EUR/USD remains in a narrow range around 1.0400, with low trading volumes due to the holiday period.
Possible technical scenarios:
On the daily chart, EUR/USD has remained within the corridor between 1.0344 and 1.0478, and it is likely to stay within this range throughout the holiday period.
Fundamental drivers of volatility:
The euro is weakening after ECB President Christine Lagarde mentioned that inflation could return to the 2% target sooner than anticipated. However, high service sector inflation (3.9%) requires caution, which supports expectations for the ECB's accommodative stance through 2025.
The US dollar's stability is also putting pressure on EUR/USD. The Fed now expects two rate cuts in 2025, which is less than previously anticipated in September. Strong labor market data and the Fed's more moderate approach to rate cuts have bolstered the US dollar's position.
The EUR/USD outlook remains bearish. Investors are awaiting the release of US jobless claims data, which may impact the pair's dynamics in the short term. Trading volumes will remain thin until the end of the year, with liquidity limited as market participants take their New Year's holidays.
Intraday technical picture:
As we can see on the 4H chart of EUR/USD, the pair has pulled back from the dotted resistance at 1.0448, leaving room for movement toward the support at 1.0344.
The GBP/USD pair remains under pressure due to the holiday period and reduced liquidity.
Possible technical scenarios:
According to the daily chart, GBP/USD is trading near the support level at 1.2500. If this key level holds, the price could recover toward the 1.2608 target.
Fundamental drivers of volatility:
Pressure on the pound has increased following weak UK GDP data: quarterly growth stagnated at zero, and annual growth was 0.9%, below the expected 1.0%.
Disappointing US data also weighed on market sentiment, with durable goods orders falling 1.1% instead of the expected 0.4% decline, reflecting a broader downturn in market conditions.
Market liquidity is shrinking as the Christmas holidays approach, limiting trader activity and responses to economic releases. In the coming days, attention will turn to US jobless claims data, though low trading volumes may prevent significant market movements until the week’s end.
Intraday technical picture:
Judging by the unfolding situation on the 4H chart of GBP/USD, the price has bounced upward from the support level within the sideways range between 1.2500 and 1.2608. Given the low pre-New Year liquidity, this could lead to a cautious recovery within this range.
The USD/JPY pair remains near a multi-month high, supported by a weak Japanese yen and a strong US dollar.
Possible technical scenarios:
On the daily chart of USD/JPY, the pair is testing the resistance at 157.10. A consolidation above this level would allow the price to continue its upward movement towards the target of 160.21. If it fails to hold, a pullback toward the support at 154.83 is possible.
Fundamental drivers of volatility:
The accommodative stance of the Bank of Japan and the hawkish approach of the Federal Reserve are driving the US dollar higher, widening the yield gap between the two countries. However, concerns about potential foreign exchange intervention by Japan and geopolitical risks are limiting the aggressive sell-off of the yen.
The positive global market sentiment is also undermining the Japanese yen's safe-haven status. Nonetheless, strong inflation data from Japan could push the Bank of Japan to consider a rate hike in 2024. However, expectations that any policy change will be delayed until March continue to weigh on the yen.
The US dollar, which remains near a two-year high, is supported by rising US bond yields and overall confidence in the US economy. With trading volumes shrinking ahead of Christmas, volatility may slow for the remainder of the year.
Intraday technical picture:
On the four-hour chart of USD/JPY, trading around the 157.10 level leaves uncertainty about which side the price will consolidate on. If the price consolidates above, the next local target for growth would be the highs of December 20, and a further move could take the price to the 160.21 level.
The USD/CAD pair shows weak growth after a two-day decline, as the US dollar remains strong.
Possible technical scenarios:
On the daily chart of USD/CAD, the pair is consolidating above the 1.4349 level. From here, the price has room to move toward the highs of December 19, and if those levels are surpassed, it may rise further toward the resistance at 1.4556.
Fundamental drivers of volatility:
The US dollar in the pair is supported by the Fed's signals of a more cautious approach to rate cuts in 2025 due to persistent inflationary pressures. However, weak consumer spending and durable goods orders data in the US are limiting market confidence.
In Canada, GDP grew by 0.3% in October, surpassing expectations for a 0.1% decline, indicating stable economic activity. However, a 0.5% decline in the commodity price index suggests pressure on the export sector. The anticipated contraction in Canadian GDP in November may increase volatility in the pair.
Amid mixed macroeconomic data from both sides, USD/CAD retains potential for further growth, especially considering the difference in monetary policies between the Fed and the Bank of Canada.
Intraday technical picture:
On the 4H chart of USD/CAD, after an upward reversal from the support at 1.4349, the nearest target for growth is the dotted resistance at 1.4429. If this level fails to break, the pair may continue trading within the sideways range between 1.4349 and 1.4429.
Gold prices remain below three-month highs as the Fed is expected to continue cutting rates in 2025, but at a slower pace than previously anticipated.
Possible technical scenarios:
On the daily chart, gold has reached the middle of the sideways range between 2542.00 and 2659.00 during its local decline, and the price still has some room to move toward the lower boundary of this range.
Fundamental drivers of volatility:
Gold prices have been cautiously declining for the fifth consecutive week as market participants evaluate the prospects of a gradual rate cut and the potential impact of trade tariffs under President-elect Donald Trump.
Despite the pressure from higher rates, gold remains an attractive safe-haven asset due to ongoing geopolitical tensions and strong central bank buying activity.
The market's attention is focused on US economic policy, potential tariff-related volatility, and the pace of monetary easing, all of which could continue to support demand for gold in the coming months.
Intraday technical picture:
On the 4H chart of XAU/USD, a series of consecutive lower highs supports the scenario of a price decline toward the support corridor between 2542.00 and 2659.00.
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