Forex News

• WTI price climbs to near $57.65 in Monday’s early European session, up 1.12% on the day. 
• Officials said the US had intercepted an oil tanker in international waters off the coast of Venezuela. 
• Fed rate cut bets might help limit the WTI’s losses. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $57.65 during the early European trading hours on Monday. The WTI price rises after US President Donald Trump said that he will not rule out war with Venezuela, raising fresh supply uncertainty. Traders brace for the release of the American Petroleum Institute (API) crude oil stockpiles report on Tuesday for fresh impetus.

NBC reported on Sunday that the US is still in pursuit of a third oil tanker near Venezuela as Trump intensifies an oil blockade on Nicolás Maduro’s government. Another official affirmed that the tanker was under sanctions but reiterated that it had not yet been boarded and that interceptions may take several forms, including sailing or flying near vessels of concern.

"The market is waking up to the fact that the Trump administration is taking a hardline approach to the Venezuelan oil trade," said June Goh, senior oil market analyst at Sparta Commodities.

On the other hand, the growing expectation that the US Federal Reserve (Fed) will deliver further interest rate cuts after signs of softer US inflation and cooler jobs reports could weigh on the US Dollar (USD) and boost the USD-denominated commodity price. 

Financial markets are pricing in nearly a 21.0% odds the Fed will cut interest rates at its next meeting in January, after it reduced them by a quarter-point at each of its last three meetings, according to the CME FedWatch tool.

Here is what you need to know on Monday, December 22:

Gold gathers bullish momentum to the holiday-shortened week and trades at a new record-high above $4,400. The economic calendar will not offer any high-tier data releases on Monday, allowing investors to react to changes in risk perception.

Reports of Israel planning to attack Iran on growing concerns about Iran reconstituting nuclear enrichment sites and expanding its ballistic missile program cause markets to adopt a cautious stance early Monday. Citing four former US officials familiar with the development, NBC news reported that Israeli Prime Minister Benjamin Netanyahu is expected to meet US President Donald Trump later this month to explain why they need to take military action against Iran again. After rising above 1% in the previous week, Gold turned north in the Asian session and was last seen trading at $4,405, rising more than 1.5% on the day.

Meanwhile, US stock index futures trade marginally higher after Wall Street's main indexes closed in positive territory on Friday and the US Dollar (USD) Index stays in a consolidation phase above 98.50 following the recovery seen in the second half of last week. On Tuesday, the US Bureau of Economic Analysis will publish the Gross Domestic Product data for the third quarter.

EUR/USD corrected lower following the rally seen in the first half of the previous week and closed in negative territory to snap a three-week winning streak. The pair holds steady in the European morning on Monday and trades in a tight channel above 1.1700.

Escalating tensions in the Middle East seem to be causing oil prices to rise at the beginning of the week. At the time of press, the Barrel of West Texas Intermediate was up more than 1% on the day at $57.15.

The People’s Bank of China (PBOC) announced early Monday that it left its one-year and five-year Loan Prime Rates (LPRs) unchanged at 3.00% and 3.50%, respectively. After posting marginal gains on Thursday and Friday, AUD/USD gains traction and trades near 0.6630 to start the European session.

GBP/USD ended the previous week virtually unchanged despite the volatile action see in the immediate aftermath of the Bank of England's (BoE) policy announcements. The pair edges slightly higher early Monday and trades near 1.3400.

USD/JPY corrects lower after rising nearly 1.5% on Friday and trades in negative territory below 157.50.

• The Japanese Yen kicks off the new week on a positive note amid a combination of factors.
• Reviving safe-haven demand benefits the JPY amid renewed government intervention fears.
• A modest USD downtick further weighs on USD/JPY, though the downside seems cushioned.

