The US Dollar (USD) held onto its gains, setting a positive outlook for the year as everyone watches the upcoming US labor market report. The Dollar Index (DXY) rose above its 200-day SMA and approached the 99.00 mark. EUR/USD was on a downward trend, falling toward its 55-day SMA around 1.1640. The German Balance of Trade, Industrial Production, and Retail Sales data for the euro area are expected, along with a speech from the European Central Bank (ECB).

Current Market Trends

GBP/USD fell for three days straight, nearing the 1.3420-1.3415 range. The BRC Retail Sales Monitor will be released on January 13. USD/JPY saw a small increase, briefly surpassing 157.00. Upcoming data includes Household Spending and early readings of the Coincident and Leading Economic indexes. AUD/USD continued its decline, hitting three-day lows below 0.6700. Household Spending figures from Australia are due on January 12. WTI oil prices bounced back after two days of losses, climbing to about $58.00 per barrel, while traders keep an eye on developments in Venezuela’s oil sector. Gold prices fell to a three-day low, dropping under $4,400 per ounce due to a stronger US Dollar. Silver prices also decreased, reaching three-day lows after touching the $74.50 mark per ounce. Last year at this time, the market focused intensely on the US Nonfarm Payrolls report, which drove a dollar rally with the DXY close to 99.00. The strong job market in early 2025 kept the Federal Reserve on a hawkish path for two more quarters. Currently, however, estimates for this week’s payrolls data stand at only 110,000. Traders should brace for a weaker dollar if this lower figure comes true.

Historical Market Insights

In January 2025, the euro and pound faced significant pressure, with EUR/USD testing 1.1640 as the ECB remained inactive. Recent data shows Eurozone core inflation stubbornly at 3.5% in December 2025, prompting policymakers to adopt a more aggressive stance. The negative outlook for the pound has eased, especially after UK retail sales for the fourth quarter of 2025 surprised with a 1.2% increase, encouraging traders to consider buying on dips. The rise above 157.00 in USD/JPY a year ago was a major peak, prompting warnings from Japanese officials that limited further gains through 2025. With Japan’s national core CPI above the 2.5% target for three straight months, the Bank of Japan faces pressure to tighten policy. Traders dealing in derivatives might consider options to protect against sudden drops in this currency pair. The Australian dollar’s weakness below 0.6700 in early 2025 was linked to low oil prices, as WTI crude struggled around $58 a barrel. Today, the situation is very different, with WTI trading above $85 a barrel due to new supply disruptions. This supports the Aussie, suggesting that long positions are now much more favorable than they were last year. We also remember the pullback in gold to $4,400, triggered by a stronger dollar and speculation about index rebalancing. This dip was a clear buying opportunity, as persistent global inflation kept precious metals rising throughout 2025. The World Gold Council recently reported record central bank buying in Q4 2025, meaning any temporary weakness in gold or silver should be seen as a chance to build bullish positions. Create your live VT Markets account and start trading now.

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