Asian Tech Rally Drives Strong Start to the New Year

The EUR/USD pair gained traction toward 1.1755 during Friday’s early European session, although it remains on track for a move of around 0.26% lower for the pair so far this week. Despite the weekly decline, the Euro is finding support from the European Central Bank’s (ECB) December decision to hold rates steady, alongside President Christine Lagarde’s data-dependent approach. With the ECB signaling less urgency for cuts compared to its peers, some economists now anticipate rates may remain unchanged through 2026, providing a stable backdrop for the currency.

The pair’s current resilience is further bolstered by downward pressure on the Greenback following comments from the U.S. administration regarding future Federal Reserve leadership. Concerns that a dovish successor will be named to ensure low interest rates have heightened market worries about central bank independence.

Gold prices extended their rally toward $4,375 during Friday's early European session, climbing for the day. Despite this intraday strength, the precious metal remains under pressure on a broader scale, recording a drop of more than 3.4% so far this week. The recent recovery is being fueled by persistent geopolitical tensions following accusations between Russia and Ukraine regarding drone strikes, alongside growing market bets that the Federal Reserve will continue cutting interest rates throughout 2026.

While lower interest rates typically support non-yielding assets by reducing opportunity costs, further upside for the yellow metal may be constrained. The CME Group recently increased margin requirements for gold and silver futures, a move that often triggers profit-taking and portfolio rebalancing as traders are required to post more collateral. Market participants are now looking ahead to next week’s Nonfarm Payrolls (NFP) report for definitive signals on the health of the US economy and the future pace of monetary easing.

Oil prices steadied on Friday, the first trading day of 2026, as investors balanced new geopolitical risks against upcoming policy signals. Despite the calm start to the year, the market has shown resilience in the short term, with moves of around 1.66% up for WTI and 0.76% up for Brent, the two main crude oil benchmarks so far this week. This weekly recovery follows a difficult 2025 where both contracts fell nearly 20% due to global oversupply concerns and uneven demand growth.

The market's attention is firmly fixed on the OPEC+ meeting scheduled for January 4. The group is widely expected to reaffirm its decision to halt planned output increases for early 2026 in an effort to stabilize a well-supplied market. There appears to be little appetite among major producers to add more barrels following the steep losses recorded in the previous year.

Geopolitical tensions continue to provide a floor for prices. The U.S. administration has intensified sanctions on firms in Hong Kong 50 and mainland China accused of helping Venezuela circumvent oil export restrictions. Additionally, renewed strikes on Black Sea port infrastructure in the Russia-Ukraine conflict have raised fears of supply disruptions.

Bitcoin rose slightly on Wednesday but remains on track to end the year in negative territory following a sharp 22% decline in the fourth quarter. The market is currently grappling with thin liquidity and fading risk appetite, which has pulled the world's largest cryptocurrency well below its October record high of $126,000. Despite these broader yearly struggles, the two top cryptos by market capitalization, Bitcoin and Ethereum, have seen recent upward moves of around 1.14% and 2.52%, respectively so far this week.

The regulatory optimism that initially fueled the sector following the 2024 U.S. election proved difficult to sustain as global financial conditions tightened in mid-2025. While institutional interest through spot ETFs remains present, it has not been enough to offset the general "risk-off" sentiment prevailing in global markets.

Expectations of additional rate cuts in 2026 have served as a vital catalyst for risk assets, including digital currencies, as lower interest rates typically enhance the appeal of speculative investments over yield-bearing assets. However, the market remains cautious in the near term due to ongoing uncertainty regarding the exact scale and timing of future Federal Reserve policy easing.