Market sentiment remains risk-on, with the USD weakening amid expectations of a rate cut in 2026. The AUD/USD pair remains bullish. With the Christmas and New Year holidays approaching, market liquidity is likely to be low as some institutions close positions. However, price spikes could occur if there are unexpected news triggers.
Today's EUR/USD movement is expected to experience reduced liquidity due to most forex markets being closed for Christmas. On the 30-minute timeframe, EUR/USD is moving near the lower band and drawing a contracting Bollinger band, indicating decreasing volatility. Hold open buy positions on this pair with a stop loss.
Geopolitical tensions and the risk of escalation between the US and Venezuela have increased demand for gold. This could potentially disrupt the oil supply chain, potentially driving up oil prices. Silver and gold still have the potential to rise amid geopolitical risks and expectations of a US interest rate cut.
Demand for safe-haven currencies like the CHF is expected to increase amid recent geopolitical tensions. The USD performed well yesterday, but Swiss CPI data is expected to support the CHF today.
The Japanese yen is predicted to continue weakening despite the Bank of Japan's decision to abandon negative interest rates. However, the rate hike isn't strong enough to support the JPY amidst risk-on sentiment. USD/JPY is hovering near the upper band, awaiting a pullback, with a breakout scenario suggesting further upside.
The GBPUSD pair is expected to move within a range near the middle band line. Important data is being released today from the UK and the US, with GDP in the UK and unemployment claims in the US.
The Japanese yen strengthened following statements by Japanese officials about the possibility of currency intervention if the JPY continues to weaken. Japan's interest rate is heading towards normalization, but remains at 0.75%. Heated geopolitical tensions and Trump's tariffs threatening countries that reject US demands on Greenland have fueled demand for safe-haven currencies.
Today, we await the release of Australian and US data. In Australia, economic data related to employment, and in the US, data on the PCE index and GDP, may trigger today's movements. AUDUSD is trending higher and is trying to wait for a price rebound around 0.6700.
The US dollar index weakened yesterday. If no new catalysts support the USD, the weakening could continue amid geopolitical risks caused by President Trump.
The Fed kept interest rates unchanged, as the market expected. This temporarily supported the USD, but overall the US dollar is under pressure. GBP/USD is expected to continue its gains.
