The recent inflation data (Consumer Price Index/CPI) from the United States has caused market volatility at the start of trading on Friday (December 19, 2025). US inflation was recorded at 2.7% year-on-year (YoY) for November, lower than the forecast of 3.1% and the previous month’s rate of 3%. Meanwhile, core US inflation (core CPI) was reported at 2.6%, also below expectations and the prior period’s 3%, marking the slowest rate of deceleration since March 2021. This data strengthens the view that inflationary pressures in the US are easing.
This release has led market participants to grow increasingly optimistic that the Federal Reserve (The Fed) may implement interest rate cuts two to three times in 2026. Additionally, prior data indicated an increase in the unemployment rate to 4.6%. However, traders believe that The Fed is unlikely to lower interest rates in January.
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These sentiments are expected to keep the market volatile during European trading. Important economic data releases must also be monitored. Below is the data from Trading Central:
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UK retail sales (year-on-year/Nov) at 14:00 WIB; forecast 1.4% vs. previous 0.2%
GOLD
Gold prices (XAUUSD) experienced significant volatility, reaching up to $4,374.45 per troy ounce and nearing an all-time high, before ultimately closing Thursday’s trading down by $5.72 or 57 pips at $4,331.98 per troy ounce.
The positive sentiment surrounding Gold remains intact, driven by the market’s optimism that The Fed might reduce interest rates two to three times next year. Furthermore, the slowdown in core CPI in the US reaching the lowest level since March 2021 further enhances Gold’s appeal as a safe-haven asset.
As European trading approaches, Gold may face pressure as profit-taking occurs after reaching close to record highs. Nevertheless, with strong fundamental sentiment still in play, Gold retains potential for a rebound during the European session.
OIL
Oil prices (CLS10) fell by $1 to $55.89 per barrel in Thursday’s trading and continue to decline today. Price pressures are arising from improved prospects for a peace agreement between Russia and Ukraine, after US President Donald Trump suggested the end of the war was nearing.
Should a peace deal be reached and sanctions against Russia lifted, Russian oil supply could flood global markets, raising concerns about oversupply.
This negative sentiment could further pressure Oil prices during the European trading session.
EURUSD
EURUSD dropped by 168 points or 16.8 pips to 1.17211 during Thursday’s trading and continues to face downward pressure today. This comes after European Central Bank (ECB) President, Christine Lagarde, failed to provide clear indications regarding future monetary policy direction, affirming that all options remain open, unlike the stance of several other officials who appear more hawkish.
On the other hand, the US dollar remains strong, even as US inflation data shows a slowdown and the unemployment rate increases. The market still anticipates that The Fed will maintain interest rates in January 2026, supporting the strength of the US dollar.
This sentiment may continue to weigh on EURUSD pricing during the European session.
GBPUSD
GBPUSD moved very volatile before ultimately closing flat at 1.33761 on Thursday. The Bank of England (BoE) officially cut interest rates by 25 basis points to 3.75%, in line with market expectations.
However, this cut is categorized as a hawkish move, considering that 4 out of 9 Monetary Policy Committee (MPC) members preferred to maintain interest rates. This indicates that the BoE is unlikely to continue with further rate cuts in the near future.
Additionally, the US dollar continues to strengthen as the market expects The Fed will hold interest rates steady in January next year. In the European trading session, UK retail sales data is set to be a key focus. If actual data exceeds forecasts, indicating economic improvement in the UK, GBPUSD could see upward momentum.
USDJPY
USDJPY fell by 141 points or 14 pips to 155.477 during Thursday’s trading, pressured by the release of US inflation data that indicated a significant slowdown. However, as the European session nears, this currency pair is showing signs of recovery.
The Bank of Japan (BoJ) officially raised interest rates by 25 basis points to 0.75%, in line with market expectations. Nevertheless, a lack of guidance regarding the direction of BoJ’s interest rate policy for the upcoming year has weakened the yen.
Conversely, the US dollar remains strong amid market expectations that The Fed will maintain interest rates in January 2026. This combination of sentiments could still drive an increase in USDJPY during the European trading session.
NASDAQ
The Nasdaq surged by 493 index points to 25,219 during Thursday’s trading and continues its upward trend today. This increase is driven by US inflation data showing a deceleration, reinforcing market optimism that The Fed will cut interest rates two to three times next year.
This positive sentiment is expected to continue supporting Nasdaq’s movement in the European trading session.
