In the week ahead: BOC and Fed Rate Statements, U.S. Core PPI

The EUR/USD pair opened the week on a strong footing, climbing to trade near the 1.1900 level during Monday’s Asian session. The rally comes as the US Dollar remains under pressure, extending losses from last week amid growing caution ahead of the Federal Reserve’s monetary policy decision on Wednesday.

The US Dollar continues to face heavy selling as investors remain concerned about the United States’ long-term trade relationships with key partners. This pressure persists despite the recent easing of geopolitical and trade tensions between Washington and several European Union members, developments that have so far failed to provide meaningful support to the Dollar.

Market participants widely expect the Federal Reserve to keep interest rates unchanged within the 3.50%–3.75% range at its upcoming meeting, according to the CME FedWatch tool. If confirmed, this would mark the Fed’s first policy pause following three consecutive rate cuts. The central bank lowered borrowing costs by a total of 75 basis points toward the end of 2025 in response to signs of weakness in the US labor market.

Looking ahead, attention for the Euro will turn to key economic data releases later this week, including the preliminary fourth-quarter Eurozone Gross Domestic Product (GDP) figures and Germany’s January Harmonized Index of Consumer Prices (HICP), both of which could influence near-term direction in the EUR/USD pair.

Gold prices surged beyond the pivotal $5,000-per-ounce mark on Monday, extending last week’s powerful rally as investors flocked to the safe-haven asset amid rising geopolitical uncertainty.

The precious metal has been on a remarkable run, jumping more than 8% last week as prices repeatedly set new historical highs.

Gold’s rally has been underpinned by a mix of escalating geopolitical risks, expectations of looser US monetary policy later in 2026, and sustained buying from central banks and investors seeking protection against heightened market volatility.

A key catalyst behind gold’s latest surge has been growing friction between the United States and its NATO allies over Greenland, which has unsettled global markets in recent weeks. President Donald Trump’s comments regarding US strategic interests in the Arctic region have strained transatlantic relations, raising concerns over potential diplomatic and economic repercussions.

Adding to the uncertainty, Trump reignited trade tensions with Canada over the weekend, warning of a potential 100% tariff on Canadian goods should Ottawa move forward with a trade agreement with China. In a post on his social media platform, Trump suggested Canada could become a “drop-off port” for Chinese exports entering the US and cautioned that Beijing would “eat Canada alive” if such a deal proceeds.

While a pause is largely priced in, investors will closely watch the Fed’s statement and comments from Chair Jerome Powell for signals on the timing and scale of potential rate cuts later this year. Lower interest rates typically bolster gold by reducing the opportunity cost of holding non-yielding assets.

Oil prices were little changed on Monday after posting solid gains in the previous session, as investors balanced heightened geopolitical tensions against lingering concerns over a potential supply surplus, while awaiting signals from the Federal Reserve’s policy meeting later this week.

Both benchmarks had climbed more than 2% on Friday, supported by a sharp rise in geopolitical risk premiums.

Oil markets remained on edge following signals of increased US military activity in the Middle East. President Donald Trump said an “armada” of US naval assets, including an aircraft carrier strike group, was being deployed to the region amid escalating tensions with Iran. Any conflict involving Tehran has raised concerns about potential disruptions to crude shipments from one of the world’s key oil-producing regions.

Broader geopolitical uncertainty has also weighed on market sentiment, with recent tensions involving the United States over Greenland adding to volatility across global financial markets.

On the supply side, some downward pressure on prices eased after Kazakhstan’s primary crude export route returned to full operating capacity. The Caspian Pipeline Consortium confirmed that loading operations at its Black Sea terminal have resumed following the completion of repairs at a mooring point, allowing exports to return to normal levels.

Focus now turns to the Federal Reserve’s policy decision later this week, with markets widely expecting interest rates to remain unchanged.

US stock markets ended Friday on a mixed note, with the US 500 posting a marginal gain but still closing out its second consecutive weekly decline. Losses in Intel shares following disappointing earnings, combined with persistent geopolitical tensions, weighed on overall sentiment.

Although the major indices rebounded on Wednesday and Thursday after sharp losses earlier in the week, the recovery proved insufficient to prevent a second straight weekly decline for Wall Street.

In corporate news, Intel shares slumped after the chipmaker reported a fourth-quarter loss and issued a cautious outlook for the current quarter. The company posted a net loss of $333 million for the final three months of its fiscal year, exceeding analysts’ expectations for a smaller loss.

Intel, which has recently received renewed support from major investors — including AI heavyweight Nvidia — as well as backing from the US government, cited industry-wide supply constraints as a major challenge. Chief Financial Officer David Zinsner said shortages linked to surging data-center demand could persist well into 2026.

Looking ahead, investors will turn their attention to a packed week of earnings from major technology firms, including Apple, Microsoft, Amazon, and Tesla.

On the macro front, economic data releases included January S&P PMI figures and the University of Michigan’s consumer sentiment index, though neither was expected to significantly influence market direction ahead of this week’s Federal Reserve meeting.

The central bank is widely expected to leave interest rates unchanged as policymakers navigate increasing uncertainty surrounding the US economic outlook.