Analytics

The US dollar preserves recent gains during the last trading sessions of the year, holding slightly below two-year highs registered last week around 108.55. Ahead of the weekend, the USD index has settled above the 108.00 handle which remains in the market focus at this stage. With many traders taking time off between Christmas and New Year’s holidays, trading activity was subdued.

The greenback reached its strongest level against the Japanese yen in five months, fueled by optimism that the upcoming policies of Donald Trump’s administration would stimulate economic growth and drive up inflation. Also, the yen has been weighed down by the significant interest rate gap between Japan and the U.S.

Investors are banking on the idea that relaxed business regulations and tax reductions could drive U.S. growth in the coming year. However, there’s talk that tighter controls on illegal immigration and potential new tariffs on trading partners might push prices up and create long-term economic challenges.

Despite the dollar’s recent gains against other currencies, there’s still plenty of uncertainty about which policies will actually be implemented and what their effects will be.

Skepticism about additional rate cuts

Recently, the dollar has rallied amid a growing skepticism about additional cuts. Last week, the Fed reduced rates by 25 basis points, but Fed Chair Jerome Powell emphasized that any future rate reductions would depend on substantial progress in bringing down persistently high inflation. The policymakers at the Fed have adjusted their inflation projections for 2025 and lowered their interest rate expectations to 50 basis points from the previous 100.

On the data front, the number of Americans filing for unemployment benefits hit a one-month low last week, reflecting a labor market that’s slowing down but remains robust.

In the near term, the dollar will likely continue to oscillate around the 108.00 mark, deciding on further direction in thin trading conditions.

The yen extended its rally versus the U.S. dollar, reaching a six-week peak on Friday, prompted by unexpectedly high inflation rates in Tokyo that bolstered expectations for a potential Bank of Japan interest rate increase next month.

Amid reduced trading activity due to the U.S. Thanksgiving holiday, the dollar declined against major currencies. The USD index has been losing ground since the start of the week, staying on the defensive on Friday after touching 105.62, its lowest since November 12.

The dollar has experienced a decline since it reached a two-year high against major rivals roughly a week ago. Nevertheless, it is projected to secure a more than 2% increase in November, following its over 3% rise last month.

This robust performance can largely be attributed to Donald Trump’s decisive election victory on November 5, which raised expectations for significant fiscal spending, higher tariffs, and stricter border controls, all perceived as inflationary by economists. This week, however, the dollar index is expected to drop by 1.5%, marking its largest weekly decline since mid-August.

Best performance since late July

The yen showed a strong recovery, poised for around 3% gains, potentially marking its best performance since late July. The falling U.S. Treasury bond yields added to the dollar’s losses, while safe-haven flows amid Trump’s widespread tariff warnings this week, combined with increased speculation of a BOJ rate hike next month, have bolstered the yen. Currently, traders estimate a nearly 60% chance of a quarter-point rate increase.

Adding to the upbeat tone surrounding the yen, the data showed that Tokyo’s core consumer price index increased by 2.2% in November on a yearly basis versus the expected rise of a 2.1% rise and a 1.8% increase in the previous month.

The price of bitcoin has been rallying for the fourth session in a row on Tuesday, challenging the $71,000 figure after the recent break above the $70,000 psychological level for the first time since June. The buying pressure has persisted since last month, with bulls staying in the game as the US Presidential election nears.

The rally is mostly driven by investments in exchange-traded funds and speculation surrounding the upcoming US election as many market participants view bitcoin as a so-called «Trump trade» as the Republican presidential nominee actively supports digital assets during his campaign. Trump continued to lead in prediction markets, fueling demand for BTC and other digital currencies. Harris, meanwhile, has proposed a more cautious approach, advocating for a regulatory framework.

The largest cryptocurrency by market capitalization has been also supported by rising US stocks. Wall Street equities saw a positive start to the week, with the Nasdaq Composite approaching its all-time high set in July amid solid gains in tech stocks.