The Japanese Yen (JPY) sticks to modest intraday gains through the Asian session on Monday amid a combination of supporting factors. This, along with a retreating US Dollar (USD), keeps the USD/JPY pair depressed below mid-157.00s. Rising tensions between the US and Venezuela, along with concerns about renewed Israel-Iran conflict and persistent uncertainties stemming from the protracted Russia-Ukraine war, underpin the JPY's safe-haven status. Furthermore, comments from Japan’s top foreign exchange official, Atsushi Mimura, fueled speculation about a possible government intervention and provided an additional lift to the JPY.

Meanwhile, Bank of Japan (BoJ) Governor Kazuo Ueda left the door open to further tightening, though he remained vague on the exact timing and pace of future rate hikes. Adding to this, worries about Japan's worsening fiscal condition, aggravated by the recent steep rise in Japanese government bond (JGB) yields, might hold back the JPY bulls from placing aggressive bets. Adding to this, hawkish comments from the US Federal Reserve (Fed) officials could limit deeper USD losses and offer some support to the USD/JPY pair. This makes it prudent to wait for strong follow-through selling before confirming a near-term top for the currency pair.

Japanese Yen remains on the front foot as geopolitical risks drive safe-haven flows amid intervention fears

• Atsushi Mimura, Japan’s Vice Finance Minister for International Affairs and top foreign exchange official, said on Monday that he is concerned about one-way moves and warned of appropriate action against an excessive decline in the Japanese Yen.
• The US intercepted a Venezuelan oil tanker over the weekend and is in active pursuit of a third in less than two weeks. This comes after US President Donald Trump last week ordered a blockade of sanctioned tankers entering and leaving Venezuela.
• Israel's Prime Minister Benjamin Netanyahu said that officials are concerned that Iran is reconstituting nuclear enrichment sites and are preparing to brief Trump on options for attacking the missile program again, NBC News reported on Saturday.
• Russian President Vladimir Putin’s top foreign policy aide said on Sunday that changes made by the Europeans and Ukraine to US proposals did not improve prospects for peace. This contributes to driving safe-haven flows towards the JPY.
• The Bank of Japan, as was widely expected, raised its policy rate to 0.75%, or a 30-year high, at the end of the December meeting on Friday and reiterated that it would continue to hike rates if the economy and prices move in line with forecasts.
• In the post-meeting press conference, BoJ Governor Kazuo Ueda said that the central bank will closely look at the impact of the latest interest rate change, and the pace of monetary adjustment will depend on economic, price, and financial outlooks.
• Ueda, however, did not offer clarity on future hikes. Moreover, concerns about Japan's worsening fiscal health – led by a sharp rise in Japanese government bond yields and Prime Minister Sanae Takaichi's spending plan – might cap gains for the JPY.
• The recent hawkish comments from influential Federal Reserve officials pushed the US Dollar to a one-week high on Friday and should contribute to limiting any meaningful corrective slide for the USD/JPY pair, warranting caution for bears.
• In fact, Cleveland Fed President Beth Hammack said that monetary policy is in a good place to pause and assess the effects of 75 basis points (bps) of interest rate cuts on the economy during the first quarter, Bloomberg reported on Sunday.
• Traders, however, are still pricing in a greater possibility of two more interest rate cuts by the US central bank in 2026. This keeps a lid on a further USD appreciating move ahead of the delayed US Q3 GDP growth figures on Thursday.

USD/JPY technical setup favors bulls; 157.00 resistance-turned-support holds the key

Friday's breakout through the 156.95-157.00 horizontal barrier was seen as a fresh trigger for the USD/JPY bulls. Moreover, oscillators on the daily chart have been gaining positive traction and are still away from being in the overbought zone. This, in turn, suggests that any subsequent fall is more likely to attract fresh buyers near the said resistance breakpoint. Some follow-through buying, however, could pave the way for deeper losses towards the 155.50 intermediate support en route to the 155.00 psychological mark. The latter should act as a key pivotal point, which, if broken, might shift the bias in favor of bearish traders.

