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The week started on a mixed note. Market mood in Europe was rather subdued, with major indices trading flat to negative as China announced tariffs of up to 43% on EU dairy imports. Even the energy- and mining-heavy FTSE 100 failed to eke out gains yesterday, despite a rally in the energy and metals complex.

Heightened tensions with China are nothing new, but the fact that Chinese producers are diverting exports to markets outside the US — including Europe — is clearly fuelling tensions across the Old Continent, which is already grappling with its own cost-of-living crisis.

One could argue that cheaper Chinese imports help tame inflationary pressures. They certainly do. The problem, however, is that they make European-made products relatively more expensive than they already are, weighing on local businesses and jobs.

And I’m not only talking about local cheese makers and French bistros. I’m also referring to the continent’s growth engines — such as major French and German carmakers — which largely missed the EV transition and are now being squeezed by Chinese competition. Chinese EVs are flooding European markets, often offering better software and technology for cheaper prices, while traditional European carmakers are left watching consumers prioritise innovation over luxurious interiors.

Europe is also missing the AI turn in real time. It has no Big Tech platforms, few major innovations and instead operates under a heavy regulatory framework. At the same time, the money is running out.

And now, European tariffs on Chinese goods are starting to backfire, with Beijing retaliating in kind. This escalation is unlikely to bode well for what lies ahead and could further weigh on European growth next year.

More broadly, the Trump-style trade playbook is contaminating global trade. The key difference is that the US has massive AI and tech investment to offset anaemic growth elsewhere. Europe does not. European watches, handbags and luxury cars rely heavily on US and Chinese consumers. Should these pillars weaken, alternatives are scarce. Technology is not a solution — ASML alone cannot lift an entire continent — and the defence sector, which powered this year’s equity rally, may have already captured much of its upside. While higher defence budgets will support military equipment makers, fiscal constraints will eventually reassert themselves. Spending there is unlikely to match Big Tech’s investment in data centres and chips.

So what’s next? Market consensus still points to further rotation into cyclical names — an area where Europe could continue to benefit, supported by relatively lower borrowing costs — alongside reduced exposure to technology, which is increasingly weighing on global risk appetite. However, renewed trade tensions with China could derail what little optimism remains around European growth.

This is not an exaggeration. One of Europe’s weakest-performing economies — the UK — just printed 0.1% growth in Q3, if one can even call it growth. Three months of near stagnation justify the use of the word “miserable”.

Looking at sterling’s performance, one could barely tell that the Bank of England delivered a rate cut and that several weak economic indicators were released — with more weakness likely following a growth-negative budget. But this is less about sterling strength than about broad-based dollar selling.

The dollar has been under pressure for several reasons. Since Donald Trump took office, concerns around fiscal discipline, trade tensions, waning demand for US Treasuries as reserve assets, and increasingly dovish Federal Reserve (Fed) expectations have all weighed on the greenback.

In the very short term — since yesterday — the dollar has also come under pressure from a sharp retreat in the USDJPY, following Japanese authorities’ warnings that the move had gone too far, too fast.

Beyond short-term noise, the USD outlook remains comfortably negative into next year. Bullish calls on the dollar are rare, aside from some large banks forecasting a stabilisation in the second half of next year. That alone raises the question of whether much of the dollar weakness is already priced in.

As such, any data or news that prompts a hawkish reassessment of Fed expectations could trigger a sharp dollar rebound.

All eyes are now on the final US data releases of the year, with the Q3 GDP revision and PCE inflation — the Fed’s preferred gauge — on the menu ahead of the Christmas break. US growth is expected to have exceeded 3% in Q3, with AI-related investment accounting for a significant share, while price pressures are expected to have firmed. A combination of stronger growth and higher inflation could revive the Fed’s hawks, unless the more up-to-date PCE data proves soft enough to bolster the dovish camp.

At present, Fed funds futures price roughly a 20% probability of a rate cut in January and slightly above a 50% chance of a cut in March. Any increase in expectations for further easing would support equity valuations, though cyclical and non-tech segments are likely to benefit more than richly valued Big Tech.

As for the Santa rally — typically defined as the last five trading days of the year and the first two of the next — which has delivered an average gain of around 1.6% since 1928, odds still favour upside. That said, any meaningful correction could well materialise in January.

Much will therefore depend on the final data prints of the year and investors’ reaction. This year has been full of twists and turns: tech-led gains, but also a clear rotation toward non-tech segments. If anything can put a floor under a potential tech sell-off, it is the hope that the rally continues to broaden beyond technology.

