Gold, EUR/USD Forecast: Two trades to watch

Gold soars past $5000 on safe haven demand & a weak USD

Gold has broken past the $5000 barrier, crossing the level for the first time on Monday and hitting a record high of $5100 amid worries about a U.S. government shutdown. The yen's intervention added fresh fuel to the metals' already impressive rally.

Gold trades over 18% higher so far this year, after rallying by 63% in 2025. Investors have piled into the safe haven amid concerns over geopolitical tensions, USD weakness and lower interest rates, which have all boosted gold's appeal, as well as central bank buying.

Safe haven demand on tariff threats, government shutdown worries

The latest leg higher today came, and Trump threatened 100% tariffs on Canada. Trump warned that if Canada makes a deal with China, it will immediately face 100% tariffs on all Canadian goods entering the US. This lifted safe haven flows.

Worries that the US government could shut down for the second time in months come amid anger from Senate Democrats, who said they wouldn't vote for a federal funding package without major changes to Homeland Security provisions.

USD slumps, yen intervention worries, Gold rally

Adding support to gold, there has been a sharp decline in the US dollar, amid intervention concerns to support the Japanese yen. The yen has risen by 1.5% in the European session, leaving USD/JPY at 153.40, its lowest level since mid-November.

The New York Federal Reserve conducted a rate check on Friday, raising the chance of joint US-Japanese intervention, the first in 15 years, to halt the yen's slide.

These moves have come as the yen has been under huge pressure following Takeichi's taking over as Japanese Prime Minister in October. She has pledged to ramp up spending and cut taxes, sending Japanese government bond yields to record highs and the currency sharply lower.

Fed rate cut expectations.

Attention will also be on the FOMC rate decision this week. No rate cut is expected, but the market is still pricing in two cuts this year, which keeps non-yielding gold supported. Fed Chair Powell’s remarks will be watched closely for clues over the timing of the Fed’s next cut. A dovish-sounding Powell could lift Gold further.

XAU/USD forecast – technical analysis

XAU/USD trades within a rising channel on the 4-hour chart, reaching a record high of 5109. The RSI is very overbought, so buyers should be cautious at these levels. However, the MACD shows strong bullish momentum.

Buyers will look to break out above the rising channel and 5110 to create a higher high to fresh record levels.

Support is seen at 4965, the lower band of the rising channel. Below her 4900 comes into focus.

EUR/USD rises to a 4-month high amid USD weakness

EUR/USD has risen to a four-month high above 1.1850 in early trade on Monday amid uninspiring German business sentiment and an ongoing slump in the US dollar.

The US Federal Reserve conducted a rate check on the US dollar yen on Friday. Such a move is often considered a warning of an intervention in the forex market, prompting investors to cut their U.S. dollar long positions. USD/JPY rallied. The US dollar sharply fell on Friday and extended those losses on Monday, helping the EUR/USD to its highest level since September.

President Trump's threat to impose 100% tariffs on Canada has brought the erratic trade policy of the Trump administration back into focus, and is also keeping the US dollar under pressure.

On the macroeconomic data front, German business sentiment remained unchanged in January according to the latest Ifo survey. The business sentiment index was 87.6 in January, unchanged from December, suggesting the German economy is starting the new year without momentum.

Looking ahead, the main focus will be on the FOMC rate decision on Wednesday.

EUR/USD forecast -technical analysis

EUR/USD extended its recovery from the 1.16 2026 low, rising above 1.18 resistance to 1.19, a four-month high, before easing lower. The long upper wick on the candle suggests there was little buying demand at the higher levels. This should be monitored because it could be a shooting star reversal candle forming.

Support can be seen at 1.18, the December high and 1.1765, the falling trendline support below this. It would take a break below 1.16, to create a lower low, and for the bears to take charge.