Gold is on the way to their best monthly effect since March last year, as feelings remain strong and participants are considering the possible impact of American politics. Both IT and dollar remained strong this week because the federal reserves (‘Fed’) held rates, and the European Central Bank (‘ECB’) decreased as expected. This article summarizes the latest news and rumors that affect the main markets this week and then briefly views the Xauusd and Eurusd.
The Fed held rates at the current 4.25-4.5% of January 29, as almost universally expected, emphasizing the importance of progress on inflation before multiple reduction. The likelihood of another retaining in March has now increased to about 85% according to CME Fedwatch.
The working market in the US is generally strong and there is no indication of the upcoming recession based on GDP or other economic indicators. Significantly, the Feda statement had a reference to progress to the goal of 2% removed. This could suggest that the FED sees the current growing inflation as part of a relatively new trend, unlike just a few months of output results.
The ECB made one cut according to its main refinancation rate, also very widely expected, taking it to 2.9%. The next meeting on March 6th will also probably have a cut. The annual main inflation is half percent lower in the euro area than the United States, and ECB forecasts a drop to 2% by the end of the year. This gives the central eurozone bank more space to reduce the rates compared to the Fed, but a significant difference in rates between the euro and dollar could expose to the former major losses.
Donald Trump recently confirmed plans for the introduction of 25% of tariffs to various Canadian and Mexican imports, considering 10% of the Kinene goods tariffs. The markets are widely expected by significant new tariffs, so this is not a big surprise in itself, but the details of how much the tariffs will cost and what products they will affect the key. Traders are waiting for announcements about confirmed details.
The euro has been weak compared to the dollar in recent months because of different monetary policy, but also of worse economic appearances in the euro area. Recent job data and eurozone GDP are generally negative, while the American economy looks everything as a whole. The threatening tariffs on imports of the US have influenced the mood, but there was no confirmation of how much could be or what European products would affect.
50 SMA from bands has been an important technical reference in the last few weeks. The price currently tests the move below it. Although the move above $ 1.05 in the midst of overcrowding was not successful, it would be possible to see the testing of the area again, depending on the results of the NFP on February 7th.
