Market sentiment is cautiously optimistic on Thursday, after the US Fed kept rates steady and hinted at two rate cuts in 2025, amid slower growth and higher unemployment, during its monetary policy announcements late Wednesday. It should be noted that Fed Chair Powell’s speech also lacked optimism and failed to inspire the US Dollar bulls, though the Greenback ended the day higher, halting a three-day losing streak.
Apart from the Fed-inspired sentiment change, the mood is also lifted by US President Trump’s push for more rate cuts and progress in the Ukraine-Russia ceasefire talks. However, caution is rising ahead of upcoming decisions from the Bank of England (BoE) and Swiss National Bank (SNB), along with challenges for US ships due to anti-China policies and the PBoC’s ongoing rate inaction.
Despite the US Dollar's weak performance, Gold hit a new all-time high for the third day in a row, testing a three-month trend line resistance at $3,058. EURUSD continues its decline, while GBPUSD pulls back from its highest point since November ahead of the BoE's "Super Thursday." USDJPY drops after reaching a two-week high during Japan's holiday. AUDUSD and NZDUSD extend losses, while USDCAD rises for a third day, driven by mixed China concerns despite stronger crude oil prices.
Last but not least, cryptocurrencies pull back from heavy gains, while equities edge higher and the bond market remains quiet.
Despite the Fed's impact on the US Dollar and optimism in Germany defended the EURUSD buyers, softer Eurozone inflation and dovish comments from ECB officials weighed on the quote. As a result, the pair holds steady after retreating from a five-month high, though it lacks strong downward momentum.
On the other hand, USDJPY extends its previous day’s retreat from a two-week high, ignoring Japan's holiday. This follows hawkish comments from Bank of Japan Governor Kazuo Ueda after the BoJ kept rates unchanged. The Yen's safe-haven status also puts downward pressure on USDJPY.
After hitting a 4.5-month high early in the day, GBPUSD sees slight losses as traders await the BoE policy announcements after downbeat UK employment data. The Pound’s decline reflects a corrective bounce in the US Dollar, with expectations of a dovish pause from the BoE and potential economic challenges due to the UK government's planned spending cuts. Additionally, ongoing UK-US trade tensions are weighing on GBPUSD, despite positive UK data and a softer USD challenging bears near a multi-month high.
The People's Bank of China's (PBOC) fifth consecutive month of inaction, along with a weak Australian employment report, is weighing on AUDUSD, pushing it towards a three-day losing streak. NZDUSD follows the same trend despite stronger-than-expected New Zealand GDP growth. Meanwhile, USDCAD rises for the third day in a row, ignoring stronger crude oil prices, as concerns about the Bank of Canada's dovish stance, US-Canada trade tensions, and political instability in Ottawa take center stage ahead of the BoC Governor’s speech.
The financial market’s uncertainty, a struggling US Dollar, and central bank buying, Gold is pushing toward a new all-time high, testing the key $3,058 resistance. However, overbought RSI conditions, technical resistance, and potential quarter-end positioning could cause a pullback to the previous resistance of $3,000. That said, bears are unlikely to take control anytime soon.
Crude Oil has ignored a higher-than-expected weekly inventory build, posting a gain recently. It has edged higher, supported by Trump’s warning to Iran and ongoing tensions between Hamas and Israel, which suggest potential supply disruptions, despite the challenge posed by OPEC+'s increased output.
Despite the Fed’s inaction and a surge in Bitcoin whale demand fueling a strong rally, crypto buyers remain cautious. Bitcoin (BTCUSD) and Ethereum (ETHUSD) trim previous gains, facing mild losses amid lingering industry concerns and thin market liquidity.
Markets remain on edge as traders await the Bank of England’s policy decision, US jobless claims, and key activity data, not to forget central bankers’ speeches from Europe and Canada. After the Fed-induced volatility, geopolitical tensions surrounding US tariffs, Ukraine-Russia, and the Middle East add to the uncertainty and are also worth watching for clear directions.
GBPUSD could face pressure if the BoE signals economic concerns or hints at future rate cuts. Meanwhile, Gold prices may retreat from resistance amid overbought conditions, while EURUSD, crude oil, Antipodeans, and cryptocurrencies are also vulnerable to daily losses. USDJPY, however, is unlikely to stage a recovery.
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