US Economy: Challenges ahead - Nomura

The EUR/USD pair posts a fresh weekly low near 1.1740 during the Asian trading session on Wednesday. The major currency pair is under pressure as the US Dollar edges higher despite Federal Open Market Committee minutes of the December policy meeting, released on Tuesday, showing that most policymakers stressed the need for further interest rate cuts.

The GBP/USD pair holds steady around 1.3465 during the early Asian trading hours on Wednesday. However, the Bank of England guided that monetary policy will remain on a gradual downward path, which might underpin the Cable against the US Dollar. Financial markets are expected to trade on thin volumes as traders prepare for the New Year holiday.

Gold price extends the rally above $4,350 during the early European trading hours on Wednesday. Gold's price has surged about 65% this year and is set to record its biggest annual gains since 1979. The rally in the precious metal is bolstered by the prospect of further US interest rate cuts in 2026. Lower interest rates could reduce the opportunity cost of holding Gold, supporting the non-yielding precious metal.

Bitcoin, Ethereum, and Ripple are holding steady on Wednesday after recording minor gains on the previous day. Technically, Bitcoin could extend gains within a triangle pattern while Ethereum and Ripple face critical overhead resistance. 

After a year marked by global economic resilience and ending on a note of optimism, 2026 looks promising and could be a year of solid economic performance. In our baseline scenario, we expect most of the supportive factors at work in 2025 to continue to play a role in 2026.

Year 2025 was volatile, as crypto often is.  Among positive catalysts were favourable regulatory changes in the U.S., rise of Digital Asset Treasuries (DAT), adoption of AI and tokenization of Real-World-Assets (RWA).