Weekly Forex News & Market Pulse

The market stayed volatile this week as the US dollar, inflation data, and bond yields took centre stage. From sticky US inflation and strong Treasury demand to pressure on EUR/USD, GBP/USD, and rising USD/JPY volatility, traders had plenty to track. In this weekly market newsletter, we break down the biggest forex moves, gold price reaction, and stock market sentiment, along with clear takeaways and what to watch next week.

US Inflation Data Keeps Interest Rate Worries Alive

US CPI and Core CPI data showed inflation easing only slightly and staying close to expectations. Prices are not falling fast enough to give clear relief to policymakers. This confirmed that inflation remains sticky, keeping the focus on interest rates and monetary policy direction in the US economy.

Impact:

The US dollar stayed strong. Gold prices struggled to move higher. Stock markets remained mixed as hopes of quick rate cuts faded.

Strong US Bond Demand Supports the US Dollar

The US 10-year Treasury auction attracted solid demand from global and institutional investors. Despite high bond yields, investors continued to buy US government debt, showing confidence in the US financial system and economic stability. Bond market signals remained a key driver for currencies and commodities.

Impact:

Bond yields stayed firm. The US dollar remained supported. Gold and crypto faced mild pressure due to higher yields.

AI and Semiconductor Strength Drives Stock Market Optimism

Technology and semiconductor companies highlighted strong demand for artificial intelligence, chips, and data-centre infrastructure. Investors focused on long-term AI growth rather than short-term economic concerns. This renewed confidence in technology as a leading sector for global growth and innovation.

Impact:

Tech stocks rallied. Risk sentiment improved. Global equity markets recovered after early-week caution.

International Monetary Fund Signals Global Economy Is Holding Up

The International Monetary Fund stated that the global economy is performing better than expected despite inflation, trade tensions, and geopolitical risks. This message reduced fears of a sharp global slowdown and reassured investors that economic activity remains resilient across major regions.

Impact:

Stock markets stabilized. Risk appetite improved slightly. Recession fears eased in global markets.

UK Economic Growth Data Pressures the British Pound

UK monthly GDP data showed weaker-than-expected economic growth, highlighting ongoing pressure from high borrowing costs and weak consumer demand. The data raised concerns about the UK growth outlook and added to uncertainty around the country’s economic recovery.

Impact:

The British pound weakened, especially against the US dollar. GBP pairs saw increased selling pressure.

European Central Bank Outlook Keeps Euro Under Pressure

European inflation data, led by soft German CPI, showed that price pressures in the Eurozone remain controlled. Slow economic growth and stable inflation kept expectations tilted toward future rate cuts rather than tightening, limiting confidence in the euro’s upside potential.

Impact:

The euro stayed weak. EURUSD struggled to hold gains. European bond yields remained subdued.

Yen Weakness Raises Forex Market Volatility

The Japanese yen continued to weaken against the US dollar, prompting verbal warnings from officials about excessive currency moves. Traders closely monitored headlines for possible intervention, keeping the forex market sensitive and reactive throughout the week.

Impact:

USDJPY became volatile. Currency markets reacted sharply to official comments.

Geopolitical Tensions Support Gold and Oil Prices

Ongoing geopolitical tensions in the Middle East kept markets cautious. Even without major escalation, uncertainty around regional stability and energy supply remained an important background risk for traders and investors.

Impact:

Gold prices stayed supported. Oil prices remained volatile. Risk sentiment weakened during headline-driven moves.

G7 Finance Ministers Meeting Focuses on Critical Minerals Supply

G7 finance ministers discussed securing supply chains for critical minerals used in electric vehicles, batteries, and advanced technology. The discussions highlighted long-term concerns around supply concentration and the need for global cooperation in mining and processing.

Impact:

Commodity markets reacted cautiously. Resource-linked currencies saw mild support. Tech sentiment stayed positive.

CES 2026 Reinforces AI-Led Growth Theme

CES 2026 showcased major developments in artificial intelligence, chips, and next-generation technology. Companies emphasised heavy investment in AI infrastructure and innovation, reinforcing confidence that technology will remain a key growth driver for the global economy.

Impact:

Tech stocks strengthened. Risk sentiment improved. Equities and risk-sensitive assets benefited.

Major Currency Pair Movements

• EUR/USD: Fell during the week as strong US dollar momentum and weak Eurozone inflation data kept sustained pressure on the euro.
• GBP/USD: Moved lower overall as disappointing UK growth data and broad US dollar strength outweighed short-term buying interest.
• USD/JPY: Moved higher as strong US dollar demand combined with continued weakness in the Japanese yen, keeping the pair volatile.
• USD/CAD: Remained volatile but trended higher overall, supported by US dollar strength despite fluctuations in oil prices.
• USD/CHF: Moved higher through the week as US dollar strength dominated price action despite periods of safe-haven demand.
• AUD/USD: Moved lower as persistent US dollar strength and cautious risk sentiment capped upside attempts.
• NZD/USD: Ended the week lower as a stronger US dollar environment continued to pressure risk-sensitive currencies.

Trader’s Takeaway

• The US dollar is still strong. Trading with the dollar trend makes more sense than trading against it.
• Inflation and interest rate news are driving the market. Always check US data before taking trades.
• The euro and pound remain weak. Any rise in EUR/USD or GBP/USD can face selling pressure.
• Yen pairs can move fast. News or comments from Japan can cause sudden moves, so trade carefully.
• AUD and NZD are under pressure. Avoid aggressive buying while the US dollar stays strong.
• Gold may struggle when US yields are high, but news events can still cause quick spikes.
• Stock markets are supported by tech news, but overall direction depends on economic data.
• Market moves can change quickly. Use a small position size and keep the stop-loss in place.

What to Watch Next Week

• US Dollar Trend Continuation – This week confirmed strong US dollar momentum. Watch if USD strength continues or starts to slow, as it will guide most forex pairs.
• US Bond Yields – Strong demand for US bonds kept yields firm. If yields remain high, USD can stay supported, and the upside may stay limited.
• Inflation Sensitivity – Inflation eased only slightly this week. Markets will react strongly to any US inflation-related data or comments.
• EUR and GBP Weakness – Weak Eurozone inflation and UK growth remain a drag. Any negative data next week can keep pressure on EUR/USD and GBP/USD.
• Yen Volatility Risk – Yen weakness is still unresolved. Any official comments from Japan can trigger sudden moves in USD/JPY.
• Gold Reaction to Data – Gold remains sensitive to US yields and headlines. Expect sharp moves around major US data.
• Risk Sentiment Remains Fragile – Tech optimism helped markets, but overall sentiment is still data-driven. Avoid assuming strong risk-on moves.

Weekly Summary

This week, markets were mainly driven by strong US dollar momentum and sticky inflation data. Firm US bond yields reduced hopes of early interest rate cuts, keeping pressure on gold and risk currencies. The euro and pound weakened due to soft economic data, while yen volatility stayed high. Tech and AI optimism supported equities, but overall market sentiment remained cautious and data-driven.

Disclaimer

This newsletter provides market insights and weekly summaries. These are expectations, not guarantees. Markets can change due to unexpected events. Always trade responsibly and use proper risk management.