The US dollar headed on Friday toward its worst weekly performance since late July, as traders intensified their bets on further monetary easing by the Federal Reserve next month, while liquidity remained thin due to the Thanksgiving holiday in the United States.

The dollar index — which measures the US currency against a basket of six major peers — was last up 0.1% at 99.624, recovering part of its losses after a five-day decline pushed it to its worst weekly drop since July 21.

Fed funds futures were pricing in an implied 87% probability of a 25-basis-point rate cut at the December 10 policy meeting, compared with 39% a week earlier, according to CME’s FedWatch tool.

The yield on the US 10-year Treasury was up 0.8 basis point at 4.0037%, after a rebound that followed five straight days of declines which had pushed the yield to briefly slip below 4% twice.

The Japanese yen swings as data support tightening

In Asia, the Japanese yen fluctuated between gains and losses after a period of weakness, and was last down 0.1% at 156.385 per dollar, as labor-market and inflation data supported expectations that Japan is moving toward policy tightening, despite the currency’s continued weakness that has increased the likelihood of intervention by the Ministry of Finance.

The yen had briefly strengthened after data showed Tokyo consumer prices rising 2.8% in November, beating economists’ expectations and exceeding the Bank of Japan’s 2% target.

“With the labor market remaining tight and core inflation (excluding fresh food and energy) still above 3% for now, the Bank of Japan will resume its tightening cycle in the coming months. The bottom line is that the case for policy tightening remains intact,” Capital Economics analysts said in a research note.

The yen is on track for a third month of losses, at a time when the government of Prime Minister Sanae Takaichi is rolling out a 21.3 trillion-yen ($135.4 billion) stimulus package, while the BOJ continues to hold off on raising interest rates despite inflation exceeding its target.

The euro and sterling hold steady… and attention turns to efforts to end the Ukraine war

The euro held at $1.1600 with little change during Asian trading, after Ukrainian President Volodymyr Zelensky said Thursday that delegations from Ukraine and the United States will meet this week to discuss a formula agreed during the Geneva talks to end the war with Russia and secure safety guarantees for Kyiv.

Sterling dipped 0.1% to $1.323 but was headed for its best weekly performance since early August, after UK Finance Minister Rachel Reeves unveiled plans on Wednesday to raise taxes by £26 billion ($34 billion).

Reeves on Thursday responded to criticism of the spending plans, which would finance additional social-welfare allowances by lifting the tax burden to its highest level since World War II.

Commodity currencies: the Australian dollar, the yuan, and the kiwi

The Australian dollar was trading at $0.6536, up 0.1% in early dealings, after data showed private-sector credit rising 0.7% in October from the previous month, a slight acceleration from the prior reading.

The offshore yuan held at 7.074 per dollar and is on track for its best monthly performance since August.

The New Zealand dollar — the “kiwi” — traded at $0.5725, down 0.1%, after ending its strongest week since late April.

The euro is attempting a modest recovery, with EUR/USD rising to 1.1589 and moving back above its short-term moving averages, offering an early signal of returning bullish momentum. And although the pair remains within a broader consolidation range, momentum indicators have begun to improve — raising the prospect that the euro may be preparing for a breakout attempt in the coming days.

Technical outlook: bullish momentum rebuilding gradually

Price action shows a slight but meaningful shift:

The rise above the 15-day moving average at 1.1574 and the 20-day moving average at 1.1561 signals a short-term bullish turn. The flattening of these averages suggests fading downside momentum and the early formation of a higher low. The 14-day RSI stands at 51.07 and has moved back above the 50 neutral line — often an early sign of improving momentum or a potential trend shift. The pair remains range-bound, but the technical bias has tilted in favor of euro bulls for the first time in weeks.

Fundamental backdrop: improved risk appetite supports the euro

Several factors have helped stabilize EUR/USD:

Euro-positive elements include improving global risk sentiment, eurozone data that — despite mixed signals — has not shown further deterioration, and a slightly more optimistic tone from the ECB that has reduced pressure on the currency.

US dollar weakness is also a key driver: the dollar has retreated alongside stabilizing yields, markets believe the Fed has concluded its major tightening phase, and softening US data has reduced the incentive to buy the dollar.

