Forex News
- Gold price gains momentum to around $4,275 in Friday’s early Asian session.
- The Fed’s decision on Wednesday to cut rates by 25 basis points in a split vote supports the yellow metal.
- Positive developments surrounding the Ukraine peace deal might cap the upside for the Gold price.
Gold price (XAU/USD) rises to seven-week highs near $4,275 during the early Asian session on Friday. The precious metal extends its upside as the US Federal Reserve’s (Fed) quarter-point rate cut drags the US Dollar (USD) lower.
The number of Americans filing new applications for unemployment benefits increased by the most in nearly four and a half years last week, according to the US Department of Labor (DOL) on Thursday. This weaker-than-expected jobs data weighs on the Greenback and provides some support to the USD-denominated commodity price.
The Fed decided to cut rates by 25 basis points (bps) in a split vote on Wednesday, putting it in a range of 3.50% to 3.75%, its lowest level in three years. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal.
However, Fed policymakers signaled a likely pause in further reductions as they monitor labor market trends and inflation that "remains somewhat elevated.” Markets are currently pricing in nearly a 78% probability that the Fed will hold interest rates steady next month, compared with a 70% odds just before the rate cut announcement, according to the CME FedWatch tool.
Hopes for a Ukraine peace deal could undermine a traditional safe-haven asset like Gold. Ukrainian President Volodymyr Zelensky said on Thursday that Kyiv’s delegation spoke with top US officials to discuss security guarantees for Ukraine in a video call after presenting America with a revised 20-point framework to end the war with Russia.
(This story was corrected on December 12 at 00:30 GMT to say, in the first bullet point, that Gold price gains momentum to around $4,275 in Friday’s early Asian session, not European session.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- GBP/USD spun a tight circle near 1.3400 on Thursday.
- Cable markets are tilting into the bullish side following the Fed’s third straight interest rate cut.
- A quiet end to the week gives way to a hectic UK release schedule next week.
GBP/USD is holding firmly in bullish territory heading into the tail end of the week, but Cable bidders ran into a technical resistance point at the 1.3400 handle on Thursday. The Federal Reserve (Fed) delivered a third straight interest rate cut this week, bolstering broad-market risk appetite and pushing the US Dollar (USD) into the low side across the board.
Fed Chair Jerome Powell cautioned following the Fed’s latest interest rate trim that further moves on rates are less than likely heading into 2026, and the majority of Fed policymakers see barely two more interest rate cuts over the next two years. Markets responded by ramping up bets that the Fed will get bullied into a faster pace of interest rate cuts through next year.
US labor data also missed the mark on Thursday, with US Initial Jobless Claims jumping to 236K per week, above the expected 220K. Wholesale inventories also rose much faster than expected in September, but the backdated figure is unlikely to sway investor outlooks.
The remainder of the week is largely lacking in meaningful economic events, but that all ends next week. Cable traders will be staring down the barrel of four straight days of high-impact data releases from next Tuesday, starting with the latest rolling three-month UK labor statistics and global Purchasing Managers Index (PMI) survey results. Wednesday brings the latest UK Consumer Price Index (CPI) inflation figures, and the real calendar-rattler will be the Bank of England’s (BoE) latest interest rate call, slated for Thursday. UK Retail Sales figures are trailing behind the BoE, and will close out the week’s UK data docket on Friday.
GBP/USD daily chart
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- USD/JPY edges lower to near 155.60 in Friday’s early Asian session.
- US Initial Jobless Claims jumped to 236K last week, weaker than expected.
- Concerns about expansionary fiscal measures in Japan and growth worries might cap the downside for the pair.
The USD/JPY pair attracts some sellers to around 155.60 during the early Asian session on Friday. The US Dollar (USD) edges lower against the Japanese Yen (JPY) amid worse-than-anticipated US employment data and a less hawkish outlook than expected from the US Federal Reserve (Fed).
The Fed lowered the benchmark federal funds rate by 25 basis points (bps) to a range of 3.5%-3.75% at its December policy meeting on Wednesday. Fed Chair Jerome Powell highlighted that the US central bank is now "well positioned to wait and see how the economy evolves" and noted that a future rate hike is not a base case scenario. Fed officials signaled they expect to lower rates just once next year.
Data released by the US Department of Labor (DOL) on Thursday showed that the number of Americans filing for new unemployment benefits increased to 236,000 in the week ending December 6. The figure came in above the market consensus of 220,000 and was higher than the previous week of 192,000 (revised from 191,000). The Greenback faces some selling pressure against the JPY in an immediate reaction to the weaker-than-expected US jobs data.
Investors remain concerned about Japan's deteriorating fiscal condition amid Prime Minister Sanae Takaichi's reflationary push and massive spending plan to boost sluggish economic growth. This, in turn, could weigh on the JPY and create a tailwind for the pair.
The attention will shift to the Bank of Japan (BoJ) interest rate decision next week. All economists by Bloomberg and a strong majority in a Reuters poll expected the Japanese central bank to raise its current benchmark policy rate from 0.50% to 0.75% at this upcoming meeting.
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
- Euro benefits from broad Dollar weakness, while ECB’s Lagarde says policy is appropriately positioned for now.
- US jobless claims rose and trade deficit narrowed, reinforcing views that the US economy is losing momentum.
- Fed cut rates 25 bps and Powell signaled flexibility ahead, boosting rate-cut expectations into early 2026.
EUR/USD advances during the North American on Thursday up 0.41% after the Fed decided to cut rates, alongside the release of weaker than expected job data in the United States (US). At the time of writing, the pair trades at 1.1742 after bouncing off daily lows of 1.1682.
