EURUSD and Gold Slide Ahead of FOMC Minutes

Key Events
• FOMC minutes loom following stronger NFP data and softer CPI readings, supporting the DXY above 97
• Market risk sentiment remains cautious amid AI turbulence, geopolitical uncertainty, and expectations of prolonged rate holds
• The dollar’s hold near 97 pressured EURUSD below 1.1850 and gold back toward the 4,900 zone

CME fed watch tool

Despite moderating U.S. inflation and stronger-than-expected labor data, market odds for a March rate cut remain low. According to the CME FedWatch Tool, expectations for rate cuts begin to increase toward June 2026.

Recent CPI data showed inflation continuing to ease toward the Federal Reserve’s 2% target, with CPI m/m at 0.2% and CPI y/y at 2.4%. Meanwhile, January NFP surprised to the upside, with payrolls rising by 130,000 and unemployment edging down to 4.3%. This combination reinforces expectations that policymakers may keep rates elevated for longer.

This positioning has supported the DXY above its long-term 18-year support zone at 95–96, pushing it back toward 97. As a result, EURUSD slipped below the 1.1850 area, while gold retreated toward 4,900, placing key technical levels under scrutiny to confirm whether these moves are temporary pullbacks or the start of deeper corrections.

Technical Analysis: Quantifying Uncertainty

EURUSD Outlook: Weekly Time Frame – Log Scale

Source: Trading view

On the weekly chart, EURUSD is facing resistance connecting consecutive higher highs since June 2025, capping gains below the key 1.1950 zone. A daily or weekly close above this level is required to reassert bullish bias toward 1.20, before potentially extending toward the 2022 and 2018 highs near 1.23 and 1.25 respectively.

That outlines the bullish scenario. However, recent price action is turning lower, with downside risks building. A break below 1.1760, which represents the 0.618 retracement of the 2026 advance, could open the door to deeper drawdowns toward:

• 1.1680
• 1.1580

The 1.1580 level becomes pivotal. A hold there could revive bullish momentum. Failure to stabilize may expose the 1.12–1.11 zone, a scenario in which renewed dollar strength takes control.

Gold Outlook: 3 Month Time Frame – Log Scale

Source: Trading view

The 3-month time frame is used to place the broader trend into perspective. The uptrend between November 2024 and January 2026 represents a breakout beyond the bounds of a multi-decade consolidation that had been in place since 1980.

This structure was discussed in my previous article Gold, Silver Outlook: Key Levels vs Volatility Risks and video Gold Prices Flash 1980s Signal as CPI Shock Tests Bull Run. The next chart is the weekly chart, where key levels are pointed out for the shorter term.

Gold Outlook: Weekly Time Frame – Log Scale

Source: Trading view

On the weekly chart, the Fibonacci retracement tool is applied to measure the potential drawdown of the move extending from the November 2024 lows to the January 2026 highs. The following levels stand out:

4,400 – 0.382 retracement, already respected as a support and dip-buying zone.
4,060–4,000 – 0.5 retracement and a major psychological barrier.
3,700 – 0.618 retracement, a critical level for potential trend reversal. Failure to hold here could extend losses toward the upper bound of the multi-year consolidation near 3,200, and possibly 2,900.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves

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