The United States ISM Services Prices increased to 66.6 in January from a previous 64.3. The FXStreet team reports this development, impacting the forex market with several currency pairs.
EUR/USD has seen a drop, challenging the 1.1800 support as the US Dollar gains strength. Meanwhile, GBP/USD is retreating towards 1.3640 due to increased Greenback traction, coinciding with anticipation for the BoE’s ‘Super Thursday.’
Gold And Cryptocurrency Market
Gold remains pressured, slipping below $5,000 per troy ounce in light of the strengthening US Dollar. In the crypto market, Dogecoin holds near support at $0.1000 amidst a wider market sell-off, while Ripple stabilises around $1.60 after recovering from a brief sell-off.
Amid changing market dynamics, the performance of software and AI-related stocks prompts questions about market sentiment. However, AI is simply being priced cautiously rather than being abandoned. Ripple experiences mixed signals, maintaining stability despite market volatility.
The jump in the US ISM Services Prices Paid to 66.6 is a clear signal that inflation remains a serious problem. This upward surprise strengthens the US Dollar, as it suggests the Federal Reserve will have to keep interest rates higher for longer. Derivative traders should therefore position for continued dollar strength against other major currencies in the coming weeks.
We saw this pattern repeatedly in 2025, where sticky services inflation, which averaged over 4% in the second half of the year, consistently forced markets to reprice rate cut expectations. This latest data point is not an anomaly but rather a continuation of a persistent trend from last year. This makes short-term bets on a Federal Reserve pivot seem increasingly risky.
Outlook On Gold And Currency Pairs
For gold, the strong dollar and the prospect of higher-for-longer US interest rates are a powerful negative combination. With the metal slipping below $5,000, options traders could look at buying put spreads to profit from a potential slide towards support levels we haven’t seen since the fourth quarter of 2025. As a non-yielding asset, gold becomes less attractive when yields on government bonds rise.
The EUR/USD pair is looking particularly vulnerable as it tests the 1.1800 support level ahead of the European Central Bank meeting. The ECB is grappling with much weaker economic growth, evidenced by manufacturing PMI figures that spent most of 2025 in contractionary territory below 50. This policy divergence strongly favors selling euro rallies against the dollar.
Similarly, GBP/USD is showing weakness ahead of the Bank of England’s decision. The UK’s minimal GDP growth of just 0.4% during 2025 limits the BoE’s ability to match the Fed’s hawkish stance. This economic underperformance makes sterling a prime candidate to short against the dollar, especially on any temporary bounces.
