Forex Today: Gold cheers reduced US dollar’s demand amid stimulus hopes

Dhwani Mehta FXStreet

Here is what you need to know on Friday, September 25:

The US dollar held steady, following the retracement from two-month highs, as persistently higher US Jobless Claims offset optimism over a likely US fiscal stimulus deal. Also, a mixed message from the US Federal Reserve (Fed) policymakers on the inflation and employment front left investors in a tipsy.

According to a key lawmaker, Democrats in the US House of Representatives are working on a $2.2 trillion coronavirus relief aid that could be voted on as soon as next week.

Asian stocks traded mixed, with the Chinese stocks the main laggard after the country’s No. 2 property developer warned of a cash crunch. Reports that Novavax Inc launched a clinical late-stage trial of coronavirus vaccine in the UK offered some support to the traders.

Among other developments, the US Justice Department ordered a San Francisco federal judge to allow the government to ban WeChat for download in app stores pending an appeal.

Across the fx board, AUD/USD extended the bounce above 0.7050 despite a drop in the Australian Trade Surplus last month while USD/JPY once again failed above 105.50 after Japan confirmed the easing of entry restrictions for new arrivals into the country.

EUR/USD consolidated the bounce to 1.1688, with the risks still skewed to the downside amid intensifying virus spread in Europe. Germany reported 2,321 new infections, the highest in five months.

GBP/USD showed some signs of life above 1.2750 amid UK Finance Minister Rishi Sunak’s job protection scheme and renewed Brexit worries. The Financial Times (FT) France's Europe minister Clément Beaune dismissed the UK’s 'intimidation' on a post-Brexit deal. BOE’s Q3 Quarterly Bulletin will be in focus.

Gold extended the recovery to $1875 amid the dollar’s pullback, ahead of the US Durable Goods data. WTI held gains near $40.50 but headed for a weekly loss.

Cryptocurrencies’ returned to the red, with Bitcoin downed to $10,650.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

EUR/USD deflates to fresh lows, targets 1.1600

The selling pressure on EUR/USD now gathers extra pace, prompting the pair to hit fresh multi-week lows in the 1.1625-1.1620 band on Friday. The continuation of the downward bias comes in response to further gains in the US Dollar as market participants continue to assess the mixed release of US Nonfarm Payrolls in December.

GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.