On the flip side, bulls might await a sustained move beyond the 157.85-157.90 region, or the multi-month top, before placing fresh bets. The USD/JPY pair might then accelerate the positive move towards the next relevant hurdle near the 158.45 area before aiming to challenge the year-to-date peak, around the 159.00 neighborhood, touched in January.

• NZD/USD jumps to near 0.5770 as the New Zealand Dollar gains on a risk-on mood.
• Upbeat NZ Q3 GDP data failed to lift RBNZ hawkish bets.
• The US Dollar drops despite slim Fed dovish bets for the January meeting.

The NZD/USD pair trades 0.25% higher to near 0.5770 during the early European trading session on Monday. The Kiwi pair regains ground after revisiting an almost three-week low near 0.5736 on Friday amid improved risk sentiment.

However, the upside in the New Zealand Dollar (NZD) seems to be capped as market expectations for a Reserve Bank of New Zealand (RBNZ) interest rate hike have diminished, despite the release of the better-than-projected New Zealand (NZ) Q3 Gross Domestic Product (GDP) data.

The probability of the RBNZ hiking its Official Cash Rate (OCR) in the July 2026 meeting has diminished to 40% from 50% seen before the Q3 GDP data release.

Stats NZ reported on Thursday that the economy grew at a faster pace of 1.1% compared to estimates of 0.9%. In the second quarter, the economy declined by 1%.

Meanwhile, a slight corrective move in the US Dollar (USD) has also strengthened the Kiwi pair. The US Dollar Index (DXY) trades slightly lower to near 98.60, even as traders remain confident that the Federal Reserve (Fed) will not cut interest rates in the January policy meeting.

NZD USD technical analysis

NZD/USD trades higher around 0.5769 at the start of the week. The pair holds above the rising 20-day Exponential Moving Average (EMA) at 0.5757, preserving a short-term upside bias. The 20-day EMA has been tilting higher for several sessions, continuing to support dips. RSI at 55 (neutral) is nudging up, keeping momentum mildly positive.

A sustained hold above the 20-day EMA would keep the recovery intact. The path for further gains would open if the price breaks above the December 11 high at 0.5832. Whereas, the price could lose ground if it breaks below Friday's low of 0.5735.

With the Relative Strength Index (RSI) shy of 60 and away from overbought, bulls have room to press higher. A retreat toward the 50 midline would warn of loss of traction.

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

• Gold price jumps to a record high in Monday’s early European session.
• Weaker US Dollar and safe-haven flows support the Gold price.
• Financial markets are set for muted trading as traders look ahead to the long holiday period.

Gold price (XAU/USD) rises to an all-time high near $4,300 during the early European trading hours on Monday. The precious metal gains momentum on the expectation of US Federal Reserve (Fed) interest rate cuts after signs of softer US inflation and cooler jobs reports. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal.

Additionally, persistent safe-haven demand amid the Israel-Iran conflict and the rise in US-Venezuela tensions might contribute to the yellow metal’s upside. It’s worth noting that traders seek assets that can preserve value during periods of uncertainty, which supports the Gold price. 

Financial markets are likely to trade in a subdued mood, and traders might book profits ahead of the long holiday period. This, in turn, might cap the upside for the precious metal. The US Chicago Fed National Activity Index report for September will be published later on Monday. On Tuesday, the preliminary reading of the US Gross Domestic Product (GDP) for the third quarter (Q3) will be in the spotlight.  

Daily Digest Market Movers: Gold rises amid Fed rate cut expectations, safe-haven flows

• The US is still in pursuit of a third oil tanker near Venezuela, officials told Reuters on Sunday, as US President Donald Trump intensifies an oil blockade on Nicolás Maduro’s government.
• Israel's Prime Minister Benjamin Netanyahu said over the weekend that officials are preparing to brief US President Donald Trump about options for attacking Iran again, according to Reuters. 
• The final reading from the University of Michigan on Friday showed that the Consumer Sentiment Index was downwardly revised to 52.9 in December from a preliminary reading of 53.3. Economists had expected the index to be upwardly revised to 53.4.
• Cleveland Fed President Beth Hammack said on Sunday that monetary policy is in a good place to pause, and she will assess the effects of 75 basis points (bps) of rate cuts on the economy during the first quarter, per Bloomberg.
• Financial markets are pricing in only a 21.0% chance the Fed will cut interest rates at its next meeting in January, after it reduced them by a quarter-point at each of its last three meetings, according to the CME FedWatch tool. 

