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Dollar Holds Gains into Year-End with Euro Being Near Lows and Metals Steady (12.30.2024)

Global markets opened the week with the euro hovering near two-year lows as diverging central bank policies and soft Eurozone data pressured the currency. 

The yen, weakened by uncertain BOJ rate plans, is on watch for possible intervention. Meanwhile, the dollar remains firm on rising U.S. yields and expectations around President-elect Trump’s policies. Gold hovers above $2,600 on ongoing geopolitical worries and a softer U.S. dollar, while silver stays flat as traders monitor upcoming economic reports from China and the U.S. The British pound is steady around 1.2580, facing external pressure from the stronger dollar and subdued UK growth projections.

TimeCur.EventForecastPrevious
8:00  EURSpanish CPI (YoY) (Dec)  2.60%2.40%
8:00  EURSpanish HICP (YoY) (Dec)  2.60%2.40%
14:45  USDChicago PMI (Dec)42.740.2
15:00  USDPending Home Sales (MoM) (Nov)0.90%2.00%

Dollar Steady on Rising Yields and Trump Policy Expectations

The EUR/USD pair is trading around 1.0425, while the U.S. dollar index held steady near the 108 mark on Monday, supported by rising U.S. yields in light of thin year-end trading. Earlier this month, the dollar reached its highest level in over two years after the Federal Reserve cut interest rates but indicated a slower pace of monetary easing in the year ahead. The dollar’s strength comes from expectations around President-elect Donald Trump’s policies. These include deregulation, tax cuts, higher tariffs, and stricter immigration. Together, they are expected to increase growth and inflation, and keep Treasury yields high.

From a technical perspective, the first resistance level is at 1.0465, with further resistance levels at 1.0515 and 1.0575 if the price breaks above. On the downside, the initial support is at 1.0330, followed by additional support levels at 1.0300 and 1.0230. 

R1: 1.0465S1: 1.0330
R2: 1.0515S2: 1.0300
R3: 1.0575S3: 1.0230

Finance Minister Signals Intervention as Yen Faces External Pressures

The Japanese yen held steady around 157.8 per dollar on Monday, near a five-month low, as investors assessed the Bank of Japan's rate policy. Minutes from the BOJ’s December meeting suggested discussions of a potential rate hike, though rates remained at 0.25%. Governor Kazuo Ueda emphasized the need for more data on wage growth and clarity on U.S. economic policies. Finance Minister Katsunobu Kato expressed concerns about the weakening yen, signaling readiness for intervention against sharp currency fluctuations. Rising U.S. Treasury yields added external pressure, despite the Federal Reserve's recent rate cuts.

The key resistance level appears to be 158.30, with a break above it potentially targeting 160.00 and 161.00. On the downside, 153.90 is the first major support, followed by 152.70 and 151.00 if the price moves lower. 

R1: 158.30S1: 153.90
R2: 160.00S2: 152.70
R3: 161.00S3: 151.00

Gold Gains on Safe-Haven Demand and U.S. Policy Speculation

Gold traded above $2,620 per ounce on Monday in light holiday trading, as investors monitored the Fed's monetary stance and potential tariff policies under President-elect Trump. Soft PCE inflation data hinted at possible policy cuts, supporting non-yielding gold. Markets are bracing for major shifts, including tariffs, deregulation, and tax reforms. Gold's safe-haven appeal remains strong amid geopolitical risks like the Russia-Ukraine conflict and Middle East tensions. The metal has surged over 27% this year, its best performance since 2010, driven by U.S. policy easing, geopolitical uncertainty, and central bank purchases.

Technically, the first resistance level will be 2635 level. In case of this level’s breach, next levels to watch would be 2655 and 2670 consequently. On the downside 2600 will be the first support level. 2575 and 2545 are next levels to monitor if first support level is breached.

R1: 2635S1: 2600
R2: 2655S2: 2575
R3: 2670S3: 2545

GBP/USD Steady at 1.2580 Amid Year-End Dollar Strength

The pound traded steadily at 1.2580 at the start of the year-end week. While it faces a yearly loss, it has outperformed other currencies due to the Bank of England's slower rate cuts. However, expectations of 75 basis points in cuts for 2025 and stagnant Q3 growth pose downside risks. A stronger dollar following the FOMC meeting adds external pressure on the GBP/USD pair.

The first resistance level for the pair will be 1.2600. In case of this level's breach, the next levels to watch would be 1.2645 and 1.2700. On the downside 1.2550 will be the first support level. 1.2500 and 1.2460 are the next levels to monitor if the first support level is breached.

R1: 1.2600S1: 1.2550
R2: 1.2645S2: 1.2500
R3: 1.2700S3: 1.2460

Silver Steady Amid Year-End Lull, PMI Data in Focus

Silver started the week with a flat movement at the 29.40 level. While a generally quiet week is expected due to the year-end period, the upcoming unemployment and PMI data from the U.S. will likely impact the precious metal. Additionally, China, the largest consumer and exporter of silver, is set to release its manufacturing PMI this week, which will be crucial in determining the direction of silver prices.

Technically, the first resistance level will be 29.85 level. In case of this level’s breach, the next levels to watch would be 30.20 and 30.70 consequently. On the downside 29.35 will be the first support level. 29.00 and 28.50 are the next levels to monitor if the first support level is breached.

R1: 29.85S1: 29.35
R2: 30.20S2: 29.00
R3: 30.70S3: 28.50


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