Eurozone CPI and Fed policy determine the EUR/USD outlook
Additionally, Eurozone CPI data for December is scheduled for Tuesday. This data will be a key focus for EUR/USD. The ECB’s decision in December to cut interest rates further contrasts sharply with the Fed’s plan to maintain higher interest rates. ECB President Lagarde outlined a neutral interest rate range of 1.75%-2.5%, pointing to the potential for further rate cuts.
Cooling inflation in the eurozone could reinforce expectations for aggressive easing by the ECB, putting further downward pressure on the euro. This apparent policy difference between the ECB and the Fed is likely to keep bearish sentiment on the euro intact.
EUR/USD reflects this policy difference and remains under pressure as the US dollar strengthens. The pair is particularly vulnerable if eurozone inflation figures point to further declines. A strong US labor market could boost dollar gains, potentially pushing EUR/USD closer to parity.
On the other hand, unexpected aggressive signals from the ECB or weaker than expected US data could provide short-term relief for the euro. Traders will closely monitor Tuesday’s CPI release and Wednesday’s FOMC minutes for more accurate directional signals.
Gold (XAU) Technical Analysis
Golden daily chart – symmetrical triangle
The daily chart for gold shows that the price is approaching the apex of a symmetrical triangle and is ready for a breakout. This week’s NFP data release will provide further direction for the gold market. However, the overall trend remains positive, with the price above the red-dotted trendline at $2,550.