Focus on US Labor Data: Key employment figures, including Non-Farm Payrolls and Unemployment Rate, will shape expectations for Federal Reserve policy.
Euro at Risk of Parity: The euro is under intense selling pressure, with bearish momentum targeting parity against the dollar amidst weak economic data.
Gold Technical Consolidation: Gold prices are consolidating near critical resistance levels, with technical patterns indicating an emerging pattern.
What Now?
The dollar’s strength continues to dominate the forex market, fueled by robust US economic data and expectations of prolonged Fed policy divergence. The Bloomberg Dollar Spot Index remains near multi-year highs, gaining 0.32% last week as investors pivoted toward safe-haven assets. Meanwhile, the euro plummeted to its lowest level since 2022, reflecting bearish momentum and concerns over eurozone growth.
In commodities, gold prices held steady near $2,654 as traders assessed global macroeconomic risks and technical chart patterns. Crude oil remained range-bound, with persistent concerns about oversupply and soft demand tempering price movements.
The euro fell sharply last week, losing 1.3% against the dollar, driven by weak eurozone data and heightened concerns over additional US tariffs. Leveraged funds are increasingly positioned for parity, with heavy options trading in favor of euro downside. Hedge funds are targeting the 0.97-1.00 range in the coming months, exacerbating bearish sentiment.
The US labor market remains in focus after recurring unemployment claims ticked higher, signaling potential vulnerabilities despite overall economic resilience. Gold prices consolidated gains as traders anticipated further safe-haven flows amid volatile equity markets.
Market Events and Announcements:
Times are in GMT+2.
Monday, January 6, 2025:
All Day – EUR – German Prelim CPI (m/m): A slight rebound to 0.3% is expected, offering early insight into eurozone inflation trends.
4:45 PM – USD – Final Services PMI: Forecast at 58.2, this reading could reinforce expectations of US economic resilience.
Tuesday, January 7, 2025:
9:30 AM – CHF – CPI (m/m): Expected at 0.2%, influencing the SNB’s monetary policy outlook.
11:30 AM – GBP – Construction PMI: Forecast at 55.2, reflecting the UK construction sector’s strength.
12:00 PM – EUR – Core CPI Flash Estimate (y/y): At 2.7%, this key inflation metric will influence ECB expectations.
5:00 PM – USD – ISM Services PMI: Forecasted at 52.3, pivotal for assessing US service sector performance.
5:00 PM – USD – JOLTS Job Openings: An expected 7.72M, indicating US labor market dynamics.
Wednesday, January 8, 2025:
2:30 AM – AUD – CPI (y/y): Forecasted at 2.2%, shaping the RBA’s inflation outlook.
3:15 PM – USD – ADP Non-Farm Employment Change: Forecast at 130K, a precursor to Friday’s NFP data.
5:30 PM – USD – Crude Oil Inventories: With expectations of -1.2M, this data will impact energy markets.
The pair trades near $1.029, testing oversold territory. A break below $1.025 could pave the way for further declines, with parity becoming a likely target.
Main Scenario:
A sustained move below $1.02525 could trigger a decline toward $1.01500 and $1.00369 (161.80% and 200% Fibonacci levels).
Alternative Scenario:
A recovery above $1.04462 (61.80% Fibonacci retracement) could signal a short-term reversal, targeting $1.06293.
Key Levels:
Support: $1.02525, $1.01500, $1.00369
Resistance: $1.04462, $1.06293
Chart 2: XAU/USD (Gold) – Daily Chart
Gold consolidates near $2,654, forming a triangle pattern that suggests a breakout will be imminent eventually. However, the firm USD has capped recent rallies, limiting upside momentum.
Main Scenario:
A move above $2,665.63 (127.20% Fibonacci extension) could target $2,682.04 and beyond.
Alternative Scenario:
Failure to hold above $2,622.66 (61.80% Fibonacci level) may result in a retracement toward $2,596.10.
Key Levels:
Support: $2,622.66, $2,596.10
Resistance: $2,665.63, $2,682.04
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