Forex Today: Fear grips markets as US kills top Iranian commander, ISM, FOMC awaited

Yohay Elam FXStreet

Here is what you need to know on Friday, January 3:

The US killed Qassem Suleimani, a top Iranian commander, in Bahgdad's airport. Ali Khamenei, Iran's supreme leader, vowed "severe revenge."

Global markets are selling off, and oil prices spiked higher. WTI topped $63, USD/JPY hit 108, Gold leaped above $1,540, and the greenback is rising across the board.

North Korea continues threatening a strike amid its escalation with the US. Relations have soured in the past few months.

The US dollar had already been on the rise before the Mid-East news broke out. The greenback reversed its losses in late 2019. EUR/USD is well below 1.12, and GBP/USD is struggling around 1.31.

The ISM Manufacturing Purchasing Managers Index for December is the first top-tier release in 2020 and it serves as a hit toward next week's jobs report. It is expected to rise – but remain below 50, reflecting contraction.

See US ISM manufacturing PMI December Preview: Waiting for improvement from China trade

Late in the day, the Federal Reserve's meeting minutes from the December meeting may shed more light on the bank's latest rate cut and its decision to wait before the next moves.

See December FOMC minutes preview: Affirming neutral

Germany releases preliminary December inflation figures, a prelude to all-European statistics next week.

Brexit: Labour, the opposition party, will table an amendment to the Withdrawal Bill that will try to prevent a no-trade-deal Brexit. The chances of passing are low as Prime Minister Boris Johnson's Conservatives command a majority. UK construction PMI is set to show a minor improvement in December.

Cryptocurrencies are recovering after a substantial fall on Thursday, with Bitcoin trading above $7,000.

EUR/USD in 2020: Lean times soon to turn into flush times for euro dollar
GBP/USD in 2020: Pound may continue to fall on hard Brexit deadline
USD/JPY in 2020: A journey from trade fears to high-stakes election

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

GBP/USD drifts lower below 1.3250 on steady BoE rate path, traders await US jobs data

The GBP/USD pair loses traction to around 1.3240 during the Asian trading hours on Tuesday. A potential rate hike from the US Federal Reserve provides some support to the US Dollar against the British Pound. The US ADP employment data and the US Nonfarm Payrolls data will take center stage later this week.

EUR/USD looks to extend intraday descent below 1.1400 on firmer USD

The EUR/USD pair attracts some sellers during the Asian session on Tuesday, snapping a three-day winning streak and stalling its recent recovery from the lowest level since May 2025 set last week. Spot prices slip below the 1.1400 mark amid a firmer US Dollar and seem vulnerable to weaken further.

Gold recovers slightly from YTD low; not out of the woods yet

Gold recovers slightly from its lowest level since November 2025, touched during the Asian session, albeit it sticks to a negative bias for the second straight day. Against the backdrop of renewed Mideast tensions, mixed signals on US-Iran talks assist the US Dollar to attract some dip-buyers and stall its recent pullback from the highest level since May 2025.

Solana, Zcash, and Hyperliquid rebound while Bitcoin remains below $60,000

The broader cryptocurrency market remains under pressure with Bitcoin below $60,000 on Tuesday, while Solana, Zcash and Hyperliquid emerge as top performers over the last 24 hours. Retail sentiment remains bearish with the Fear and Greed Index around 17 on Tuesday, during early Asian hours, maintaining an “Extreme Fear” signal.

Just like Fed, is BoJ’s independence under threat?

When talking about central bank independence, most of the focus has been on Donald Trump’s pressure on the Federal Reserve. But a similar story, a quieter one for now, seems to be happening on the other side of the Pacific: Japan’s government may be testing the Bank of Japan’s independence.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.