Gold stays bullish and prepares to challenge its record high

Gold trades in positive territory on the day. According to the four-hour chart, the yellow metal maintains the bullish outlook as the price is well-supported above the key 100-period Exponential Moving Average. Furthermore, the Bollinger Bands widen and the 14-day Relative Strength Index (RSI) is located above the midline, keeping the bulls in check. 

The immediate resistance level for XAU/USD emerges at an all-time high of $4,381. A clean break above this level could set Gold up toward the $4,400 psychological mark. 

On the flip side, sustained trading below the December 20 low of $4,337 could invite fresh selling pressure and drag the price down to the lower limit of the Bollinger Band of $4,307, followed by the 100-day EMA of $4,253.

• The Indian Rupee trades firmly against the US Dollar near 90.00 at the start of the week.
• The RBI has intervened to support the Indian Rupee, and FIIs have remained net buyers in the December 17-19 period.
• Fed’s Hammack stresses against further interest rate cuts, citing that November’s CPI data was distorted.

The Indian Rupee (INR) holds onto last week’s gains against the US Dollar (USD) at the start of the week. The USD/INR pair clings to losses near 90.00, driven by the Reserve Bank of India’s (RBI) intervention in the spot and non-deliverable forward (NDF) market to support the Indian Rupee.

Last week, the RBI sold US Dollars in the opening trade on Wednesday and in closing trading hours on Friday to cushion the Indian Rupee against its one-way depreciation against the USD. The Indian currency has declined almost 6.5%, so far this year, against the US Dollar.

The major drivers behind strength in the USD/INR this year are strong demand for US Dollars by Indian importers and the continuous outflow of foreign funds from the Indian stock market amid trade frictions between the United States (US) and India.

In the cash market, Foreign Institutional Investors (FIIs) have remained net sellers in seven out of 11 months this year. So far this month, FIIs have also offloaded their stake worth Rs. 19,857.37 crore. However, some sort of buying has been seen by overseas investors in the last three trading days. FIIs have remained net buyers in only the past three trading days this month, and have bought a stake worth Rs. 3,598.38 crore.

Daily Digest Market Movers: Fed’s Hammack argued against reducing interest rates at least before spring

• The US Dollar struggles to regain ground against the Indian Rupee after posting a fresh three-week low near 89.50 on Friday, even as the former trades broadly stable against its major peers amid expectations that the Federal Reserve (Fed) will not cut interest rates in its January policy meeting.
• At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally lower around 98.60.
• According to the CME FedWatch tool, the probability of the Fed reducing interest rates by 25 basis points (bps) to 3.25%-3.50% in the January meeting is 22.5%.
• Fed dovish expectations for the January meeting have not accelerated despite the US Consumer Price Index (CPI) data for November showing that inflationary pressure cooled down.
• The data on Thursday showed that the headline inflation cooled down to 2.7% year-on-year (YoY) from 3% in October. In the same period, the core CPI – which strips off volatile food and energy items – cooled down to 2.6% from estimates and the prior reading of 3%.
• On Friday, Cleveland Fed President Beth Hammack stated in a podcast interview with the Wall Street Journal (WSJ) that there is no need to change interest rates at least until the spring, while stressing the need for evidence supporting progress in inflation towards 2%. She added that the significance of November’s inflation reading is limited as the data was distorted due to the government shutdown.
• “My base case is that we can stay here for some period of time, until we get clearer evidence that either inflation is coming back down to target or the employment side is weakening more materially,” Hammack said.
• Going forward, the major trigger for the US Dollar will be the preliminary Q3 Gross Domestic Product (GDP) data, which will be published on Tuesday.