A break above 1.1620–1.1640 would confirm short-term bullish momentum, while a daily close above 1.1700 would lift the pair out of its consolidation structure and signal a broader trend reversal. Conversely, a failure to hold 1.1550 would shift attention back toward 1.1500, the current range floor.

Investor sentiment: shifting toward mild optimism

Retail traders have increased long exposure, institutional positioning has shifted from bearish to neutral, and options markets show a slight improvement in bullish pricing versus last week. Overall sentiment remains balanced — but tilts modestly in favor of buyers.

In short, EUR/USD is showing early signs of a bullish turn, supported by improving technicals and a softer dollar. A breakout has not yet occurred, but upward pressure is building. The bullish scenario opens above 1.1620, targeting 1.1700, while a break below 1.1550 refocuses attention on 1.1500. For now, the euro is stable and gradually rebuilding momentum.

Data

A series of data released Friday indicates that eurozone inflation continues to follow a reassuring trajectory, supporting economists’ expectations that it will remain close to target in the coming years — reducing the need for further rate cuts by the European Central Bank.

Inflation has hovered around the ECB’s 2% target for most of this year, and policymakers expect it to remain near this level in the medium term — a rare success for a central bank that struggled with extremely low inflation for a decade before it surged above 10% after the pandemic.

French inflation remained steady at 0.8% this month, eased slightly to 3.1% in Spain, and was broadly unchanged across several major German states — keeping the aggregate eurozone reading, due Tuesday, on track to hold near 2.1%.

No additional rate cuts expected

An ECB survey last month showed consumers expect inflation at 2.8% next year, up from 2.7% a month earlier, while three-year expectations stayed at 2.5%, and five-year expectations at 2.2%.

The survey — covering 19,000 adults in 11 eurozone countries — supports policymakers’ view that inflation has become anchored near target and is likely to stay there in the coming years, even if short-term fluctuations occur.

For this reason, financial markets see virtually no chance of a rate cut next month and assign only about a one-in-three probability to any further easing next year. Most economists believe the rate-cutting cycle has reached its floor.

Rate-cut debate continues

Still, the internal ECB debate on rate cuts is unlikely to fade soon. Lower energy prices could push inflation below target in 2026, and some policymakers worry that persistently low readings may drag expectations lower and entrench weak inflation.

However, the ECB typically looks past volatility caused by energy prices and focuses on the medium-term outlook. Chief economist Philip Lane warned that underlying price pressures excluding energy remain too high.

Lane also said that domestic inflation is set to moderate and pointed to the ECB’s income and spending survey, which showed consumer expectations for income growth rising to 1.2% from 1.1%, while expectations for spending growth remained at 3.5%.

Although the ECB is keeping the door open to further rate cuts, it has made clear it is in no hurry to adjust policy. Some policymakers argue the bank may have already completed its easing cycle after cutting the deposit rate in half over the past year through June.

Spot gold rose on Friday and is on track to notch a fourth straight monthly gain, supported by growing investor optimism that the Federal Reserve will cut interest rates in December, while a technical outage at CME Group halted trading in futures contracts.

Trading on CME’s currency platform — along with futures tied to FX, commodities, Treasurys, and equities — was suspended after the disruption. Before the outage, US gold futures for December delivery were last quoted at 4,221.30 dollars an ounce.

Nicholas Frappell, global head of institutional markets at ABC Refinery, said: “The main impact was a significant widening of over-the-counter spreads as liquidity disappeared from the futures market.”

Spot gold climbed 0.7% to 4,185.34 dollars an ounce by 07:17 GMT, marking its highest level since 14 November and heading for a weekly gain of roughly 3%. The metal is also poised for a 3.9% rise this month.

Tim Waterer, chief market analyst at KCM Trade, noted: “Liquidity appears thin, which is amplifying some price moves. Much of gold’s upside has been driven by pre-positioning ahead of a potentially lower-rate environment.”

Traders are assigning an 85% probability to a rate cut in December, up sharply from 50% a week earlier.

Comments this week from San Francisco Fed President Mary Daly and Fed Governor Christopher Waller further reinforced expectations of a cut next month.

And like President Donald Trump, Kevin Hassett — now emerging as the leading contender to succeed Jerome Powell as Fed chair — said interest rates should be lower.

Gold, which offers no yield, typically benefits from lower-rate environments.

The US dollar is heading for its worst week since late July, making dollar-priced gold more attractive for buyers using other currencies.

