Euro Gains on Gradual Tariff News, Yen Near 4-Week High, Gold Above $2,690 (01.16.2025)

Euro Rebounds to $1.03 on Reports of Gradual Trump Tariffs

The euro rose to $1.03 from a two-year low of $1.018 amid reports of a phased tariff plan by Trump’s team to avoid sudden inflation spikes. The plan suggests gradual monthly tariff increases of 2-5%. The euro remains pressured as markets reassess rate cut expectations and inflation risks from Trump’s policies. Focus shifts to ECB minutes and Eurozone inflation data for policy insights.

From a technical perspective, the first resistance level is at 1.0350, with further resistance levels at 1.0460 and 1.0500 if the price breaks above. On the downside, the initial support is at 1.0270, followed by additional support levels at 1.0125 and 1.0100. 

Yen Hits 4-Week High at 155.5 on Hawkish BOJ Signals

The Japanese yen strengthened to 155.5 per dollar on Thursday, a four-week high, following hawkish comments from BOJ Governor Kazuo Ueda, who signaled possible rate hikes if conditions align. Deputy Governor Himino echoed similar views, while Finance Minister Kato pledged to support the yen. The currency also gained from a weaker US dollar after lower US core inflation increased hopes for further Fed rate cuts.

The key resistance level appears to be 158.60, with a break above it potentially targeting 160.00 and 161.00. On the downside, 154.90 is the first major support, followed by 153.40 and 152.40 if the price moves lower.  

Eased Inflation and Trump Policies Shape Gold’s Outlook at $2,690

Gold held above $2,690 per ounce on Thursday, the highest in over a month, driven by easing US inflation and hopes for less restrictive Fed policy in 2025. Core inflation slowed unexpectedly, fueling expectations of 40 basis points in Fed rate cuts by year-end, up from 31. However, Fed officials cautioned that inflation risks remain, with pro-inflationary policies from President-elect Trump adding to concerns. A ceasefire between Israel and Hamas slightly reduced gold's safe-haven appeal.

Technically, the first resistance level will be 2725 level. In case of this level’s breach, the next levels to watch would be 2750 and 2790 consequently. On the downside 2660 will be the first support level. 2630 and 2600 are the next levels to monitor if the first support level is breached. 

Pound Stabilizes at $1.22 as UK Inflation Eases to 2.5%

The British pound stabilized at $1.22 after briefly declining, staying near November 2023 lows as markets assessed the latest CPI report. Annual inflation eased to 2.5% in December, which was in line with Bank of England forecasts but below market expectations. Services inflation fell to 4.4%, a low since 2022, while core inflation dropped to 3.2%, suggesting easing inflationary pressures. Traders expect only one 0.25% BoE rate cut this year. Meanwhile, UK bonds face pressure from concerns over rising debt levels and fiscal management, prompting the finance ministry to reaffirm strict budget discipline.

The first resistance level for the pair will be 1.2265. In the event of this level's breach, the next levels to watch would be 1.2350 and 1.2460. On the downside 1.2100 will be the first support level. 1.2080 and 1.2000 are the next levels to monitor if the first support level is breached.

Silver Rises on Fed Speculation Despite Weak Industrial Demand

Silver prices rose to $30.3 per ounce on Wednesday, nearing a one-month high, as cooling US inflation raised expectations for a less restrictive Fed policy. Core inflation slowed unexpectedly in December, reducing the appeal of interest-bearing assets and supporting silver. However, uncertainty about industrial demand kept prices below the 12-year high of $35 reached in October. In China, overcapacity in the solar panel industry led to a government-led supply control program, dampening silver demand. Meanwhile, US import bans targeting solar panel manufacturers in Xinjiang over forced labor allegations added further pressure.

Technically, the first resistance level will be 31.00 level. In case of this level’s breach, the next levels to watch would be 31.80 and 32.50 consequently. On the downside 29.85 will be the first support level. 28.80 and 28.50 are the next levels to monitor if the first support level is breached.