In the week ahead: Non-Farm Payrolls, CPI, BOE and BOJ Interest Rate Statements

The EUR/USD pair starts the week on a slightly weaker footing, edging lower during Monday’s Asian session as the US Dollar regains some ground.

The US Dollar is attempting to extend last week’s rebound from a more than two-month low, which is exerting mild downward pressure on the euro.

Although the Fed signaled greater caution last week after delivering its third rate cut of the year, market participants continue to price in the likelihood of at least two additional cuts in 2025. Growing evidence of softness in the US labor market has reinforced these expectations, limiting the scope for a sustained USD recovery. Speculation that the next Fed chair could align more closely with President Donald Trump’s preference for lower interest rates also weighs on the dollar.

Trump recently indicated that he has narrowed the shortlist to replace Fed Chair Jerome Powell, emphasizing his desire for a nominee supportive of rate cuts.

Meanwhile, the euro continues to benefit from increasing confidence that the European Central Bank has reached the end of its easing cycle. That said, traders remain hesitant to take aggressive positions ahead of Thursday’s ECB policy decision. Additional caution is also evident ahead of the delayed US Nonfarm Payrolls report due on Tuesday, both of which could provide fresh direction for the pair.

Bitcoin traded modestly lower on Sunday, dipping below the $90,000 mark as cautious sentiment prevailed across markets. Investors largely adopted a wait-and-see stance ahead of a packed week featuring major economic data releases and central bank policy decisions.

Bitcoin has struggled to establish a clear direction in recent sessions, with price action largely confined to narrow ranges. Market participants appear hesitant to initiate fresh positions as attention turns to a series of high-impact U.S. data points that could influence interest-rate expectations.

Key releases this week include U.S. labor market indicators, such as employment data and weekly jobless claims, as well as November inflation readings and preliminary December PMI figures. In addition, scheduled speeches by Federal Reserve officials Stephen Miran and Christopher Waller are expected to provide further insight into policymakers’ views on the future path of rates.

Against this backdrop, Bitcoin’s recent performance has been characterized by subdued momentum and limited volatility, mirroring the broader tone of caution across financial assets.

Oil prices edged higher during early Asian trading on Monday, attempting a modest rebound after sharp losses last week. However, gains remained limited as persistent concerns over excess global supply and a fragile demand outlook continued to weigh on market sentiment, offsetting support from ongoing geopolitical risks.

The mild uptick follows weekly declines for both benchmarks, driven largely by mounting fears that global oil supply is running ahead of demand growth. Investors have remained focused on rising production from major oil-producing nations and elevated inventory levels, both of which have kept prices under pressure.

Geopolitical developments have provided some near-term support, though the impact has so far been fleeting. Ongoing attacks on Russian energy infrastructure linked to the conflict in Ukraine have raised concerns over potential supply disruptions, but these risks have failed to materially lift prices.

Renewed tensions between the United States and Venezuela have also offered temporary support. Increased pressure from Washington has sparked speculation that stricter enforcement measures could curb Venezuelan crude exports. Given Venezuela’s vast oil reserves, any disruption to its shipments could marginally tighten global supply.

Oil prices have also been pressured by weak economic signals from China. Data released on Monday showed that industrial production and retail sales both fell short of expectations in November, highlighting uneven growth momentum in the world’s second-largest economy. With China remaining the largest importer of crude oil, ongoing economic softness and a prolonged downturn in the property sector continue to dampen demand prospects.

U.S. equities ended sharply lower on Friday, with losses led by technology stocks after weakness in semiconductor shares dampened investor appetite for the artificial intelligence trade. Cautious guidance from several AI-linked companies sparked a broad risk-off move across the market.

Shares of Broadcom tumbled after the chipmaker warned that its high-margin, non-AI business is likely to post subdued performance in the current quarter. The company also indicated that a major data-center agreement with OpenAI is not expected to meaningfully contribute to earnings until at least 2027.

Despite the stock’s sharp decline, Broadcom delivered better-than-expected fiscal fourth-quarter results and issued an above-consensus revenue outlook. The company also highlighted a sizable AI-related order backlog totaling roughly $73 billion over the next 18 months. Still, investors appeared unsettled by concerns that some of Broadcom’s largest customers may explore in-house development of AI data-center chips.

Broadcom’s weakness reverberated across the semiconductor space, dragging down shares of Micron Technology, Lam Research, Marvell Technology, Advanced Micro Devices, and Nvidia.

The negative tone followed fresh concerns about elevated valuations in the technology sector, coming a day after cloud-computing firm Oracle issued a cautious outlook that raised doubts about the sustainability of AI-driven gains.

Looking ahead, expectations of monetary easing continue to underpin sentiment. Markets are pricing in at least 50 basis points of interest-rate cuts next year, amid speculation that President Donald Trump’s nominee for Federal Reserve Chair could favor a more accommodative policy stance.