Bitcoin shrugs off Tether news

Interestingly, the pre-election rush helped bitcoin shrug off the recent scrutiny of Tether, the largest stablecoin issuer. Last week, there were reports that U.S. federal authorities are still scrutinizing Tether, triggering speculations about the possibility of ongoing criminal investigations involving Tether’s activities.

In the near term, bitcoin must stay above $70,000 to target its March record of $73,798. After refreshing four-month highs around $71,500, the BTCUSD pair has settled around the $71,000 mark, deciding on a further direction.

So far this year, bitcoin has increased by 70%, staying resilient despite reduced expectations for Federal Reserve interest rate cuts. The central bank is expected to cut rates by 25 basis points in November after a 0,5% cut in September.

Both spot gold and futures contracts continue to refresh all-time highs these days. The December futures jumped to new tops above $2,660, rallying for the ninth month in a row already. Despite the overbought conditions, the precious metal's short- and medium-term outlook remains positive. There are several reasons to stay bullish on gold at this stage.

First, bullion would benefit from rate cuts by global central banks. Last week, the Fed finally joined its counterparts to announce the easing of its monetary policy. Furthermore, the central bank cut the interest rate by 50 basis points. Further cuts would bolster the appeal of the yellow metal.

Second, the US dollar will likely continue to lose its ground, adding to demand for non-yielding gold. The USD index slipped to mid-2023 lows last week, and the bearish tone could persist in the coming months as the Federal Reserve has just reversed the course of its policy. The USD index may get below the 100.00 psychological level in the near term amid speculations about a dovish Fed.

Third, geopolitical tensions in the Middle East and globally could persist in the medium term, with the continuing US-China trade war adding to investor worries. In times of geopolitical uncertainty, demand for safe-haven gold stays elevated. So, this driver is likely to support bullion further.

Finally, recession concerns could reemerge should US economic data continue to deteriorate. In the eurozone, the incoming signals are not positive as well. Fresh data showed on Monday that both eurozone and German PMIs, both in the services and manufacturing, continued to decline in September, which could add to global worries and thus give extra bullish momentum to gold.

Now that gold prices have settled above $2,600, a decisive break above the $2,660 immediate barrier would bring the $2,700 figure into focus for the first time. Spot gold, meanwhile, climbed to $2,600 to register fresh tops around $2,640, also shifting investor attention to the $2,700 level.

The US dollar posted early-2024 lows at the start of the week, but managed to stage some recovery since then. The USD index found a bottom slightly above the 102.00 handle where dip buyers reemerged. After a three-day bounce, however, the greenback came back under pressure on Friday, struggling to extend the ascent amid rising expectations that the Fed will cut interest rates in September more aggressively than expected earlier.

During the previous session, the dollar gave up some intraday gains due to stronger-than-expected data on US jobless claims. Initial claims fell to 233,000 for the week ending August 3 to come in lower than the expected 240,000.

Stocks turned positive to see their best day since 2022 after the release, so risk demand capped the buck’s recovery attempts. As the report showed fewer workers applied for unemployment benefits, investor worries about the health of the economy have faded after the recent panic selling.

USD struggles as Fed is getting closer to cutting rates

Meanwhile, Kansas City Fed President Jeffrey Schmid highlighted he’s not ready to support a cut in interest rates so far, as inflation remains above target and the labor market still healthy despite some signs of cooling. However, the USD index failed to gain any support from relatively hawkish comments as a September rate cut is seen by markets as a done deal.

In the near term, the US currency is unlikely to see any sustained and decisive rebound, with downside risks persisting as Fed policy remains in focus. The USD index now needs to hold above the 103.00 figure in order to avoid another retreat in the days to come. On the weekly charts, the greenback is nearly unchanged, with the immediate significant upside target coming at 103.55.

Should the selling pressure intensify, the 102.00 support zone could be derailed in the weeks to come. The dollar last traded below this figure in late 2023. On the upside, a decisive recovery above 104.50 would improve the near-term outlook for the greenback. However, so far, the path of least resistance remains to the downside.

