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The global financial landscape is shifting rapidly as the final days of 2025 unfold. Ahead of pivotal US economic data, the US Dollar has begun to lose its footing, allowing Gold to steal the spotlight with a historic rally to all-time highs. With a “dovish” Federal Reserve and escalating trade tensions dominating the narrative, investors are aggressively repositioning for a volatile start to 2026.
Gold Shines While the Greenback Falters
Gold has officially entered uncharted territory, surging past $4,440 per ounce. This meteoric rise is being fueled by a “perfect storm” of factors: a softening US Dollar, consistent central bank accumulation, and record-breaking inflows into gold-backed ETFs. As the Federal Reserve signals a more accommodative stance heading into the new year, the opportunity cost of holding the non-yielding yellow metal has plummeted, cementing its status as the ultimate hedge against both inflation and geopolitical instability.
The US Dollar Index (DXY), meanwhile, has retreated toward the 98.30 mark. After hitting one-week highs just days ago, the greenback is now under pressure as markets brace for a heavy slate of data on Tuesday. Investors are eagerly awaiting the preliminary Q3 GDP report, Durable Goods Orders, and Consumer Confidence data to see if the American economy can maintain its resilience or if a deeper slowdown is imminent.
Major Pairs in Focus: EUR, GBP, and the Aussie Rise
EUR/USD: The Euro is capitalizing on the Dollar’s weakness, climbing toward 1.1750. Despite the looming Christmas holiday, “holiday-thinned” trading hasn’t stopped the pair from gathering recovery momentum as traders adjust their exposure to US macroeconomic risks.
GBP/USD: Sterling hit a high note near 1.3460 following steady UK growth figures. The data managed to offset concerns about further Bank of England easing, allowing the Pound to remain one of the top performers in the G10 space today.
AUD/USD: The Australian Dollar is hovering near 0.6650. While the Fed is expected to hold rates steady in January, the general “risk-on” sentiment in the commodity space—paired with a sagging USD—has provided the Aussie with a much-needed floor.
The Looming Shadow of the Trade War
Adding a layer of complexity to the market is the renewed focus on Trade War rhetoric. As 2026 approaches, protectionist policies and potential tariff hikes are once again at the forefront of the global agenda. These tensions are particularly evident in pairs like USD/CAD, which remains under pressure ahead of Canadian GDP data, and USD/JPY, which is being reined in near 157.00 by vocal warnings from Japanese officials regarding yen weakness.
