Weaker Dollar Increases Euro, Yen Near Intervention, Metals Steady (01.07.2025)

The euro edges toward 1.0400 on dollar weakness and upbeat Eurozone data, while the yen hovers below 158, raising concerns of potential intervention as the BOJ mulls rate hikes. 

Gold remains steady above $2,630, supported by geopolitical risks and central bank buying, despite rising U.S. yields. Meanwhile, the pound eyes resistance at 1.2570 ahead of Fed insights, and silver holds above $31 with help from a weaker dollar and positive China PMI. Markets now turn to upcoming U.S. data, including the ISM Services PMI and Fed minutes, for policy direction.

EUR/USD Climbs to 1.0400 as Dollar Weakens, Euro Gains Momentum

EUR/USD extended its gains for a third session, trading near 1.0400 on Tuesday, driven by USD weakness. Focus shifts to the US ISM Services PMI later today and the Fed’s December meeting minutes on Wednesday.

The US Dollar Index (DXY) stayed pressured near 108.20, despite potential support from President-elect Trump’s comments reaffirming his tariff plans. Trump dismissed reports suggesting a narrower tariff scope, keeping markets attentive to policy updates.

The Euro gained strength from better European inflation and PMI data. Germany's CPI rose to 2.6% in December, beating forecasts, marking a year-high and the third consecutive monthly increase. Strong PMI readings from major Eurozone economies have tempered expectations for aggressive ECB rate cuts, supporting the Euro further.

From a technical perspective, the first resistance level is at 1.0460, with further resistance levels at 1.0515and 1.0575 if the price breaks above. On the downside, the initial support is at 1.0350, followed by additional support levels at 1.0270 and 1.0220.

Yen Falls Below 158 as Intervention Warnings Loom

The Japanese yen fell below 158 per dollar on Tuesday, a five-month low, prompting Finance Minister Katsunobu Kato to warn against speculative moves and signal readiness to intervene if volatility persists.

The yen's decline, nearing the 160 level that triggered intervention six months ago, stems from uncertainty over Bank of Japan (BOJ) rate hikes. BOJ Governor Kazuo Ueda emphasized that policy changes depend on economic, inflation, and wage conditions, urging caution amid domestic and global uncertainties.

The key resistance level appears to be 158.30, 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.  

Gold Holds Ground Amid Rising Yields and Geopolitical Support

Gold held steady at $2,630 per ounce on Tuesday, despite pressure from rising U.S. Treasury yields. On Monday, gold dipped 1% but rebounded after President-elect Trump dismissed reports of scaling back his tariff plans. Investors now await U.S. labor market data and Fed meeting minutes for rate insights. Fed Governor Lisa Cook highlighted cautious rate cuts amid labor market strength and inflation, which could weigh on gold. However, geopolitical tensions and strong central bank demand continue to support the metal.

Technically, the first resistance level will be 2665 level. In case of this level’s breach, the next levels to watch would be 2695 and 2725 consequently. On the downside 2630 will be the first support level. 2620 and 2600 are the next levels to monitor if first support level is breached. 

GBP/USD Eyes Resistance at 1.2570 Ahead of US PMI and Fed Insights

GBP/USD climbed for the third straight day, trading near 1.2530 during Tuesday's Asian session, driven by a weaker US Dollar (USD). Focus shifts to the US ISM Services PMI release later today and the Fed's December meeting minutes on Wednesday for further policy insights.

The Dollar Index (DXY) remained near 108.30 for a third session. However, USD could gain support after President-elect Trump dismissed claims his administration might narrow tariff plans, keeping traders attentive to updates on his strategy.

The British Retail Consortium (BRC) reported a 3.1% increase in December like-for-like sales, recovering from November's 3.4% drop, influenced by Black Friday. Despite the rebound, Q4 retail growth was sluggish, with annual sales rising only 0.7%. BRC CEO Helen Dickinson noted the "golden quarter" failed to meet retailer expectations amid weak consumer confidence and economic challenges.

The first resistance level for the pair will be 1.2570. In case of this level's breach, the next levels to watch would be 1.2600 and 1.2650. On the downside 1.2480 will be the first support level. 1.2350 and 1.2300 are the next levels to monitor if the first support level is breached.

Silver Holds Above $31 Amid Dollar Weakness and Positive China Data

Silver began the day trading around the 31.35 level. The pullback in the US Dollar Index yesterday, combined with positive PMI data from China, helped silver break through a key resistance level. Going forward, the economic data releases scheduled for today and the rest of the week will be crucial for the metal’s price direction.

Technically, the first resistance level will be 30.20 level. In case of this level’s breach, the next levels to watch would be 30.70 and 31.00 consequently. On the downside 29.85 will be the first support level. 28.50 and 28.00 are the next levels to monitor if the first support level is breached.