On Wednesday (December 25), the USD maintained its strength at 108.16, while Gold was in the Neutral zone at 2616 dollars. Due to the strengthening USD, EUR/USD is facing Put pressure. This week, the market may remain range-bound, without significant fluctuations, as the USA economic Calendar is light and the Forex market encounters Western holidays, resulting in lighter trading volumes.
As the USD trades within a narrow range, EUR/USD remains range-bound. With the Forex market preparing for Christmas and Boxing Day, holiday trading volumes are light, and EUR/USD experiences minimal fluctuations. Due to the Federal Reserve taking a more cautious approach to rate cuts, the overall outlook for the USD remains strong. The Fed is expected to cut rates only twice in 2025, each by 25 basis points, which is lower than previous forecasts. This adjustment reflects persistent inflation and a resilient labor market. Investors are closely watching the USA unemployment claims data set to be released on Thursday, which is expected to decline slightly.
Gold hovers above 2600 dollars, with the strengthening USD limiting its upside potential. Geopolitical tensions and trade uncertainties support demand for Gold, but the Federal Reserve's hawkish interest rate stance continues to cap gains. Gold needs to break through 2720 dollars to initiate the next round of increases.
Below are the latest updates from FXEmpire Analyst Muhammad Umair on Gold, the USD, and the EUR.Technical analysis.：
Gold Technical Analysis
The daily chart for Gold shows prices consolidating in the Neutral zone, waiting for the next direction. The Christmas and New Year holidays have led to low market volatility, with prices constrained within a consolidation Range.RSITrading is below the middle level but remains stable, indicating no clear direction. However, the price stays above the 200-day moving average, suggesting a bullish trend.
(Source: FXEmpire)
The Neutral range in the Gold market is highlighted on the 4-hour chart, with prices trading between $2720 and $2550. The RSI fluctuations within these boundaries indicate the market is experiencing Range trading.
(Source: FXEmpire)
Technical Analysis of the USD
The daily chart of USD shows that it has broken through the key level of 107 and maintains strength. After the Federal Reserve's rate cut at the December policy meeting, the momentum of USD prices is strong. The Fed's hawkish tone has driven the upward momentum of USD. A bullish hammer appeared at 105.60, and after the breakout, the momentum continued, indicating that the USD index has further upward potential.
(Source: FXEmpire)
This bullish momentum of the USD index is also reflected on the 4-hour chart. The index is trading within an ascending channel, showing a positive price trend. If the price exceeds the blue dashed Trendlines, it indicates that the index is heading toward 110, which is the upper resistance level of the ascending channel.
(Source: FXEmpire)
Technical analysis of EUR/USD.
The daily chart of EUR/USD shows that while the USD index gains bullish momentum, this currency pair still faces pressure. After the USD index broke the 107 level, EUR/USD fell below the 1.047 USD level, indicating bearish pressure below this threshold.
(Source: FXEmpire)
This Put pressure is also very evident on the 4-hour chart of EUR/USD, showing the formation of a descending channel. The price has failed to break above 1.06 USD and continues to move lower within that channel. The RSI remains below the midpoint, indicating that the bearish momentum of EUR/USD continues. The black dashed Trendlines within the descending channel define the current bearish trend, suggesting further downward momentum.
(Source: FXEmpire)