Among other precious metals, spot silver rose 1% to 53.98 dollars an ounce, and platinum gained 2.3% to 1,645.60 dollars. Silver is up 7.9% this week, while platinum has advanced 8.9%. Palladium slipped 0.4% to 1,433.20 dollars but remains on track for a weekly gain of about 4.3%.

Global energy and industrial sectors depend heavily on rare earth elements (REEs), a group of 17 metals essential for everything from electric-vehicle batteries and smartphones to wind turbines and catalytic converters. Although REEs usually appear only in small quantities—often as trace elements bound with similar minerals—they are not truly rare; some, like cerium, are more abundant than lead. Yet only about 1% of these elements is recycled globally due to the difficulty of separating them, their low concentrations in products, and the energy-intensive and hazardous recycling methods currently in use.

Critical materials such as aluminum and cobalt, by contrast, have far higher recycling rates—often approaching 100%. Aluminum scrap has now emerged as one of Europe’s most valuable critical raw materials, as the European Union intensifies efforts to keep more recyclable resources within the continent. According to EU trade commissioner Maroš Šefčovič, more than one million metric tons of aluminum scrap leave Europe each year as exports—an amount the bloc sees as far too high. Europe is a net exporter of aluminum scrap, with shipments reaching a record 1.26 million tons in 2024.

Rising US tariffs on primary aluminum have driven a surge in European scrap exports to the United States. A large share—up to 65%—also goes to Asian markets, including China, India, and Turkey, while other volumes flow to OECD countries outside the EU. Although President Donald Trump doubled tariffs on primary and semi-fabricated aluminum to 50% in June, aluminum scrap remains exempt. Still, the trend predates Trump’s second administration: consultancy Project Blue estimates that European scrap exports to non-EU destinations have grown by nearly 9% annually from 2018 to 2024.

The EU has set a target for recycled materials to supply 25% of the bloc’s total critical-metal needs by 2030. Europe requires much more recycled aluminum because its recovery uses only 5% of the energy needed to produce primary aluminum. With soaring energy costs having forced many primary smelters in Europe to shut down, the rise in scrap exports is worsening the continent’s raw-material shortage. European leaders now fear they may not meet the 2030 target, with the European Aluminium Association estimating that around 15% of the region’s recycling-furnace capacity is currently idle due to a lack of feedstock.

Not all aluminum scrap is equally valuable. High-purity scrap, such as used beverage cans, is in particularly high demand in Europe—one reason the aluminum industry is pushing for an immediate export ban on this category. Europe recycles around 75% of aluminum drink cans, compared with just 43% in the United States. By contrast, mixed-grade scrap such as “Zorba” and “Twitch,” typically recovered from end-of-life vehicles, is far harder and more expensive to process, and the EU is more willing to export it.

Recycling Potential

The potential for recycling critical minerals and REEs is enormous. Earlier studies show that improving collection systems for batteries, lamps, and magnets could raise REE recycling rates from today’s 1% to between 20% and 40%. That would equal roughly 5% of global mined REE output—around half of the United States’ annual production. Even more could be achieved. Simon Jowitt, assistant professor of geoscience at the University of Nevada, Las Vegas, told ArsTechnica that recycling rates could exceed 40% if technologies such as electric-vehicle systems are widely adopted.

Still, recycling large amounts of REEs is no simple task. Many electronics destined for recycling contain only small or uneven quantities of REEs, making recovery costly and inefficient. In many cases, manufacturers do not oversee recycling processes directly, leaving them unaware of the precise materials embedded in their own products.

Here, the US rare-earth industry could learn from Europe.

Under the EU’s Waste Electrical and Electronic Equipment (WEEE) directive, manufacturers must finance or carry out recycling of their own devices. Retailers must provide free collection services for e-waste, with clear rules for sellers and consumers. Vendors of new appliances are required to offer free “take-back” of similar old items, and large retailers must accept small electronics for recycling without requiring any purchase. These policies form part of a broader framework aimed at responsible disposal, reuse, and recycling of electronic devices.

Ultimately, success may depend on political will—or the lack of it.

Permitting procedures in the United States are notoriously long, often stretching up to three decades, compared with just two years in countries like Australia and Canada. The complex layers of local, state, and federal regulations also pose major obstacles for US mining companies, especially compared with their Chinese competitors.