After finding a bottom around more than four-month lows earlier in July, the bitcoin price bounced, extending recovery for the sixth day in a row. The coin saw a low of $53,700 before reversing north as buyers have finally reemerged on a solid dip. Since then, the BTCUSD pair has regained the $60,000 handle to reach nearly one-month highs in the $66,000 area on July 17th.

The sell-off was driven mainly by the news that the German government completed the sale of its remaining BTC holdings, while defunct exchange Mt. Gox moved over 47,000 BTC to a new wallet, potentially preparing for creditor repayments.

After digesting the news, the largest cryptocurrency by market capitalization managed to shrug off the recent weakness and saw a clear breakout from a bearish trend, with the $70,000 psychological level coming back into focus as market sentiment has improved due to a number of factors.

Bullish drivers

First, the cryptocurrency market is boosted by Trump’s rising chances of winning the November presidential election after last week’s assassination attempt. Of note, Trump, who has recently positioned himself as the crypto-friendly candidate, is scheduled to speak at a Bitcoin conference in Nashville later this month. His bullish tone could add to upbeat sentiment in the market.

Second, there are solid market inflows after several weeks of net outflows. By the way, yesterday, the 11 U.S.-listed ETFs saw a cumulative net inflow of $422.5 million, the highest single-day volume since early June.

Third, investor confidence was boosted by a bullish outlook from BlackRock CEO Larry Fink, who has rethought his previous skeptic views on BTC and now refers to the digital coin as digital gold.

In the near term, bitcoin could extend the ascent, targeting the $70,000 level. A decisive break above $66,000 would pave the way towards the $67,350 intermediate resistance. Earlier in the day, the digital currency saw a local barrier around $66,200 before trimming intraday gains as the bullish momentum has been slowing since Tuesday.

After three months of solid gains, gold looks set to finish June nearly unchanged. Last month, the precious metal advanced to fresh all-time highs around $2,465 and has been lacking the upside momentum since then. The XAUUSD pair briefly derailed the $2,300 region earlier in the week before bouncing back to the $2,340 area that has been capping gains this week.

The bullion looks cautious ahead of a key US inflation report that will affect investor sentiment across the markets. The PCE data is significant for rate-cut expectations as this is the Fed’s preferred inflation gauge. Should the index come in higher than expected, a stronger dollar may hit gold ahead of the weekend.

The US dollar is back in the green after yesterday’s slide. The USD index keeps treading water around the 106.00 figure, thus staying in the area of early-May highs. At the current levels, the dollar looks set to finish the fourth bullish week in a row. On the upside, the immediate target arrives at the 106.13 figure that has been capping gains this week.

Gold faces local barrier

In general, XAUUSD looks steady, trading within a relatively tight trading range this month. The yellow metal now needs to make a decisive break above $2,340 in order to retarget the $2,370 region that capped gains last week.

On the downside, a failure to overcome the mentioned barrier could attract renewed selling pressure in the days to come. If so, gold may retest the $2,300 psychological support, a break below which would pave the way to a deeper retreat. Should the yellow metal struggle to hold above $2,285, the $2,240 region will come back into the market focus for the first time since late-March.

Oil prices came under renewed selling pressure after another failed attempt to hold above the $86 earlier in the week. Brent crude saw a solid bearish gap at the open on Wednesday before bouncing back to the $85 figure where the futures closed during the previous session. As such, oil briefly slid to weekly lows in the $84 zone where the futures managed to attract some demand.

Still, Brent crude remains volatile and vulnerable to fresh losses as demand-related concerns continue to persist, especially as China continues to face its ailing property sector. In particular, a real estate crisis deepened with a Hong Kong court ordering the liquidation of property giant China Evergrande.

