In the week ahead: FOMC Meeting Minutes; US Jobless Claims

The EUR/USD pair remains on the front foot, trading near 1.1775 during early Asian hours on Monday, supported by growing expectations that the US Federal Reserve could begin easing policy in early 2026. These prospects continue to pressure the US Dollar, allowing the Euro to extend its gains.

Market sentiment toward the Greenback has softened as investors factor in a more accommodative Fed outlook. The central bank lowered the federal funds rate by 25 basis points at its December meeting, bringing the target range to 3.50%–3.75%. This move followed a total of 75 basis points in rate cuts delivered throughout 2025, as policymakers responded to signs of a cooling labor market despite inflation remaining moderately elevated.

Political developments are also adding to USD weakness. Investors are closely watching expectations that US President Donald Trump may nominate a new Federal Reserve Chair when Jerome Powell’s term expires in May. Trump has previously stated that he would favor a central bank leader committed to keeping interest rates low, raising concerns over potential pressure on the Fed’s policy independence.

Later on Monday, market participants will turn their attention to the US Pending Home Sales data for November, which could offer fresh insight into the health of the US housing sector.

Meanwhile, the Euro continues to draw support from a relatively steady policy outlook at the European Central Bank. The ECB left interest rates unchanged earlier this month and indicated that policy is likely to remain restrictive for some time. ECB President Christine Lagarde reiterated that the central bank cannot offer firm forward guidance amid heightened uncertainty, stressing that future decisions will remain data-dependent and assessed on a meeting-by-meeting basis.

Precious metals traded lower early on Monday, with gold easing from near record highs and silver pulling back after briefly touching fresh all-time peaks, as investors locked in profits and safe-haven demand softened amid signs of easing geopolitical tensions.

Market participants pointed to a mix of profit-taking and improving diplomatic signals as key drivers behind the pullback. Optimism surrounding discussions between US President Donald Trump and Ukrainian President Volodymyr Zelensky over a potential peace agreement has reduced immediate demand for traditional safe-haven assets such as gold and silver.

Trump stated on Sunday that negotiations with Ukraine were progressing positively and that both sides were moving closer to a possible resolution to the conflict, a development that has weighed on defensive positioning across precious metals.

Despite the short-term correction, the broader trend for metals remains strongly bullish.

Gold has delivered an exceptional performance in 2025, advancing around 72% year-to-date and setting multiple record highs. Its rally has been underpinned by expectations of further US interest rate cuts, ongoing geopolitical uncertainties, sustained central bank buying, and increasing inflows into gold-backed exchange-traded funds.

Markets continue to price in two US rate cuts next year, with traders awaiting the release of the Federal Reserve’s December meeting minutes for further guidance on the policy outlook. Historically, non-yielding assets such as precious metals tend to benefit in lower interest rate environments.

Oil prices recovered modestly during Asian trading on Monday, rebounding from sharp losses in the previous session as US-led diplomatic efforts to end the war in Ukraine failed to produce a decisive breakthrough. However, upside momentum remained constrained by persistent concerns over a potential global supply surplus heading into 2026.

Investor sentiment had been unsettled late last week amid renewed optimism that diplomatic negotiations could pave the way for an end to the nearly three-year conflict in Ukraine. US President Donald Trump said on Sunday that discussions with Ukrainian President Volodymyr Zelensky were progressing and that the two sides were “getting very close” to an agreement, although he acknowledged that several key issues remain unresolved.

Trump’s remarks followed a series of US-led diplomatic initiatives aimed at securing a ceasefire. The absence of tangible progress helped oil prices stabilize on Monday, as traders reassessed the likelihood of a near-term resolution and the potential return of sanctioned Russian crude to global markets. A credible peace agreement could eventually weigh on prices by eroding the geopolitical risk premium that has supported oil since Russia’s invasion of Ukraine. Oil markets have also drawn some support from heightened tensions between the United States and Venezuela.

US equity markets closed marginally lower on Friday, with gains in major technology stocks helping to limit broader declines during subdued post-Christmas trading. Market activity remained muted, with volumes expected to stay light ahead of a shortened New Year’s trading week.

Technology stocks provided one of the few areas of strength during the session. NVIDIA led gains after announcing an agreement to acquire the assets of AI startup Grok in a deal valued at approximately $20 billion. The acquisition is expected to strengthen Nvidia’s position in the rapidly growing AI inference market, complementing its leadership in AI training and infrastructure hardware. As part of the transaction, Grok’s founder, president, and key members of its core engineering team are set to join Nvidia.

Elsewhere in the technology sector, CrowdStrike Holdings also advanced after Wedbush reiterated its positive outlook on the cybersecurity firm.

The relative resilience in tech shares reflects renewed investor interest in AI-related stocks, alongside ongoing speculation that the Federal Reserve could begin cutting interest rates in 2026, a backdrop that continues to support growth-oriented sectors.

Looking ahead, with markets set to resume fuller participation following the holiday period, investors are expected to monitor economic data releases and portfolio positioning into year-end. Trading conditions are likely to remain thin, with seasonal factors such as the so-called “Santa Claus rally” often influencing late-December market dynamics.