Forex Today: Stimulus hopes and vaccination plans lifting the mood

FXStreet Team FXStreet

Here is what you need to know on Monday, December 7:

The greenback corrected some of its extreme oversold conditions after reaching fresh year lows against most major rivals but remains the weakest currency across the FX board.

The EUR/USD pair is firmly anchored above 1.21, while USD/CAD trades sub-1.2800. USD/JPY and AUD/USD saw little action with the latter reaching a two-year high.

The GBP/USD pair traded as high as 1.3539 but closed the day around 1.3430 amid contradictory Brexit headlines. Hopes boosted the pair early on Friday, but intensive Brexit trade talks have bare no fruit. EU´s Brexit Negotiator Michel Barnier tweeted that, after a week of negotiations in London, both sides were unable to reach an agreement, with persistent, significant differences on the issues of a level playing field, governance and fisheries.

On Saturday, EU’s Commission leader Ursula von der Leyen said, “I had a phone call with Boris Johnson on the EU-UK negotiations. Differences remain. No agreement feasible if these are not resolved. Chief negotiators will reconvene tomorrow. We will speak again on Monday.” GBP/USD could gap lower at the weekly opening.

Gold recovered last week, closing it at $1,838 a troy ounce, below the base of its previous range. Mixed US employment data fueled hopes for fiscal stimulus, providing support to the bright metal.

US Treasury yields reached a three-week high, with the yield on the benchmark 10-year note reaching 0.97%.

Equities advanced on Friday amid hopes related to coronavirus vaccines. Russia has started immunization on Saturday, and the UK plans to start this week. Several other countries are on their way to start preventive vaccination before year-end.

Bitcoin technicals suggest an imminent correction before the next leg up

Author

FXStreet Team

FXStreet

Composed of a group of economic journalists and FX experts, the FXStreet content team produces and oversees all content published on FXStreet. It provides a purely journalistic approach to the Forex market.

GBP/USD extends the drop to 1.3360

GBP/USD builds on Monday’s decline and briefly clinches five-day lows near 1.3360 on Tuesday. Cable’s extra pullback follows the better tone in the Greenback as uncertainty in the Middle East prompts investors to adopt a cautious stance. Meanwhile, an apathetic UK labour market report also collaborates with the selling pressure on the British Pound.

EUR/USD stays offered just above 1.1400

EUR/USD keeps the downtrend well in place for yet another day, challenging the 1.1400 contention zone on Tuesday. The continuation of the selling impulse in spot comes amid decent gains in the US Dollar, which continues to find support in the persistent effervescence surrounding the US-Iran crisis.

Middle East crisis intensifies, Gold up

Gold now seems to have embarked on a consolidative phase below the key $4,100 mark per troy ounce in the latter part of Tuesday’s session. Meanwhile, uncertainty surrounding the Middle East conflict and rising expectations for a hawkish Fed policy outlook are expected to limit the precious metal’s bullish momentum in the near term.

XRP rebounds on rising on-chain activity

Ripple (XRP) ticks up and trades around $1.13 at the time of writing on Tuesday. This rebound aligns with a broader recovery in the cryptocurrency market, attributed to reports that mediators between the United States (US) and Iran are seeking a 10-day cessation of strikes to find a way back to the signed Memorandum of Understanding (MoU).

The Iranian war has again risen

The Iranian war has again risen to the top of the economics factor list. There is no end in sight. Intelligence experts say the current level of offense/retaliation will not change minds in Tehran, while in Washington, Trump fears all-out war, which would mean boots on the ground.

US Dollar mid-year outlook: Exceptional currency, exceptional risks?

The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.