ATFX Market Outlook 7th January 2025

ATFX Market Outlook 7th January 2025

Gold Struggles as Fed Stays Hawkish and Bond Yields Rise

Opinion Today:

On Monday, the S&P 500 and Nasdaq hit their highest levels in over a week, driven by gains in semiconductor stocks and reports suggesting the incoming Trump administration might adopt a softer approach to tariffs. The Dow fell by 0.06%, the S&P 500 rose by 0.5%, and the Nasdaq increased by 1.2%.

The dollar fell in volatile trading due to conflicting reports about Trump’s tariff plans. The dollar index dropped 0.64% to 108.26, while the euro rose 0.8% to 1.0390 against the dollar. The dollar gained 0.17% against the yen, and the pound climbed 0.78% against the dollar.

Gold prices struggled, and U.S. Treasury yields rose as the Federal Reserve indicated a potential slowdown in interest rate cuts in 2025 and geopolitical tension. Spot gold swings and decreased by 0.14% to $2,635.33. Oil prices retreated as bearish economic news from the U.S., and Germany countered support from a weaker dollar amid forecasts for increased heating demand due to winter storms.

Today, the Eurozone released the preliminary December Consumer Price Index (CPI). Concerns about whether the annual rate will rise for the third month in a row, potentially reaching its highest level since July of last year, could support further interest rate cuts by the European Central Bank (ECB). Tonight, attention will turn to the US ISM Services PMI for December, which is expected to increase to 53. If the data is slightly upbeat, it will be bullish on the dollar and US stock indices. 

Key Data:

18:00 EU CPI Flash DEC & Unemployment Rate NOV ** 

21:30 US Trade Balance NOV ** 

21:30 CA Trade Balance NOV ** 

23:00 US ISM Services PMI DEC *** 

Tomorrow

05:30 US API Crude Oil Stock Change ***

21:15 US ADP Employment Change DEC *** 

EUR/USD

1.0423/1.0458 Resistance

1.0312/1.0277 Support 

The euro increased against the U.S. dollar for the first time since early August last year, fueled by the dollar's declining value. After closing above the 10-day moving average, it broke through the 20-day moving average to maintain its upward momentum. Key resistance levels to watch include last week's high of 1.0458 and the trend line from last December, which could hinder further gains.

GBP/USD

1.2539/1.2568 Resistance 

1.2447/1.2410 Support 

Yesterday, sterling had its largest gain against the US dollar since late November. However, it must still break through the key resistance level of 1.2500 to 1.2560, where the daily moving average is located. After testing this range yesterday and then reversing, it may continue to operate within the downward channel established in late December if it adjusts further today.

USD/JPY

158.89/159.12 Resistance

157.78/157.54 Support 

The USD/JPY pair formed a low-level pullback yesterday, hitting a three-day low of 156.24 before closing higher. It rose sharply in the early Asian session, reaching a new high since last July. If it stays above 158, it will confirm a move into a higher technical zone.

USD/CAD

1.4384/1.4399 Resistance

1.4320/1.4305 Support

Canadian Prime Minister Justin Trudeau announced his resignation due to internal party struggles, which boosted the Canadian dollar. Consequently, the USD/CAD exchange rate fell by 0.75%, the largest drop since late August last year. It dropped below recent lows but is trying to hold support at the 20-day moving average to ease downward pressure. Investors should watch the Canadian Trade Balance release and the momentum of the crude price impact on the Canadian dollar. 

U.S Crude Oil Futures (Feb)

73.91/74.35 Resistance 

72.53/72.08 Support

Economic concerns have overshadowed the rise in winter energy demand, causing crude oil prices to decline from a nearly three-month high of $75. Watch for a drop below $72 for potential support as momentum slows, with the 10-day moving average becoming relevant.

Spot Gold

2646/2652 Resistance

2626/2620 Support

Spot Silver

30.16/30.33 Resistance

29.59/29.46 Support 

The Fed's comments and rising U.S. Treasury yields have pressured gold prices. Yesterday, spot gold fluctuated, nearing $2,650 before falling to $2,615. After a partial recovery, it settled between two key moving averages on the daily chart. Monitor the trend line from December 19 for potential support, with resistance above $2,640.

US30

43360/43765 Resistance 

42548/42150 Support 

U.S. President-elect Trump denied plans to limit tariffs. Major U.S. stock indexes closed mixed, with the Dow Jones rising to a week-high of 43,115 before falling below 43,000 and the 10-day moving average. This suggests a weak consolidation trend, and with the bearish job data outlook, the Dow may test lower levels.

NAS100

21708/21927 Resistance

21442/21227 Support 

Technology stocks have significantly boosted the Nasdaq, with Nvidia up 3.4% and Meta rising 4.2%. The index gained over 1%, reaching its highest level in over a week. Support is at around 21,500, with resistance above 21,800. However, US job data expectations may limit further upward movement.

BTC (Bitcoin)

104271/105290 Resistance,

100955/99953 Support

Bitcoin rose for the seventh consecutive session on Monday, up 6% for the week, recovering from a slump after hitting a December 2024 high of $108,244.9. While optimism remains, with projections upwards before US job data is released this week, our analysts caution that prices could swing between $110,000 and $90,000 in the short run, depending on President-elect Trump's policies. Investors should consider poised for a pullback ahead of the US job data.

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