Market Digest

The U.S. dollar maintained its dominance on Monday, trading near three-month highs despite weaker ISM factory data. The greenback’s strength was underpinned by the Federal Reserve’s hawkish tone and persistently tight money-market conditions.

Gold steadied above the $4,000 level as investors balanced Fed policy uncertainty with China’s surprise move to reduce the VAT exemption on bullion purchases. Meanwhile, oil prices rose modestly after OPEC+ confirmed a 137,000 bpd production increase in December, followed by a Q1 output pause to prevent a supply glut.

The euro weakened toward 1.15 amid cautious comments from the European Central Bank (ECB), while the Swiss franc depreciated after inflation missed expectations, fueling rate-cut bets for mid-2026.
In Asia, China’s slower PMI and a cautious U.S.–China trade truce weighed on the yuan and commodity-linked currencies, with traders now focusing on the RBA’s rate decision and New Zealand’s employment data.

Technical Analysis

USD/CHF – Bulls Eye Key 0.8100 Resistance

USD/CHF extended its bullish rally, targeting the 0.8100 level after clearing near-term resistance. Momentum indicators show a solid uptrend — RSI above 60 and MACD widening — though overbought conditions may prompt short-term pullbacks.

• Key Resistance: 0.8090 / 0.8100

• Key Support: 0.8060 / 0.7920
  Outlook: Bullish but vulnerable to profit-taking.

EUR/USD – Bears Dominate as Pair Holds Near 1.1500

EUR/USD remains pressured just above 1.1500, reflecting sustained dollar strength. RSI readings indicate selling pressure, while MACD suggests continued bearish momentum. A break below 1.1500 could target 1.1400; recovery above 1.1560 may spark correction.

• Key Resistance: 1.1560 / 1.1690

• Key Support: 1.1400 / 1.1160
  Outlook: Bearish bias persists short term.

XAU/USD – Consolidates Above $4,000 Amid Cooling Momentum

Gold continues consolidating above the $4,000 psychological threshold. The MACD histogram narrows, and RSI neutralizes — signaling waning momentum after October’s surge. Still, EMAs support the long-term bullish structure.

• Key Resistance: $4,350 / $4,400

• Key Support: $3,900 / $3,800
  Outlook: Bullish consolidation with fading momentum.

Economic News

1. XAU/USD – Gold Struggles to Extend Gains

Gold traded range-bound around $4,000 after October’s pullback. Fed Chair Powell’s hawkish tone and China’s VAT adjustment weighed on sentiment. The cut in VAT from 13% to 6% aims to curb speculative demand and redirect capital flows toward equities and property.

• Range: $3,960–$4,030

• Close: ~$4,004
  Takeaway: Fed hawkishness and policy shifts in China keep gold’s upside limited, though long-term fundamentals remain firm.

2. USOIL – OPEC+ Confirms Modest Hike and Q1 Pause

OPEC+ will add 137k bpd in December, then pause output hikes through Q1 2026 to manage surplus risks. New U.S. sanctions on Rosneft and Lukoil and disruptions at Russia’s Tuapse port elevated supply concerns.

• Range: $61.30–$61.40
  Takeaway: Oil remains supported by geopolitical risks but capped by a stronger dollar and demand uncertainties.

3. CNH – Yuan Weakens as PMI Misses Forecasts

China’s manufacturing PMI slowed to 50.6 (vs. 50.8 forecast), marking softer expansion. Despite a stronger yuan fix at 7.0867, the currency weakened as the U.S.–China truce shaped policy sentiment.

• USD/CNH: Rebounded to 7.1276

• AUD/USD: Fell to 0.6525

• NZD/USD: Slipped to 0.5698
  Takeaway: Softer China data and USD strength weighed on Asia-FX.

4. CHF – Franc Slips as Inflation Miss Sparks Rate-Cut Bets

Swiss inflation slowed to 0.1% YoY (vs. 0.2% forecast), extending the disinflation trend and fueling expectations of a rate cut to -0.25% by mid-2026.

• USD/CHF: Rose above 0.8080

• EUR/CHF: Near 0.9300

• GBP/CHF: Around 1.0603
  Takeaway: Weak inflation bolsters dovish SNB expectations.

5. EUR – Euro Weakens Toward 1.15 on Fed–ECB Divergence

The euro hit a three-month low as Fed hawkishness contrasted with ECB’s cautious stance. While Q3 GDP outperformed, easing inflation (just above 2%) reinforced market skepticism about ECB’s growth outlook.

• EUR/USD: ~1.1510 → 1.1520

• EUR/GBP: ~0.8767
  Takeaway: Dollar resilience continues to suppress euro gains.

6. USD – Dollar Steady Despite Weak ISM Data

U.S. ISM Manufacturing PMI fell to 48.7 (vs. 49.9 forecast), indicating deeper contraction, but dollar strength persisted amid tight liquidity and reduced rate-cut bets.

• USDX: ~99.90

• USD/JPY: ~154.10
  Takeaway: Markets maintain faith in Fed’s hawkish stance despite soft data.