Shutdown Fears Continue with a Softer Dollar (10.01.2025)

The euro climbed to $1.1740 after stronger inflation data from the Eurozone’s largest economies suggested delayed ECB easing, while the yen held near 148 per dollar despite U.S. tariff concerns. 

Gold traded close to record highs at $3,870, supported by safe-haven demand amid U.S. government shutdown risks, while silver hovered near $47 as Fed cut bets strengthened following solid U.S. labor data. Sterling advanced toward $1.3440 on stronger UK growth, extending its three-day rally as the dollar softened.

Euro Rises to $1.1740 on Strong Inflation Data

The euro climbed to $1.1740 after inflation data from the four largest Euro Area economies signaled firmer price growth, prompting investors to anticipate delays in rate cuts. Germany’s inflation reached 2.4%, above the 2.3% forecast, while France posted 1.2% and Spain increased to 2.9%. Italy remained unchanged at 1.6%. Overall, euro-zone inflation likely reached a five-month high in September.

Technically, 1.1690 is the key support, while resistance is seen at 1.1770 and 1.1790.

Yen Holds Gains Despite U.S. Tariff Concerns

The yen traded close to 148 per dollar on Wednesday after three straight sessions of gains, supported by data showing large manufacturers’ sentiment in Q3 improved to its highest level since late 2024. Nonetheless, concerns over US tariffs remained. The Bank of Japan has highlighted the survey as a key gauge for policy decisions, with markets now assigning a 39% chance of a quarter-point hike at this month’s meeting.

Resistance is at 149, while support holds at 147.25.

Gold Near Record as Shutdown Risks Lift Demand

Gold advanced toward $3,875 on Wednesday, above Tuesday’s record, as US shutdown worries lifted safe-haven demand. The Senate’s failure to pass a funding bill brought the government closer to closure, while President Trump hinted at workforce cuts. Investors now watch how long a shutdown might last, since delays to key data like Friday’s nonfarm payrolls could affect the Fed’s late-October meeting.

From a technical perspective, support is around 3792, and resistance is at 3875.

Stronger UK Growth Lifts Pound to 1.3440

GBP/USD edged higher in Wednesday’s Asian session, approaching the 1.3440 level and extending its advance for a third day. The Pound was lifted by stronger UK GDP growth, while the US Dollar remained soft as investors concentrated on the risk of a US government shutdown.

Technically, support is at 1.3380, with a break lower exposing 1.3325. Resistance sits at 1.3495 and 1.3525.

Silver Holds Near $47 on Fed Cut Bets

Silver held gains above 1%, trading around $47 per ounce as of writing, after reaching an early Asian session high of $47.57 on Wednesday. The metal’s rise was supported by US employment data, which strengthened expectations for Federal Reserve rate cuts. According to the CME FedWatch Tool, markets now assign a roughly 97% chance of a rate cut in October and a 76% probability of another in December.

From a technical perspective, resistance is observed at 47.75, while support is located at 45.95.