Key Highlights

• Gold started a fresh surge above the $4,450 resistance.
• The bulls could now aim for a move above $4,500.
• WTI Crude Oil prices started a recovery wave above $57.50.
• The US GDP could grow by 3.2% in Q3 2025 (Preliminary), down from 3.8%.

Gold Price Technical Analysis

Gold prices started a fresh rally above $4,400 and $4,420 against the US Dollar. It settled above $4,450 to enter a bullish zone.

The 4-hour chart of XAU/USD indicates that the price cleared a key contracting triangle with resistance at $4,330 to enter a positive zone. The recent rally pushed the price to a new all-time high at $4,490 on TitanFX.

On the upside, immediate resistance is near the $4,490 level. The next major resistance sits near the $4,500 level. A clear move above $4,500 could open the doors for more upside. In the stated case, the bulls could aim for a move toward $4,550.

If there is a pullback, Gold might find bids near the $4,450 level. The first major support sits at $4,420, below which the price might slide to $4,400.

The main support sits at $4,350. Any more losses might call for a test of the 100 Simple Moving Average (red, 4 hours) or even the 200 Simple Moving Average (green, 4 hours).

Looking at WTI Crude Oil, the price started a recovery wave above $57.50 and might aim for a move toward the $60.00 hurdle.

Economic Releases to Watch Today

• US Gross Domestic Product for Q3 2025 (Preliminary) – Forecast 3.2% versus previous 3.8%.
• US Durable Goods Orders for Oct 2025 – Forecast -1.5% versus +0.5% previous.

USDJPY: ⬇️ Sell

• USDJPY reversed from strong resistance level 157.90
• Likely to fall to support level 156.00

USDJPY currency pair recently reversed down from the strong resistance level 157.90 (which stopped the previous impulse wave (iii) in the middle of November) – standing close to the major resistance level 158.70 (which started sharp downtrend in January).

The resistance level 157.90 was strengthened by the upper daily Bollinger Band and by the resistance trendline of the daily up channel from April.

Given the strength of the resistance level 157.90 and the bearish divergence on the daily Stochastic USDJPY currency pair can be expected to fall to the next support level 156.00.

Gold: ⬆️ Buy

• Gold broke key resistance level 4382.00
• Likely to rise to resistance level 4600.00

Gold recently broke sharply above the key resistance level 4382.00 (which stopped the previous intermediate impulse wave (3) in the middle of October).

The breakout of the resistance level 4382.00 coincided with the breakout of the resistance trendline of the daily Ascending Triangle chart pattern from October.

Given the overriding daily uptrend, Gold can be expected to rise to the next resistance level 4600.00 (target price for the completion of the active impulse wave 3).

On 15 December, we highlighted that USD/JPY was sliding towards a key support area near the lower boundary of its ascending channel.

Since then (as shown by the arrow), the pair has reversed higher, gaining around 1.5% and moving close to an important high set last month.

Notably, the advance has occurred despite two bearish factors:

→ last Friday’s interest-rate increase to 0.75%, the highest level in 30 years;

→ the ongoing risk of currency intervention aimed at supporting the yen.

It appears that the rate hike had already been priced in, while traders focused on the relatively dovish tone of the Bank of Japan’s comments following the decision. At the same time, the threat of intervention is largely being viewed as rhetorical rather than imminent.

Technical Analysis of the USD/JPY Chart

From a technical perspective:

→ the decline since 20 November resembles a bullish flag correction pattern;

→ the forceful breakout above its upper boundary suggests growing confidence among buyers in a continuation of the uptrend, after successfully keeping the pair within the broader channel that has been in place since September.

It cannot be ruled out that:

→ in the short term, the channel’s median line (which previously acted as resistance) could serve as the next upside target;

→ support may be provided by the acceleration zone — a sign of buyer-side imbalance — between 156.15 (the breakout level) and the 157 yen-per-dollar mark.

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WTI crude staged a sharp rebound at the start of the week, confirming a short-term bottom at 54.98. The move followed a brief breach of 55.20 last week that failed to gain traction, before price surged back through 57.13, former support-turned-resistance.

The catalyst was a renewed escalation around Venezuela. News that U.S. authorities had intercepted another oil tanker in international waters off the Venezuelan coast raised concerns over supply disruption. The US Coast Guard is now pursuing yet another vessel, potentially marking the third such action in under two weeks.

This follows last week’s hardening stance from President Donald Trump, who announced a “total and complete” blockade of sanctioned Venezuelan oil shipments. Markets are increasingly sensitive to the risk that enforcement actions could escalate further, especially if more seizures follow.

