Strong US jobs and inflation data, along with China’s efforts to stabilize the Yuan, roiled the market sentiment and pushed the US Dollar higher. Further, Geopolitical tensions in the Middle East and concerns over Trump's trade policies also kept the US Dollar and Gold prices strong, ahead of key US inflation and retail sales data this week.
Despite the strong US Dollar, oil buyers remained active as the US and UK unveiled more sanctions on Russian energy exports.
EURUSD and GBPUSD hit multi-month lows, while USDJPY faces a three-day decline despite a Japan holiday.
AUDUSD and NZDUSD dropped for the fifth straight day, while USDCAD rose for five days, even with strong oil prices. Moving on, cryptocurrencies are still under pressure, and stocks remain in a downtrend.
The strong US Dollar and worries about the European Central Bank (ECB) and political and economic instability in the Eurozone push EURUSD lower for the fifth day, hitting its lowest since November 2022. Meanwhile, USDJPY faces a three-day losing streak, despite a stronger US Dollar, as concerns grow over potential Bank of Japan rate hikes in 2025, following wage hikes and rising inflation in Japan.
GBPUSD posts its sharpest intraday drop among major currency pairs, extending its losing streak to a fifth day and reaching its lowest since November 2023. The Pound’s weakness stems from a stronger US Dollar and soft UK inflation signals.
Adding to the downside are doubts over the Bank of England’s (BoE) hawkish stance and ongoing political uncertainty in Britain. Traders now await key UK and US data releases later this week for further direction.
The Australian, New Zealand, and Canadian Dollars extend their losing streak to a fifth day against the surging US Dollar. The Greenback strengthens on rising expectations of reduced Fed rate cuts and renewed bets on a potential rate hike in 2025.
Adding to the pressure, concerns over China’s economic transition and caution ahead of key Aussie-China data weigh on AUDUSD and NZDUSD, while bolstering USDCAD. Notably, higher crude oil prices—Canada’s key export—fail to support the Loonie amid domestic political turmoil and growing expectations of further rate cuts from the Bank of Canada, fueled by last week’s mixed Canadian data.
Gold prices fluctuate near a one-month high, struggling to extend their five-day rally as market uncertainty boosts demand for the traditional safe-haven but firmer US Dollar tests the bullion buyers. Additionally, hopes of lower rates from major central banks, coupled with rising demand from India and China, further support gold's appeal.
Meanwhile, crude oil climbs over 1% intraday, reaching a nine-week high amid fears of an energy supply crunch following new UK and US sanctions on Russian exports. Additional support for oil prices comes from lower inventory levels and the OPEC+ decision to extend supply cuts.
Despite the Trump administration’s plans to establish the first crypto-focused Senate subcommittee, Bitcoin (BTCUSD) and Ethereum (ETHUSD) remain under pressure. The cautious market mood and profit-taking ahead of Donald Trump’s inaugural ceremony weigh on the cryptocurrencies, overshadowing significant ETF inflows and mixed on-chain data.
With a light economic calendar in Europe and the US, markets could see a subdued start to the week, potentially pausing the US Dollar’s recent rally. However, expectations of a hawkish Federal Reserve, along with likely upbeat US Consumer Price Index (CPI) and Retail Sales data, may keep Greenback buyers optimistic.
Additionally, mixed economic data from China, the UK, and Australia could add further pressure on EURUSD, GBPUSD, and other Antipodeans. Meanwhile, USDJPY and Gold prices are expected to stay firm, supported by their respective catalysts mentioned above.
May the trading luck be with you!
