Eurozone private loans grew by 2.9% in November compared to last year, which is better than the expected 2.8%. This growth occurred even as the overall economy faced challenges after the New Year holidays. The EUR/USD currency pair fell back toward 1.1700 due to a slight recovery in the US Dollar, with trading activity light. The GBP/USD pair also stabilized around 1.3450 but struggled to gain momentum during the holiday season.

Gold Prices Increase

Gold prices rose towards $4,400, gaining over 1.5% after a significant drop. This increase is driven by expectations of a more lenient Federal Reserve policy and ongoing geopolitical tensions. Cardano has kicked off the New Year on a positive note, trading above $0.36. This is fueled by improving on-chain data and a favorable technical outlook. Projections for 2026 suggest that advanced countries may experience strong economic performance, building on resilience seen in 2025. The crypto market forecast for 2026 shows potential growth, after a volatile 2025. Positive factors include favorable regulatory changes, the rise of Digital Asset Treasuries, and greater adoption of AI and tokenization. The better-than-expected private loan growth in the Eurozone last November hints at some economic strength. However, the recent US dollar recovery is keeping pressure on the EUR/USD pair, pushing it toward the important 1.1700 level. We are monitoring whether this dollar strength is just a temporary holiday effect or marks the start of a new trend for the first quarter.

Federal Reserve Policy Expectations

The main market driver right now is the expectation that the Federal Reserve will adopt a more dovish policy throughout 2026. This belief is a key factor behind gold’s rise toward $4,400 per ounce, with strong buying from central banks continuing since 2024. The CME FedWatch tool shows a high chance of further rate cuts by March, leading traders to consider call options to gain exposure to precious metals. This overall optimism for 2026 fosters a risk-on mood, contrasting the economic uncertainty we faced in 2024. This shift is evident in alternative assets like Cardano, which is gaining momentum as the new year begins. It suggests that any dips in equity indices or growth-oriented assets might be viewed as buying opportunities in the coming weeks. Trading volumes remain low after the New Year, causing pairs like GBP/USD to trade sideways near 1.3450 without a clear direction. The implied volatility in major currency options is currently low, but this will likely change as trading volumes increase. This could be a good time to position for a volatility breakout by considering long straddle strategies on consolidating pairs. Create your live VT Markets account and start trading now.

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