The ISM Services Prices in the United States rose to 66.6 in January, up from 64.3. This change, reported by the FXStreet team, is affecting the forex market and several currency pairs.
EUR/USD has fallen and is testing the 1.1800 support due to the strengthening US Dollar. Similarly, GBP/USD is moving towards 1.3640 as the Greenback gains traction, with eyes on the Bank of England’s ‘Super Thursday’ announcements.
Gold And Cryptocurrency Market
Gold is under pressure, dropping below $5,000 per troy ounce as the US Dollar strengthens. In the cryptocurrency market, Dogecoin is holding steady near the $0.1000 support amidst a market sell-off, while Ripple has stabilized around $1.60 after a brief dip.
As market conditions shift, the performance of software and AI stocks raises questions about investor sentiment. However, it’s not that AI is being dismissed; rather, it’s being approached with caution. Ripple is showing mixed signals but remains stable despite the broader volatility.
The rise in the US ISM Services Prices Paid to 66.6 indicates that inflation is still a major concern. This unexpected increase boosts the US Dollar, suggesting that the Federal Reserve may need to keep interest rates high for an extended period. Derivative traders should position themselves for continued dollar strength against other major currencies in the coming weeks.
We saw a similar trend in 2025 when persistent services inflation, averaging over 4% in the second half of the year, forced markets to reconsider rate cut expectations. This recent figure is not an isolated incident but part of a steady trend from last year, making short-term bets on a Federal Reserve shift increasingly risky.
Outlook On Gold And Currency Pairs
For gold, the strong dollar combined with the expectation of prolonged high US interest rates is a negative mix. With gold slipping below $5,000, options traders might consider buying put spreads to profit from a potential decline toward support levels not seen since the fourth quarter of 2025. Because gold doesn’t yield returns, it becomes less appealing when government bond yields rise.
The EUR/USD pair seems particularly weak as it tests the 1.1800 support level before the European Central Bank meeting. The ECB is facing significantly lower economic growth, as shown by manufacturing PMI figures that stayed below 50 for most of 2025. This divergence in policies suggests selling euro rallies against the dollar.
Likewise, GBP/USD is showing weakness ahead of the Bank of England’s upcoming decision. The UK’s minimal GDP growth of just 0.4% in 2025 limits the BoE’s ability to match the Fed’s aggressive stance. This economic underperformance makes the pound a prime candidate for shorting against the dollar, especially on any brief recoveries.
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