,000 for the week ending December 6, compared with 192,000 the previous week. The figure came well above market expectations of 220,000. The four-week moving average also climbed to 216,750, confirming a progressive deterioration in labor-market conditions. Meanwhile, Continuing Jobless Claims eased to 1.838 million but remain elevated overall, reinforcing concerns about a deeper economic slowdown.

This data was released just one day after the Federal Reserve (Fed) cut interest rates by 25 basis points, bringing the target range to 3.50%-3.75%. While the move was widely expected, the softer tone of Federal Reserve Chair Jerome Powell and the limited number of hawkish dissents strengthened the view that the Fed is increasingly concerned about slowing economic activity and could cut rates further in 2026. Markets already expect at least two more rate cuts next year, according to the CME FedWatch tool.

The US Dollar is also weighed down by mounting speculation about Powell’s succession, with his term expiring in May. The possible nomination of Kevin Hassett, seen as more dovish, adds further downside pressure to the Greenback.

In contrast, the Japanese Yen retains a supportive backdrop. Investors continue to price the possibility of a Bank of Japan (BoJ) rate hike as early as next week. BoJ Governor Kazuo Ueda recently noted that the conditions needed to justify policy normalization “have been gradually improving,” while the Corporate Goods Price Index remains high by historical standards. Expectations of Japanese monetary tightening, coupled with a broader sense of caution across global markets, support demand for the Japanese Yen.

Market focus now turns to the BoJ policy meeting scheduled for next Friday. In the meantime, the combination of a softer US Dollar and a firm Japanese Yen keeps USD/JPY on the defensive.

• Gold holds range as traders reassess the Fed’s monetary policy outlook after the latest 25 bps rate cut.
• Fed Chair Jerome Powell’s cautious tone and data-dependent message keep XAU/USD confined to its familiar range.
• Softer US Dollar and easing Treasury yields help limit downside pressure on the metal.

Gold (XAU/USD) regains ground on Thursday, giving back part of earlier losses as the US Dollar (USD) weakens broadly. At the time of writing, the metal is trading around $4,235, with investors reassessing the Federal Reserve’s (Fed) monetary policy outlook after the latest interest rate cut.

The Fed delivered another 25 basis point (bps) rate cut on Wednesday, bringing the policy range to 3.50%-3.75%, in line with expectations. The decision passed on a 9-3 vote, with Stephen Miran once again advocating a larger 50 bps move, while Austan Goolsbee and Jeffrey Schmid preferred to leave policy unchanged.

However, the lack of conviction in the forward guidance limited Gold’s upside. Fed Chair Jerome Powell reiterated that the central bank is “well-positioned to wait and see how the economy evolves."

Powell’s remarks were widely interpreted as confirmation that the Fed is adopting a wait-and-see approach after delivering 75 bps of rate cuts this year. Even so, policymakers remain divided on the need for additional easing in 2026, leaving investors uncertain about the policy path and keeping the precious metal confined to the familiar range that has dominated trade for more than a week.

Market movers: Markets digest Fed outlook and updated projections

• US Initial Jobless Claims increased to 236K for the week ending December 6, surpassing expectations of 220K, while the 4-week average ticked up to 216.75K, and Continuing Jobless Claims fell to 1.838 million.
• A broadly weaker US Dollar (USD) and softer Treasury yields are helping limit downside in Gold. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, is trading near 98.25, its lowest level since October 17. Meanwhile, the benchmark 10-year Treasury yield is hovering around 4.10%, easing after briefly climbing to three-month highs ahead of Wednesday’s Fed decision.
• The Federal Open Market Committee (FOMC) statement highlighted that economic activity is expanding at a moderate pace, with job gains slowing and unemployment edging higher, while inflation has moved up and remains somewhat elevated. Policymakers highlighted rising downside risks to employment and acknowledged elevated uncertainty around the economic outlook. The Committee said it will carefully assess incoming data, the evolving outlook, and the balance of risks when determining the extent and timing of any further policy adjustments, reaffirming its commitment to maximum employment and returning inflation to the 2% objective.
• The updated Summary of Economic Projections (SEP) placed the median forecast for real Gross Domestic Product (GDP) at 1.7% in 2025 and 2.3% in 2026, compared with 1.6% and 1.8% in the September projections. The unemployment rate outlook was largely unchanged at 4.5% for 2025 and 4.4% for 2026. PCE inflation is now projected at 2.9% for 2025 and 2.4% for 2026, slightly below the prior estimates of 3.0% and 2.6%, while core PCE is seen at 3.0% in 2025 and 2.5% in 2026, compared with earlier projections of 3.1% and 2.6%.
• Dot plots were unchanged, with the FOMC median rate forecast still implying one cut for both 2026 and 2027, no change in 2028, and the same longer-term rate of 3.0%.
• In the post-meeting press conference, Powell said inflation remains somewhat elevated and noted weakening labour-market sentiment. He highlighted upside risks to inflation and commented that risks are tilted against both sides of the Fed’s mandate. Powell added that the normalization achieved over the last three meetings should help stabilise the labour market and maintain downward pressure on inflation. He reiterated that interest rates are now within the range of plausible neutral estimates and emphasized that policy decisions will continue to be made on a meeting-by-meeting basis.

