Forex : FOMC minutes in focus as gold reels from its sharpest drop in weeks

⚡Market Fast

• Trading volumes remain muted as year-end holiday atmosphere settles in
• All eyes turn to the release of FOMC minutes and US housing data
• The US dollar continues to struggle against risk currencies
• Gold and silver correct sharply after recent surges, testing investor nerves
• Major currency pairs consolidate with limited directional momentum
• Yen gains modestly amid Bank of Japan’s hawkish undertone

AI-generated key points

Market pace slows as holiday lull begins

With the festive season fully setting in, financial markets opened Tuesday in a subdued tone. Trading desks were quieter than usual, and the drop in volumes hinted at a pause rather than a pivot. Yet, behind the calm, tension builds as investors prepare for a key moment: the Federal Reserve’s monetary policy minutes from the December meeting.

This afternoon, the spotlight will also turn briefly to US housing data, but expectations remain restrained. Participants appear more interested in clues from the Fed about the trajectory of interest rates going into early 2026.

Dollar weakness deepens as risk appetite holds

Over the past month, the US dollar has posted one of its weakest performances against a basket of major currencies. The Australian dollar leads the gains, outpacing the greenback by 2.44%, followed closely by the Canadian dollar and euro.

While the USD/JPY exchange rate slipped 0.3% on Monday reflecting market reaction to a slightly hawkish tone from the Bank of Japan the broader dollar index remains anchored around the 98.00 level, showing little inclination to trend decisively in either direction.

Pending home sales and Fed manufacturing data

US data released Monday provided no real spark. Pending home sales climbed by 3.3% in November, while the Dallas Fed Manufacturing Index dropped slightly to -10.9, down from -10.4 in November. These updates did little to sway the broader market narrative, and currency pairs moved within tight bands.

Gold stumbles after record peak, silver follows

Gold faced one of its steepest corrections in weeks, sliding over 4% on Monday after touching record highs. The XAU/USD pair attempted a rebound Tuesday morning but remained capped under $4,400.

Silver, which had briefly pierced above $84, tumbled even harder, losing 9% before recovering toward the $75 zonea modest intraday gain of over 3%. For both metals, these violent swings highlight the fragile balance between bullish sentiment and end-of-year profit-taking.

Euro and pound stay adrift, yen claws back ground

The EUR/USD pair remained stuck in its recent holding pattern, trading just above 1.1750 with little conviction. Similarly, GBP/USD continued to hover near the 1.3500 mark, lacking the momentum to break higher despite slightly positive sessions.

The yen was among the rare outperformers, buoyed by the Bank of Japan’s Summary of Opinions, which signaled a more hawkish stance than expected. The USD/JPY pair slid below 156.00, with traders now watching closely for signs of a possible policy shift in early 2026.