In the week ahead: ISM Manufacturing, BOE Rate Decision, Non-Farm Payrolls

The EUR/USD pair remains on the back foot around the 1.1850 level during the Asian session on Monday, extending the losses recorded late last week. The pair is weighed down by broad-based US Dollar strength following the nomination of former Federal Reserve Governor Kevin Warsh as the next Fed Chair, succeeding Jerome Powell.

The US Dollar has drawn notable support from Warsh’s appointment, as he is widely regarded as a proponent of a strong USD.

Looking ahead, the US Dollar might experience heightened volatility this week amid a heavy slate of US economic data, including employment indicators and ISM Purchasing Managers’ Index (PMI) releases. Market participants will be particularly focused on the January Nonfarm Payrolls (NFP) report due on Friday.

On the Euro side, investors are awaiting the flash Eurozone Harmonized Index of Consumer Prices (HICP) data for January, scheduled for release on Wednesday. Headline inflation is forecast to ease to 1.7% year-on-year from the previous reading of 1.9%. Evidence of cooling price pressures could strengthen expectations for a near-term interest rate cut by the European Central Bank (ECB), potentially adding further downside pressure to the Euro.

Gold prices remain under pressure during early European trading on Monday, with XAU/USD sliding to a three-week low amid profit-taking and renewed US Dollar strength. The pullback follows last week’s rally to record highs and comes after reports confirmed the nomination of former Federal Reserve Governor Kevin Warsh as the next Fed Chair.

The announcement has eased investor concerns over the independence of the US central bank, reinforcing confidence in US monetary policy and weighing on demand for non-yielding assets such as Gold. Expectations that Warsh may favor a firm policy stance have further supported the Greenback, adding to downside pressure on bullion.

Ongoing tensions between the United States and Iran continue to underpin safe-haven flows, with market participants closely monitoring diplomatic developments and any further signals on Warsh’s policy outlook.

Attention later on Monday will turn to the US ISM Manufacturing Purchasing Managers’ Index (PMI) for January, which is expected to rise modestly to 48.3 from 47.9 in December.

Meanwhile, recent US inflation data has reinforced expectations that the Federal Reserve will keep interest rates unchanged in the near term.

Markets currently price in a high probability that rates will remain within the 3.50%–3.75% range, with the first 25-basis-point rate cut most likely expected in June. While Gold remains vulnerable to further near-term consolidation, structural support from central bank purchases and geopolitical uncertainty may continue to limit deeper losses.

Oil prices slumped nearly 5% early on Monday, marking their steepest single-session decline in more than six months, after comments from US President Donald Trump signaled a potential easing of tensions with Iran, an OPEC member.

Both benchmarks retreated sharply from recent multi-month highs as fears of a military confrontation in the Middle East subsided.

The sell-off followed Trump’s remarks over the weekend that Iran was “seriously talking” with Washington, suggesting progress toward renewed negotiations. The comments came after weeks of heightened rhetoric, during which Trump had warned of possible intervention if Tehran failed to reach a nuclear agreement or continued its crackdown on protesters—threats that had supported oil prices throughout January.

Signs of de-escalation were further reinforced by reports that Iran’s Revolutionary Guards have no plans to conduct live-fire naval exercises in the Strait of Hormuz, a key global oil transit route. Markets interpreted these developments as reducing the geopolitical risk premium that had been priced into crude during last week’s rally, triggering a wave of profit-taking.

Meanwhile, supply-side dynamics offered little support. At a meeting on Sunday, OPEC+ agreed to keep output levels unchanged for March. The producer group had already suspended planned production increases from January through March 2026, citing seasonally weaker demand.

US equity markets closed lower on Friday as risk-off sentiment dominated trading, driven by a sharp unwind in precious metals, stronger-than-expected producer inflation data, and President Donald Trump’s nomination of former Federal Reserve Governor Kevin Warsh as the next Fed Chair.

Investor sentiment was further dented by a dramatic sell-off in precious metals following a prolonged rally.

Despite Friday’s pullback, major US indices finished January in positive territory.

January proved volatile after markets closed 2025 with a third consecutive year of double-digit gains. Uncertainty surrounding the Trump administration’s trade and geopolitical policies drove safe-haven demand earlier in the month, pushing gold and silver prices to record highs.

The nomination of Kevin Warsh emerged as Friday’s key political and market-moving development. Trump praised Warsh as a potential standout Fed Chair, a pick that had been widely anticipated by markets given Warsh’s previous tenure as a Fed Governor from 2006 to 2011.

Corporate earnings continued to shape individual stock moves. Apple exceeded expectations for profit and revenue in its fiscal first quarter, posting its strongest iPhone sales growth in more than four years. However, shares fell modestly as performance in other business segments lagged.

Verizon shares jumped after the telecoms firm beat earnings estimates and issued an upbeat outlook, signaling early progress in its strategic turnaround. Chevron stock rose after reporting profits that, while lower year-on-year, surpassed expectations amid aggressive cost-cutting efforts.