Technical analysis: Gold stays supported above rising SMAs in a tight range

Gold (XAU/USD) remains range-bound, with repeated dip-buying interest emerging in the $4,200-$4,180 zone and consistent selling pressure capping gains near $4,250.

In the daily chart, the 21-day Simple Moving Average (SMA) at $4,157.36 stands above the 50-day SMA at $4,105.55, both rising as price holds above them, underscoring a bullish bias. The Relative Strength Index (14) prints 60.03, above the midline, reinforcing positive momentum without overbought signals.

A daily close above the upper boundary of the consolidation zone would expose $4,300 and potentially open the path toward the all-time high near $4,381. On the downside, a break below $4,180 would weaken the near-term bias and shift attention toward the rising SMAs as initial support.

The number of Americans filing for new unemployment benefits increased to 236,000 in the week ending December 6, the US Department of Labor (DOL) reported on Thursday. The figure came in above the market expectation of 220,000 and was higher than the previous week’s level, which was revised up to 192,000 from 191,000.

The report also showed that the 4-week moving average inched higher to 216,750, compared with 214,750 in the week ending November 29.

In the same release, the DOL noted that seasonally adjusted Continuing Jobless Claims fell to 1.838 million for the week ending November 29, marking a drop of 99,000 from the previous week’s revised level. The prior week’s figure was revised down to 1.937 million from 1.939 million.

The insured unemployment rate declined to 1.2%, compared with 1.3% in the preceding week, while the 4-week moving average for Continuing Claims eased to 1.918 million, down from a revised 1.945 million.

Market reaction

The Greenback extends its slide following the data. The US Dollar Index (DXY), which tracks the Buck’s value against a basket of six major counterparts, is trading near 98.28, its lowest level since October 17.

• EUR/CHF extends losses for a third straight day as the Swiss Franc strengthens following the SNB’s latest policy decision.
• SNB keeps the policy rate unchanged at 0%, in line with expectations, maintaining a cautious but steady policy stance.
• Focus shifts to next week’s ECB meeting, where policymakers are widely expected to keep all key rates unchanged.

The Euro (EUR) edges lower against the Swiss Franc (CHF) on Thursday as the CHF strengthens in the aftermath of the latest Swiss National Bank (SNB) interest rate decision. At the time of writing, EUR/CHF is trading around 0.9330, extending losses for the third straight day as traders respond to the SNB’s cautious but steady policy tone.

The SNB left the policy rate unchanged at 0%, in line with expectations. Policymakers reiterated that the central bank remains ready to intervene in foreign exchange markets if needed, while emphasising that the current low rate environment helps maintain price stability and support economic activity. The central bank noted that inflationary pressure remains virtually unchanged compared with the previous assessment.

In its updated projections, the SNB said inflation dipped to 0.0% in November, down from 0.2% in August. However, the medium-term outlook remains stable, with the SNB forecasting average inflation of 0.2% in 2025, 0.3% in 2026, and 0.6% in 2027, assuming the policy rate stays at 0% over the entire forecast horizon.

On the domestic front, Switzerland’s economy contracted in the third quarter. Even so, the economic outlook has improved modestly on slightly better global conditions, with Gross Domestic Product (GDP) expected to expand by just under 1.5% in 2025 and around 1% in 2026.

During the post-meeting press conference, SNB Chairman Martin Schlegel said the bank’s monetary stance will remain expansive, adding that policy is expected to “stoke inflation slowly in the next quarters.” He reiterated that the SNB is willing to introduce negative rates if needed, noting that negative rates in the past helped reduce the attractiveness of the Franc.

At the same time, he stressed that the probability of returning to negative rates has not increased and that the hurdle for using them is now higher. Schlegel also underlined that the SNB has no preference for inflation as long as it remains within its target range, and noted that while the unemployment rate is expected to rise slightly, it could fall again further ahead.

Looking ahead, attention now turns to next week’s European Central Bank (ECB) interest rate decision. The ECB is widely expected to keep all three key policy rates unchanged, with speculation building around the possibility of a rate hike next year following a series of firmer remarks from policymakers this week.