Elsewhere, data from the American Petroleum Institute overnight showed that US oil inventories grew by around 0.9 million barrels last week versus expectations for a 3-million-barrel drawdown after a 2.3-million-barrel build the prior week. The figures suggest that US fuel demand remains sluggish despite the summer driving season, thus adding to market concerns.

$85 in focus

Also, oil feels the pressure from a stronger US dollar. After finding support around the 105.35 figure during the previous session, the dollar bounced from local lows, targeting the 106.00 barrier on Wednesday.

The technical picture looks neutral, however, at least as long as Brent crude holds above the $82 figure. Should the futures manage to overcome the $85 level in the near term, the outlook will improve somehow, while traders will shift their focus back to the $86 key barrier on the way towards the $90 psychological level last seen in April. However, as demand concerns continue to dominate the market, oil prices are unlikely to stage a sustained and strong rally any time soon, with downside risks persisting at this stage.

The bitcoin price has been trending lower for two weeks already, retreating from local highs seen just below the $72,000 handle earlier in the month. After a failed attempt to settle above $66,000 during the previous session, the BTCUSD pair is back below the $65,000 figure on Friday, with the $64,000 mark acting as a key near-term support at this stage.

The largest cryptocurrency by market capitalization struggles to attract renewed demand at this stage, with downside pressure persisting these days, shifting market focus away from the $70,000 psychological level which has turned back into resistance.

The digital coin saw failed bullish attempts after MicroStrategy announced that the company had bought 11,931 BTC at an average cost of $786 million. MicroStrategy currently holds 226,331 BTC on its balance sheet worth approximately $8.33 billion.

In the near term, a recovery above the $65,000 handle is crucial for the continuation of the uptrend. If the price stays below this figure on a daily and weekly closing basis, the near-term technical outlook for BTC will deteriorate further. A failure to hold above $64,000 would add to bearishness surrounding the coin.

Strong USD caps gains

In a wider picture, bitcoin remains within a broader bullish trend, albeit suffers losses this month after strong gains witnessed in May. Should the recovery momentum reemerge any time soon, the leading cryptocurrency will retarget the $70,000 psychological level. The near-term outlook remains bearish while below this barrier.

In part, a stronger dollar caps potential bounce in BTC. The greenback keeps trending north after yesterday’s rally as risk-off tone dominates global financial markets. The USD index extended gains to fresh early-May highs in the 105.86 area earlier today. Should the bullish bias persist in the days to come, the greenback may challenge the 106.00 barrier for the first time in nearly two months.

Gold prices retain a modest bullish bias, looking resilient after an ascent witnessed on Tuesday. The bullion seems to have partially shrugged off the recent bearish pressure, with $2,300 representing the intermediate significant support on the way to local lows.

Now, the XAUUSD pair needs some momentum to make a more decisive bounce, with prices struggling to attract more decisive demand so far today. The downside potential looks limited at this stage, however, as the dollar looks steady these days.

The US currency finished unchanged overnight, staying unbiased today, with volatility ebbing these days. Late last week, the greenback briefly rallied to early-May highs in the 105.80 area due to a relatively hawkish tone from the Fed before retreating partially amid some profit-taking.

Indecisive dollar helps

This week, the dollar has settled above the 105.00 figure, struggling for direction after a slide witnessed at the start of the week. During the previous session, the dollar extended losses towards the 105.13 zone before bouncing marginally. The USD index turned slightly bullish in recent trading, but lacks the momentum so far, thus fueling some demand surrounding the yellow metal.

On the weekly timeframes, the technical picture has barely changed, with wider picture remaining upbeat after reaching fresh all-time highs. On the upside, the immediate significant target is now represented by the $2,350 zone, followed by the $2,360 region that capped gains last week. Downside risks look limited while above the $2,300 figure.

In the medium term, gold will continue to take clues from speculations surrounding the Fed policy outlook, with rate cut expectations keeping the bullion afloat. Of note, slowing US retail sales bolstered rate cut chances, adding to upbeat tone surrounding gold.