Technical Analysis: USD/INR falls below 20-day EMA

USD/INR trades cautiously near 90.0440 at the start of the week. The 20-day Exponential Moving Average rises, though price has slipped marginally below it at 90.1601, tempering near-term upside after a firm climb. The rising trend line from 83.9122 underpins the broader bias, with support aligned near 89.1107.

The 14-day Relative Strength Index (RSI) at 51 (neutral) confirms momentum has cooled from recent overbought readings.

Upside traction would improve on a sustained close back above the 20-day EMA that could press the price to revisit the all-time high near 91.50. Looking down, a break beneath the ascending trend line could open the door to a deeper pullback toward the November low of 88.49.

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

• EUR/GBP softens to near 0.8745 in Monday’s early European session. 
• The BoE cut rates while the ECB held rates steady at their December meetings last week. 
• Traders brace for the UK Q3 GDP data later on Monday.  

The EUR/GBP cross attracts some sellers to around 0.8745 during the early European session on Monday. The Pound Sterling (GBP) edges higher against the Euro (EUR) after the Bank of England (BoE) delivered its fourth rate cut this year, although markets pushed back their expectations for further easing.  

The BoE cut interest rates to 3.75% at its December meeting last week, the lowest level since February 2023. This was the fourth rate reduction of the year and was widely expected amid falling inflation and a slowing economy. Nonetheless, an upgraded UK Gross Domestic Product (GDP) growth forecast for 2025 to 1.5% from 1.0% provides some support for the GBP and creates a headwind for the cross. 

On the other hand, the European Central Bank (ECB) kept its key policy rate on hold last week. ECB President Christine Lagarde said that monetary policy is in a "good place" and rates will remain steady for a prolonged period. A fresh forecast followed the rate decision, predicting stronger economic growth and inflation rising to 2% in 2028 after staying below that level for most of the next two years.

The UK GDP data for the third quarter will be the highlight later on Monday. The UK economy is projected to grow 0.1% and 1.3% on a quarterly and annual basis, respectively. If the reports show weaker-than-expected outcomes, this could drag the GBP lower against the EUR. 

• EUR/USD may rise toward the psychological level of 1.1800.
• The 14-day Relative Strength Index at 61.63 stays in bullish territory, confirming strong momentum.
• The initial support appears at the nine-day EMA of 1.1713.

EUR/USD breaks its four-day losing streak, trading around 1.1720 during the Asian hours on Monday. On the daily chart, technical analysis indicates a prevailing bullish bias, as the pair remains slightly above the ascending channel pattern. Additionally, the 14-day Relative Strength Index (RSI) at 61.63 remains in bullish territory, confirming firm momentum. RSI above 60 reinforces upward pressure and could sustain tests of nearby ceilings.

The nine-day Exponential Moving Average (EMA) rises and stands above the 50-day EMA, preserving a bullish bias. The EUR/USD pair holding above both averages supports continuation. The positive moving-average alignment keeps the path of least resistance to the upside.

The EUR/USD pair may target the psychological level of 1.1800, aligned with the two-month high of 1.1804, reached on December 16. A break above this resistance area would open the path toward the upper boundary of the ascending channel around 1.1860. Further advances above the channel would lead the pair to explore the region around 1.1918, the highest since June 2021.

On the downside, the immediate support lies at the nine-day EMA of 1.1713, aligned with the lower ascending channel boundary around 1.1710. A break below the channel would weaken the short-term price momentum and put downward pressure on the EUR/USD pair to test the 50-day EMA at 1.1648, followed by the three-week low of 1.1589, which was recorded on December 1.

