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Hello everyone, today XM Forex will bring you "[XM Forex Decision Analysis]: 2025 may eventually end with a hawkish interest rate cut." Hope this helps you! The original content is as follows:
On December 10, the market was still nervous before the U.S. Federal Reserve (Fed) monetary policy announcement to be released early Thursday morning Beijing time.
With the U.S. dollar’s recent rebound, traders tend to stay on the sidelines and avoid making any directional bets ahead of the Fed’s ruling.
The Fed is widely expected to cut interest rates by 25 basis points to 3.5%-3.75% after its December policy meeting, but the dot chart, the divergent Federal Open Market www.xm-bx.committee (FOMC) board vote and Chairman Powell's www.xm-bx.comments will be key to judging the direction of interest rates in 2026.
Traders are bracing for a hawkish stance from the Federal Reserve as inflation concerns could overshadow recent signs of a labor market slowdown.
At the same time, the focus will also be on U.S. President Donald Trump's plan to begin his final round of interviews with former Federal Reserve Governor Kevin Warsh on Wednesday.
White House economic adviser Kevin Hassett, Trump's first choice to be the next Federal Reserve chair, said on Tuesday there was "a lot of room" to cut interest rates further, although he added that calculations could change if inflation picks up, Reuters reported.
In terms of economic data, the Department of Labor's Bureau of Labor Statistics (BLS) said on Tuesday that jobs, a measure of labor demand, increased by 12,000 to 7.67 million through the end of October.
U.S. private sector www.xm-bx.companies added an average of 4,750 jobs per week in the four weeks ended November 22, according to data released by Automatic Data Processing (ADP) on Tuesday.
Basic trends in the foreign exchange market:
Early in the Asian trading day on Wednesday, China's National Bureau of Statistics (NBS) showed that China's consumer price index (CPI) rose at an annual rate of 0.7%, in line with market expectations, but the monthly CPI fell by 0.1%, showing continued deflationary pressure.
AUD/USD reversed the early downturn in Europe triggered by Chinese inflation data, returning to green around 0.6650 amid overall US dollar weakness.
The biggest driver in Asia was the Japanese yen (JPY), which initially hit a two-week low near 157.00 before rebounding on the divergence of monetary policy from the Federal Reserve and Bank of Japan and expectations of verbal intervention from Japan. Japanese Prime Minister Sanae Takaichi said on Wednesday that "the government will take appropriate action against excessive and disorderly behavior." As of writing, USD/JPY is on the back foot around 156.75.
USD/CAD is trading in a range of around 1.3850, awaiting a hold on policy from the Bank of Canada (BoC) after cutting its benchmark interest rate to a three-year low of 2.25% in October.
EUR/USD will start the European trading day with trading activity below 1.1650. European Central Bank (ECB) President Christine Lagarde will take part in a moderated discussion on the future of the euro and dollar as global currencies at the Financial Times global board meeting in London at 10:55 GMT.
GBP/USD has recovered to the 1.3300 level, although there appears to be a lack of follow-on buying interest. Bank of England (BoE) Governor Andrew Bailey is expected to participate in a pre-recorded financial stability fireside chat at the Financial Times (FT) global board meeting in London.
Gold remains defensive, but prices remained above $4,200 in early trading on Wednesday. Silver hit a new all-time high, well above the $61 mark.
Euro: EUR/USD recovered after hitting the 55 4-hour EMA, but is still below the temporary high of 1.1681. The intraday bias currently remains neutral. On further gains, the 1.1590 minor support remains intact. The corrective decline from 1.1917 may have been www.xm-bx.completed at 1.1467. Above 1.1681 will first target the 1.1727 resistance level. A solid breakout there would solidify this view and lead to a retest of the 1.1917 high. However, a break below 1.1590 would reignite bears in the short term and allow 1.1467 to test the lows again.
The above content is all about "[XM Foreign Exchange Decision Analysis]: 2025 may end with a hawkish interest rate cut". It is carefully www.xm-bx.compiled and edited by the XM Foreign Exchange editor. I hope it will be helpful to your trading! Thanks for the support!
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