The US Dollar bounced back on Monday, recovering from recent lows as the market geared up for upcoming US data and discussions on Federal Reserve rates. The US Dollar Index rose slightly, nearing three-day highs around 99.50. Focus turned to the ADP Employment Change Weekly report and speeches from Fed officials Logan and Barr. The EUR/USD pair fell for the second day in a row, reaching the 1.1590-1.1580 range, while GBP/USD also slipped, approaching the 1.3130 area. In Japan, USD/JPY climbed to 155.30 for the first time since February, with attention on the upcoming Balance of Trade and Machinery Orders data. AUD/USD faced challenges near 0.6500, as traders looked ahead to the RBA Minutes.

Commodities and Precious Metals

WTI crude oil prices briefly went above $60 per barrel as exports resumed at Russia’s Novorossiysk port amid ongoing geopolitical tensions. Gold prices continued to drop, nearing $4,000 per ounce, influenced by a stronger US Dollar and fluctuating US Treasury yields, while silver gained slightly, surpassing $51 per ounce. As the week begins, the US Dollar is gaining strength, pushing the Dollar Index (DXY) towards 99.50. This follows last month’s Nonfarm Payrolls report, which showed a surprising increase of 210,000 jobs. This result has led the market to question whether the Federal Reserve will cut rates in December. Upcoming speeches from Fed officials Logan and Barr will be closely watched for hints, especially following Waller’s recent comments suggesting a possible rate cut. The Euro’s drop below 1.1600 is a direct result of the dollar’s rally. Europe’s inflation figures are cooling, with the latest headline CPI for the Eurozone falling to 2.5% year-over-year. This difference in economic data keeps pressure on the EUR/USD pair. The Australian dollar is testing the important 0.6500 support level ahead of the RBA minutes. The RBA maintained rates at their last meeting, but with Australian inflation remaining stubbornly high compared to other developed nations, traders will be looking for hawkish signals. A break of this support could indicate a deeper decline for the AUD/USD.

Market Volatility and Fed Decisions

Meanwhile, the Japanese Yen continues to weaken, with USD/JPY surpassing 155.30. This level triggered strong verbal warnings from the Ministry of Finance back in 2024. Traders dealing in derivatives should be cautious of potential intervention risks if the pair continues to rise aggressively. In commodities, oil and gold are showing contrasting trends. WTI crude has risen above $60 a barrel due to persistent geopolitical risks, particularly threats to Russian oil facilities in the Black Sea. On the other hand, gold is trending towards $4,000 an ounce, as the strong dollar makes it less appealing for investors right now. The key concern in the coming weeks is the market’s uncertainty about the Fed’s next actions. While some officials hint at easing, recent strong labor data and a Core PCE inflation figure remaining just under 3% suggest a longer wait. We should expect continued volatility, making options strategies that benefit from sharp price movements potentially useful. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now