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

• GBP/JPY attracts some sellers at the start of a new week, though it lacks follow-through.
• Reviving safe-haven demand and intervention fears boost the JPY, weighing on the cross.
• The BoE’s hawkish tilt acts as a tailwind for the GBP and should limit losses for spot prices.

The GBP/JPY cross kicks off the new week on a softer note and erodes a part of Friday's strong gains to a fresh high since August 2008 – levels just above the 211.00 mark. The downtick, however, lacks bearish conviction, with spot prices rebounding a few pips from the Asian session trough and currently trading around the 210.80-210.75 region, down less than 0.10% for the day.

Against the backdrop of persistent geopolitical uncertainties stemming from the protracted Russia-Ukraine war, concerns about renewed Israel-Iran conflict, and rising tensions between the US and Venezuela boost demand for traditional safe-haven assets. This, along with speculations that Japanese authorities would step in to stem further weakness in the domestic currency, benefits the Japanese Yen (JPY), which, in turn, is seen as a key factor weighing on the GBP/JPY cross.

Meanwhile, the Bank of Japan (BoJ) left the door open to further tightening after raising its rate to a 30-year high on Friday, though it offered little clues about the future policy path. Moreover, worries about Japan's worsening fiscal condition, aggravated by a steep rise in the Japanese government bond (JGB) yields, hold back the JPY bulls from placing aggressive bets. Apart from this, the Bank of England's (BoE) hawkish tilt supports the British Pound (GBP) and the GBP/JPY cross.

As was expected, the BoE MPC voted 5-4 to lower the benchmark interest rate by 25 basis points (bps) to 3.75%. However, a close vote split revealed differences within the committee, especially after the recent inflation surprise. This, in turn, forced investors to scale back their expectations for more aggressive easing next year. Moreover, the emergence of some US Dollar (USD) selling acts as a tailwind for the GBP and warrants caution before positioning for deeper GBP/JPY losses.

Traders now look forward to the release of the final UK Q3 GDP print for some impetus amid relatively thin trading volumes on the back of the year-end holiday season. Nevertheless, the aforementioned fundamental backdrop makes it prudent to wait for strong follow-through selling before confirming that the GBP/JPY cross has formed a near-term top around the 211.00 mark.

• USD/CHF weakens ahead of the looming US third-quarter GDP Annualized for Q3 due on Tuesday.
• Fed’s Hammack said policy is well-positioned to pause and assess the impact of 75-basis-point rate cuts.
• Traders await Tuesday’s Swiss ZEW Expectations survey for business cues and clarity on the SNB’s rate outlook.

USD/CHF pares its recent gains from the previous session, trading around 0.7940 during the Asian hours on Monday. The pair depreciates as the US Dollar (USD) struggles ahead of Tuesday’s release of the US third-quarter Gross Domestic Product Annualized for the third quarter.

The US Dollar (USD) may regain its ground due to cautious sentiment surrounding the Federal Reserve’s (Fed) policy outlook. Federal Reserve Bank of Cleveland President Beth Hammack said on Sunday that monetary policy is in a good position to pause and assess the effects of the 75-basis-point (bps) rate cuts on the economy during the first quarter, according to Bloomberg.

The CME FedWatch tool indicated a 79.0% probability of rates being held at the Fed’s January meeting, up from 75.6% a week earlier. Meanwhile, the likelihood of a 25-basis-point rate cut has fallen to 21.0% from 24.4% a week ago.

However, US President Donald Trump said last week that the next Chair of the Federal Reserve (Fed) will be someone who believes in significantly lower interest rates. Meanwhile, Fed Governor Christopher Waller, who is under consideration for the role, said, “Because inflation is still elevated, we can take our time - there’s no rush to get down. We can steadily bring the policy rate down toward neutral.”

Traders will likely observe the Swiss ZEW Expectations survey for December due on Tuesday for fresh signals on business and employment conditions, while seeking clarity on the Swiss National Bank’s rate outlook, with a return to negative rates seen as unlikely due to potential harm to savers and pension funds.