That said, skepticism over the durability of the rebound remains widespread. The structural backdrop for oil is far less supportive than in past geopolitical flare-ups. OPEC+ has steadily increased output through 2025, unwinding years of coordinated production cuts that were originally designed to defend higher prices.

That shift has coincided with growing competition from the U.S., which has now established itself as the world’s largest producer and exporter of both crude oil and LNG. The battle for market share between OPEC+ and U.S. producers acts as a structural cap on prices, making sustained rallies harder to maintain.

As a result, geopolitical tensions are more likely just catalysts for short-term volatility rather than drivers of lasting trends. Unless conflicts expand beyond regional scope or disrupt major supply corridors, price spikes are likely to fade as supply realities reassert themselves.

Technically, WTI now faces a dense resistance zone ahead. Initial resistance sits at the 55 D EMA (now at 59.44), currently near 59.44, followed closely by resistance at 60.50. Together, these levels form a strong barrier around the psychologically important 60 mark.

As long as this zone caps advances, the broader downtrend from the 78.87 high remains intact, with risk of another leg lower toward a decisive break below 55.20.

Conversely, sustained trading above 60 would argue that WTI is at least correcting the larger downtrend, opening room for extended rise towards 38.2% retracement of 78.87 to 54.98 at 64.10, likely in the first half of next year.

Gold hit new record high following 1.8% acceleration in early Monday, which broke above psychological $4400 barrier and pushed the price further into uncharted territory.

Increased safe haven demand on fragile geopolitical and economic situation contributed to the latest rally, driven mainly by growing expectations more dovish Fed’s stance in 2026.

Although the central bank expressed cautious and data-dependent approach to the monetary policy, markets expect at least two rate cuts in 2026, with weakening conditions of the US labor market and the fact that Jerome Powell will step down in May and new Fed Chair person is expected to be more compliant with President Trump’s ideas of more lose monetary policy.

The yellow metal peaked at $4420 this morning, with subsequent easing seen as expected reaction on overbought conditions on daily chart.

Broken $4400 barrier and former top at $4381, reverted to solid supports which should ideally contain shallow correction and keep fresh bulls intact for fresh push higher.

Daily close above $4400 to confirm fresh bullish signal and keep focus at the upside, with targets at $4430, 4448 and $4460, guarding psychological $4500 level.

Res: 4420; 4430; 4448; 4460
Sup: 4400; 4381; 4375; 4350

• Gold surges to fresh all-time high as geopolitical risks intensify.
• Bulls remain in control but a close above 4,380 is key.

Gold was spotted at a new all-time high of 4,420 early on Monday, extending its two-month-old recovery phase from October’s low of 3,886. A combination of factors - including expectations of Fed rate cuts, headlines surrounding a potential renewed escalation in tensions between Israel and Iran, and another U.S. oil blockade against Venezuela – was sufficient to propel bullion to higher levels.

The bulls must now secure a clear close above the previous peak of 4,381 to stretch towards the 4,500 psychological level and then pick up steam towards the tentative resistance line from April 2025 at 4,700. Note that the 161.8% Fibonacci retracement level of the latest downfall is in the neighborhood too. Beyond that, the door could open for the 4,900 round-level.

From a technical perspective, the deviation from the Ichimoku cloud and the positive slope in the simple moving averages (SMAs) can fuel buying interest in the short-term. The rising MACD is another encouraging sign, though some caution might be warranted as the RSI is strengthening in the overbought territory.

In the event upside pressures fade immediately, support could initially emerge near the 4,250-4,290 zone and the 20-day SMA. Further declines could bring the 50-day SMA and the upper band of the Ichimoku back into play within the 4,130-4,150 region.

Summing up, the precious metal might be poised to enjoy a Santa Claus rally as it enters uncharted territory, with buyers likely awaiting a convincing move above 4,380 to drive the price higher.

Daily Pivots: (S1) 1.1695; (P) 1.1717; (R1) 1.1730; More….

Intraday bias in EUR/USD stays neutral as range trading continues below 1.1803. . On the upside, break of 1.1803 will extend the rally from 1.1467 to retest 1.1917 high. However, firm break of 55 D EMA (now at 1.1640) will turn bias back to the downside for 1.1467 support, to extend the corrective pattern form 1.19717 with another falling leg.

In the bigger picture, as long as 55 W EMA (now at 1.1385) holds, up trend from 0.9534 (2022 low) is still in favor to continue. Decisive break of 1.2 key psychological level will carry larger bullish implication. However, sustained trading below 55 W EMA will argue that rise from 0.9534 has completed as a three wave corrective bounce, and keep long term outlook bearish.