High volatility has returned to the financial markets during the European trading session on Wednesday (12/10/2025). There haven’t been significant changes in the fundamentals. Market focus is squarely on the Federal Reserve’s (The Fed) interest rate announcement set for early Thursday, with most market participants optimistic about a potential cut. Aside from the interest rate decision, investors are also eagerly awaiting comments from Fed Chair Jerome Powell regarding the monetary policy direction for 2026.
These sentiments could lead to increased volatility in the US trading session. It’s crucial to keep an eye on the release of key economic data that will capture everyone’s attention. Here’s the update from Trading Central:
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Fed interest rate announcement (Thursday, 12/11/2025) at 2:00 WIT; forecast 3.75% compared to the previous 4%
GOLD
Gold (XAUUSD) decreased by $13.4 to $4,194.5 per troy ounce during the European session. Gold remains around the psychological level of $4,200, indicating that market participants are awaiting the Federal Open Market Committee (FOMC) decision from The Fed. Optimism about potential rate cuts and forecasts for monetary policy in 2026 continue to support prices.
Later in the evening, Gold’s volatility could increase. If The Fed opts for a rate cut as expected, Gold has the potential to strengthen. Sentiment would become even more favorable if Jerome Powell hints at further aggressive cuts next year.
OIL
Oil prices (CLS10) fell by $0.24 to $58.14 during the European session. Ongoing pressures stem from developments in the Russia-Ukraine peace talks and rising concerns about oversupply as reports suggest that global oil production is starting to recover at various points.
These sentiments are expected to continue to weigh on Oil during the US session.
EURUSD
EURUSD climbed 339 points or 34 pips to 1.16578. The US dollar weakened due to expectations of a Fed rate cut, acting as a primary driver for EURUSD’s strength.
In the evening session, the US dollar will remain the dominant force. If the rates are cut as expected, EURUSD may continue to rise, especially if Jerome Powell signals further aggressive easing for 2026.
GBPUSD
GBPUSD rose by 342 points or 34.2 pips to 1.33266 during the European session. The strengthening sentiment stems from the declining US dollar, fueled by market confidence that The Fed will lower interest rates.
In the evening, GBPUSD will still be influenced by the US dollar and the results of the FOMC announcement. If a more dovish policy is implemented, GBPUSD may continue its upward trend.
USDJPY
USDJPY has traded with volatility in the range of 156.559–156.938. The yen remains under pressure due to disappointing economic data from Japan, raising doubts about the possibility of a Bank of Japan (BoJ) rate hike. Concurrently, the US dollar is also pressed by expectations of rate cuts from The Fed.
If the FOMC announces a rate cut, USDJPY could decline as the dollar weakens further. Powell’s indications regarding 2026 policy will be crucial in determining future directions. Should Powell suggest more aggressive rate cuts next year, USDJPY might face additional pressure.
NASDAQ
The Nasdaq gained slightly, rising 69 points to 25,744 during the European session. Optimism surrounding The Fed’s rate cut is the main catalyst. All market attention is currently on the FOMC meeting scheduled for early Thursday.
If The Fed decides to implement a rate reduction as anticipated and Powell signals more aggressive easing for the following year, the Nasdaq may continue to rally.
