The GDP of the Netherlands for the third quarter showed a year-on-year growth of 1.8%, surpassing the expected 1.6%. Meanwhile, in currency markets, USD/INR rebounded as foreign institutional investors continued selling Indian stocks.
In other developments, the Pound outperformed against the US Dollar even with strong US GDP data for the third quarter. Meanwhile, the Silver market saw price increases as indicated by FXStreet data, and the EUR/JPY experienced a decline to near 183.50.
Forex Market Movements
Elsewhere, the AUD/JPY remains low around the mid-104.00s following a hawkish stance from the Bank of Japan. However, the AUD/USD achieved a yearly high above 0.6700.
Regarding global markets, EUR/USD stayed below 1.1800 amid a weaker US Dollar. GBP/USD maintained a range around 1.3500 during quiet pre-Christmas trading, and Gold pulled back from record highs due to profit-taking.
For the crypto market, Shiba Inu showed a bearish trend, trading below $0.000070. Stellar saw similar bearish momentum with prices slipping under $0.22.
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US Dollar Trends and Economic Indicators
The US Dollar is broadly weaker as we head into the new year, which is why we see EUR/USD holding near a three-month high of 1.1800. This softness is fueled by expectations that the Federal Reserve will be more dovish in 2026. The latest US Consumer Price Index data from November 2025, which came in at a lower-than-expected 2.8%, supports this view and suggests potential rate cuts next year.
Trading is quiet right now because of the Christmas holiday, creating thin liquidity in the market. This means current price levels might not be very reliable, and we should be cautious about reading too much into small moves. Once full trading volume returns, we could see a spike in volatility as positions are re-established for the new year.
Gold recently hit a new all-time high of $4,525 before pulling back slightly due to some profit-taking. We believe the fundamental reasons for this strength, like the weak dollar and persistent geopolitical risks, are still very much in place. This rally has been significant, blowing past the previous records we saw during the inflation peak of 2024.
We are seeing a clear divergence between central banks, particularly with a hawkish Bank of Japan strengthening the Yen. This is why pairs like AUD/JPY are under pressure, even while the Aussie dollar hits yearly highs against the greenback. The BoJ has been hinting at ending its loose monetary policy, with many now expecting a major policy shift in early 2026.
On the European front, the recent Dutch GDP growth of 1.8% was a positive surprise and beat expectations. While this is just one country, it suggests pockets of economic resilience within the Eurozone, where overall Q3 GDP growth was a more modest 1.2%. This stronger data could provide further support for the Euro if the trend continues across the bloc.
In contrast to the optimism in major currencies and gold, we are seeing bearish pressure in more speculative assets. Cryptocurrencies like Shiba Inu and Stellar are facing significant selling, with some heading toward their lowest levels of the year. This suggests that while traders are selling the dollar, they are moving into traditional safe havens and major currencies rather than the highest-risk assets.
