The EUR/USD pair continues its downward trajectory, marking the fifth consecutive day of trading in negative territory. On Monday, during the early European session, the pair was seen trading around 1.0215. This trend is largely driven by the robust demand for the US Dollar, fueled by risk-off flows in the market. The prevailing sentiment is exacerbated by hawkish expectations from the Federal Reserve and policy uncertainties surrounding former President Donald Trump.
The risk-off mood in the markets has bolstered the appeal of safe-haven assets like the XAU/USD pair. Meanwhile, the US Dollar has gained additional strength from positive US employment data released for December, signaling a steady economic recovery. Market analysts anticipate that the US Federal Reserve will maintain steady interest rates in January, further influencing currency markets.
Bitcoin and Ethereum, two leading cryptocurrencies, are experiencing significant declines. Bitcoin is down over 3%, while Ethereum has dropped more than 10% compared to the previous week. This downturn reflects the broader risk-off sentiment affecting various asset classes.
In addition to currency markets, the precious metal sector is feeling the pressure from elevated US bond yields and hawkish Fed expectations. Gold prices are under pressure, pulling back from a one-month high achieved last Friday. The strength of the US Dollar is contributing significantly to this decline in gold prices.
The GBP/USD pair is also encountering intense selling pressure. On Monday morning in Europe, it approached the 1.2100 mark, highlighting the impact of a bearish market sentiment that favors the US Dollar. The overall market sentiment remains risk-off, with investors seeking refuge in more stable assets.