USD Strength on Trade Sentiment Impacts Currencies (05.01.2025)

EUR/USD dropped to a two-week low near 1.1300 despite soft U.S. data, as hopes of potential trade deals lifted the dollar.

Gold extended its slide below $3,230 while silver steadied around $32.10 with weak U.S. growth and disappointing jobs data. GBP/USD also retreated slightly, weighed by a firmer dollar ahead of the U.S. non-farm payrolls report expected to influence Fed policy outlook.

EUR/USD Slides Below 1.1300

EUR/USD dropped 0.2% on Thursday to around 1.1300, hitting a two-week low. Despite weak U.S. data, investor sentiment shifted toward optimism on trade, lifting the dollar. Comments from President Trump about potential deals with China, Japan, South Korea, and India supported the greenback, adding pressure on the euro. The pair remains under short-term bearish pressure as markets await Friday’s U.S. non-farm payrolls, which may signal a potential slowdown in job growth.

Resistance levels are seen at 1.1460, then 1.1580 and 1.1680, while support rests at 1.1260, followed by 1.1200 and 1.1150.

Yen Rises for Third Day as BoJ Holds Rates

USD/JPY rose to 143.4 on Thursday, marking its third straight daily gain as the yen weakened following the Bank of Japan's decision to keep rates at 0.5%. This was the second consecutive meeting with no changes, as policymakers assess the impact of U.S. tariffs on Japan’s exports.

The dollar also gained after Trump’s comments hinted at progress in trade talks with Japan, India, and South Korea, along with optimism about a deal with China.

Resistance is located at 145.90, followed by 146.75 and 149.80. On the downside, support levels are at 139.70, then 137.00 and 135.00.

Gold Below $3230 on Trade Optimism

Gold extended losses for a third session, falling below $3,230 as safe-haven demand faded with signs of easing U.S.-Asia trade tensions. Trump’s remarks about possible trade agreements and his executive order easing auto-related tariffs reduced investor demand for gold. Focus is now on Friday’s jobs report for clues about the Fed’s next move. Still, gold gained over 5% last month, supported by global uncertainty and signs of U.S. weakness.

Resistance is expected at $3,365, then $3,405 and $3,500. Support stands at $3,220, followed by $3,165 and $3,050.

GBP/USD Slips to 1.3294 as Dollar Firms

GBP/USD slipped 0.2% to 1.3294 on Thursday as the dollar firmed on hopes of reduced trade tensions. Trump's remarks about potential deals with major Asian economies helped the dollar gain ground. The pound saw limited movement amid a lack of UK data and global risk sensitivity. Attention now shifts to U.S. labor data, especially the non-farm payrolls, which could shape Fed rate expectations and indirectly affect sterling.

If GBP/USD breaks above 1.3430, the next resistance levels are 1.3500 and 1.3550. Support levels are at 1.3200, followed by 1.3050 and 1.2960.

Recession Worries Push Silver Losses

Silver hovered near $32.10 after trimming earlier losses, supported by recession concerns as Q1 U.S. GDP contracted by 0.3% against expectations of growth. The contraction was driven by a 40% surge in imports with tariff fears. ADP employment data also disappointed, showing only 62,000 new private-sector jobs in April.

Weak Chinese manufacturing data added to demand concerns, though the broader outlook remains uncertain with trade dialogue still lacking clarity.

Resistance is first seen at $33.80, with higher levels at $34.20 and $34.85 if momentum builds. Support begins at $32.00, followed by $31.40 and $30.20.