EUR/USD Slips as Dollar Rides Treasury Yields High

XAU/USD

Prediction: Increase

Gold prices remained stable during early Asian trading on Friday, poised to record their strongest weekly gain since mid-November.

Investors are awaiting U.S. labor data to assess how aggressively the Federal Reserve might cut interest rates this year.

Fundamental Analysis:

Spot Price: Gold is currently trading at $2,670.16/ounce as of 00:44 GMT, up more than 1% this week. U.S. Gold Futures: Increased slightly by 0.1% to $2,694.50.

Key Non-Farm Payrolls (NFP) Data: The U.S. Non-Farm Payrolls report (NFP) will be released at 160,000 jobs in December, down from 227,000 in the previous month. A weaker report could reinforce expectations of rate cuts, supporting gold prices.

Safe-Haven Demand: Gold reached a near four-week high in the previous session, driven by safe-haven demand as investors evaluate the impact of policies proposed by President Donald Trump. Expected protectionist measures and tariffs are likely to increase inflation, further supporting gold.

Fed’s Caution on Rate Cuts: Kansas City Fed President Jeff Schmid hinted at limited room for rate cuts in 2025, citing the U.S. economy's resilience and inflation above the 2% target. This could exert downward pressure on gold. China and Gold Demand: China’s consumer inflation declined in December, while producer price deflation persisted. This could prompt Beijing to increase economic support policies, boosting gold demand from central banks.

Technical Analysis:

Key Resistance: $2,678: The nearest resistance level. If breached, gold could test $2,700 and, beyond that, $2,721. Key Support: $2,660 (EMA 34): If this level breaks, prices may drop to $2,640 (EMA 89). Further
support lies at $2,610 (EMA 200).

RSI: The RSI is hovering around 59-60, indicating that bullish momentum remains but is weakening. If RSI rises above 70, the upward momentum could strengthen significantly

 

EUR/USD

Prediction: Decrease

The EUR/USD pair is trading around $1.0303 during early Asian hours on Friday, as the U.S. dollar continues to be supported by rising U.S. Treasury yields and expectations of a strong U.S. jobs report.

The greenback is on track for its sixth consecutive weekly gain, the longest streak since 2023, thanks to the relative strength of the U.S. economy compared to global weaknesses.

Fundamental Analysis:

USD Strength: The U.S. Dollar Index (DXY) is up 0.25% this week, trading around 109.18, supported by higher U.S. Treasury yields and expectations for a robust labor market. The dollar has recorded small gains against the euro and other major currencies.

U.S. Non-Farm Payrolls (NFP): The market expects the NFP report to show the U.S. economy added 150,000 jobs in December, with the unemployment rate steady at 4.2%. 

A stronger-than-expected report could reduce expectations for Fed rate cuts in 2025, boosting the dollar and exerting downward pressure on the euro. Bond Market: The yield on the U.S. 10-year Treasury has risen nearly 9 basis points this week to 4.68%, supported by reduced expectations of rate cuts and inflationary economic policies from President-elect Trump.

Higher yields provide strong momentum for the dollar and keep the euro under pressure.

Eurozone Weakness: Signs of economic weakness in the eurozone, along with global risks, continue to weigh on the euro's recovery. While the currency has remained relatively stable against the USD this week, it lacks positive catalysts to drive an upward move.

Technical Analysis:

Support Levels: Immediate support is at $1.0290, with stronger support at $1.0222 (recent low).

A break below $1.0222 could push the price further down to $1.0200. Resistance Levels: Immediate resistance is at $1.0340 (EMA 34). If breached, EUR/USD could test $1.0375 (EMA 89).

RSI: On the 4-hour chart, RSI is hovering near 40, indicating that bearish momentum remains dominant. If RSI falls below 30, the pair could enter oversold territory. Conversely, if RSI rises above 50, a recovery signal might emerge.

 

 

 

 

 

 

 

 

 

 

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