Euro Strength and Fed Bets Drive Markets (12.22.2025)

EUR/USD advanced after the ECB signaled confidence in current policy settings, while a cautious Federal Reserve weighed on the US Dollar. 

The Yen rebounded on renewed intervention warnings despite lingering weakness, and gold and silver surged to record highs on rising Fed cut expectations and geopolitical tensions. Sterling recovered modestly ahead of key UK GDP data.

EUR/USD Rises on ECB Optimism

EUR/USD rose toward 1.1710 during early Asian trade as the Euro strengthened following the ECB’s rate hold. The central bank’s optimism regarding Eurozone resilience and its signaled pause supported the currency. Simultaneously, the US Dollar weakened as the Fed maintained a cautious stance after its latest cut, while markets are pricing in further potential policy easing ahead.

For the EUR/USD, the support is around 1.1700 and the resistance is around 1.1780.

Yen Rebounds on Intervention Warnings

The yen rose to 157 per dollar Monday, rebounding from four-week lows following official intervention warnings. Top official Atsushi Mimura pledged "appropriate" action against sharp fluctuations, mirroring Finance Minister Satsuki Katayama’s stance on speculative selling. This follows the Bank of Japan raising rates to 0.75%, the highest since 1995. Despite this, the yen remains weak against the euro and Swiss franc, as the hike has yet to provide significant currency support.

Technically, resistance stands near 157.60, while support is firm at 154.60.

Gold Hits Record High on Fed Cut Hopes

Gold (XAU/USD) reached a record high near $4,400 during European trading. Hopes for Fed rate cuts following weak inflation and employment data supported the metal's appeal. Geopolitical tensions involving Israel, Iran, and Venezuela further supported safe-haven demand. Despite this, thin holiday volumes and potential profit-taking could cap gains as traders await upcoming US economic reports.

Gold sees support near $4360, while resistance is around $4415.

Pound Recovers Before UK GDP

GBP/USD rose to 1.3390 during Asian sessions, rebounding after three days of losses as investors await the UK Q3 GDP release. Sterling stays pressured by expectations of a mid-2026 Bank of England rate cut. Meanwhile, the US Dollar finds strength from a cautious Federal Reserve and lower chances of immediate US interest rate reductions.

From a technical view, support stands near 1.3310, with resistance around 1.3430.

Silver Hits Record on Rate Cuts and Risks

Silver prices climbed over 3% on Monday, surpassing $69 per ounce to reach a record high. This rally stems from cooling US inflation and labor data, with markets anticipating two more Federal Reserve rate cuts next year. Safe-haven demand also rose following new US sanctions on Venezuela and a Ukrainian strike on a Russian-controlled oil tanker in the Mediterranean. Furthermore, strong industrial needs in the solar, EV, and data center sectors continue to support the metal. Silver is now on track for a nearly 140% gain throughout 2025.

From a technical view, resistance stands near $70.00 while support is located around $68.50.