Euro strengthens after a dovish Fed and weaker US labor figures deepen expectations of further policy easing
US economic data was mixed as the number of Americans filling for unemployment benefits rose, an indication of weakness in the jobs market. Later, the trade deficit narrowed in September, via the US Census Bureau.
On Wednesday, the Federal Reserve cut rates by 25 basis points to 3.50%-3.75%, yet most officials in the dot-plot showed that the median were expecting the Fed funds rate to end at a higher level. Meanwhile, the Fed Chair Jerome Powell hinted that Fed is “well positioned to determine the extent and timing of additional adjustments to out policy rate based on the incoming data, the evolving outlook and the balance of risks.”
This week, the US economic docket will feature Fed speakers, led by Philadelphia’s Fed Anna Paulson, Cleveland’s Fed Beth Hammack and Chicago’s Austan Goolsbee.
Across the pond, the Eurozone schedule was empty, yet European Central Bank (ECB) President Christine Lagarde said that policy is in a good place ant that the bank could update its projections in December.
Euro Price This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.81% | -0.47% | 0.17% | -0.42% | -0.42% | -0.64% | -1.15% | |
| EUR | 0.81% | 0.38% | 1.06% | 0.44% | 0.44% | 0.22% | -0.30% | |
| GBP | 0.47% | -0.38% | 0.69% | 0.09% | 0.07% | -0.16% | -0.67% | |
| JPY | -0.17% | -1.06% | -0.69% | -0.58% | -0.58% | -0.79% | -1.28% | |
| CAD | 0.42% | -0.44% | -0.09% | 0.58% | 0.00% | -0.21% | -0.73% | |
| AUD | 0.42% | -0.44% | -0.07% | 0.58% | -0.01% | -0.23% | -0.74% | |
| NZD | 0.64% | -0.22% | 0.16% | 0.79% | 0.21% | 0.23% | -0.52% | |
| CHF | 1.15% | 0.30% | 0.67% | 1.28% | 0.73% | 0.74% | 0.52% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily digest market movers: EUR/USD boosted by US Dollar weakness
- The US Dollar Index (DXY), which tracks the performance of the buck’s value against six currencies, is down 0.29% at 98.34 as the Dollar selloff extends following the Fed’s decision.
- US Initial Jobless Claims for the week ending December 6 increased by 236K, exceeding the previous week’s upwardly revised 192K, according to the Department of Labor. In contrast, Continuing Claims for the week ending November 29 fell to 1.838 million from 1.937 million, suggesting some stabilization in longer-term unemployment.
- The US Goods and Services Trade Balance narrowed to –$52.8 billion in September, improving from –$59.3 billion in August and outperforming expectations for a widening deficit toward –$63.3 billion.
- On Wednesday, the Fed Chair Powell stated that the central bank is “well positioned” to “wait and see” how the economy develops, following a total easing of 75 basis points this year. He mentioned that the Fed funds rate is near the upper end of estimates for neutrality and that they will await economic data, which may be “distorted.”
- In Europe, Portugal’s former central-bank Governor Mario Centeno emerged as a potential contender to become the ECB’s next Vice-President succeeding the Spanish Luis De Guindo whose term is expiring in May 2026.
Technical analysis: EUR/USD surpasses 1.1700, eyes on 1.1750
EUR/USD finally cleared the top of the 1.1600-1.1650 range, extending its gains past 1.1700 with traders eyeing the 1.1800 figure. Bullish momentum has increased as depicted by the Relative Strength Index (RSI), an indication that further upside is seen.
Conversely, if EUR/USD slides below 1.1700, sellers could opt to send prices towards the 100-day Simple Moving Average (SMA) at 1.1641 ahead of 1.1600.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- The Dow Jones climbed over 650 points on Thursday, bolstered by renewed market optimism.
- A third straight interest rate cut has sent investors piling into ‘real economy’ stocks.
- Despite a few bright spots, the AI tech sector rally is deflating as investors fund bullish moves elsewhere.
The Dow Jones Industrial Average (DJIA) surged to a fresh record on Thursday as investors rotated out of pressured tech names and into stocks tied more closely to economic growth following the Federal Reserve’s (Fed) latest interest rate cut. Visa (V) helped lead the Dow higher after an analyst upgrade, while the S&P 500 hovered near flat and the Nasdaq slipped as traders digested a sharp pullback in major tech stocks.
Tech stocks slump, dragged down by key names
Oracle’s (ORCL) disappointing revenue, higher spending outlook, and sharply negative free cash flow rattled markets and intensified concerns about how quickly companies can profit from large AI investments. The stock fell 12%, dragging other AI-related names lower and fueling debate about whether the sector’s rapid run-up has outpaced near-term fundamentals. Analysts cut price targets and flagged uncertainty around Oracle’s path forward.
Meanwhile, lower interest rates supported cyclicals and small-cap stocks, pushing the Russell 2000 to an intraday record alongside the Dow. Investors considered the possibility of a year-end 'Santa Claus rally,' even as some strategists warned of potential 2025–2026 headwinds, including AI-sector fatigue, political shifts, and a change in Fed leadership.
US economic data takes a back seat to rate cut focus
Outside equities, jobless claims jumped meaningfully following the holiday period, though continuing claims fell sharply. In corporate news, OpenAI unveiled its new GPT-5.2 model, aimed at boosting productivity features. At the same time, Rivian announced it is developing its own AI chip to reduce reliance on Nvidia and accelerate its autonomous-driving roadmap.
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
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