Market Week Ahead: Gold Pops, US Dollar Drops, GBP/USD and EIR/USD Rally

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The US dollar continues its move as traders price in an aggressive series of rate cuts next year. US Treasury yields are falling, leaving the US dollar at risk against a range of other currencies. Thursday’s US GDP figures missed expectations, as did Friday’s core PCE readings. Both of these releases underpinned the US dollar move lower.

US Dollar Index with Bearish Pennant Formation

Gold picked up after both US data releases and touched $2,070/oz. on Friday before giving back some gains. A weaker US dollar and lower US Treasury yields boost gold’s allure and a fresh attempt at the December 4th spike high at $2,147/oz. is on the cards in early 2024.

Retail trader data shows 59.65% of traders are net-long with the ratio of traders long to short at 1.48 to 1.The number of traders net-long is 6.22% lower than yesterday and 1.59% higher than last week, while the number of traders net-short is 2.46% higher than yesterday and 5.68% higher than last week.

US equity markets continue to ride the risk-on move and ended Friday a fraction below recent multi-year highs. Sentiment remains positive in the equity space and a fresh push higher by arrange of indices is seen when trading return at the start of January.

Global government bond yields are competing in a race to the bottom as central bankers prime the markets for a series of interest rate cuts in 2024.

EUR/USD breached the psychological 1.1000 level before the weekend, but thoughts of further gains may not materialize until the New Year is in swing.

Gold prices extend their upside rally ahead of the last trading week of 2023 which isn’t expected to provide too much in terms of volatility. XAU/ USD looks to hold above $2050.

This article zooms in on the technical outlook for EUR /USD, USD/JPY , and GBP/USD , analyzing essential price thresholds to monitor in the final trading sessions of 2023.