🧠Fed hold, soft dollar and runaway gold steer markets
Published: 1/29/2026
Good morning traders from a snow-dusted IntelliTrade desk, where flurries and a yellow ice warning are on the road outside and five-thousand-plus gold is lighting up the screens inside. Top up the mug, today’s macro picture is busy.
Overall Market Sentiment
Markets are in a cautious risk-on, dollar-soft mood. The Fed kept rates unchanged at 3.50–3.75 percent, delivered a slightly hawkish tone on inflation, and signalled patience on cutting, which stabilised yields but did not fully rescue the dollar.
The Dollar Index is hovering around 96.0, modestly firmer on the day after an earlier drop toward 95.6, but still down a little over 2 percent on the month and near a four year low. By contrast, gold has ripped to fresh all-time highs above 5,500 dollars an ounce, with some prints near 5,550–5,600, as investors hedge policy, debt and geopolitical risk.
Equities are taking the Fed in stride. The S&P 500 briefly traded above the 7,000 mark yesterday and is essentially flat this morning, still hovering near record highs as earnings season and AI optimism offset rate and political worries.
Geopolitics and policy
Policy and geopolitics are working together to keep a bid under havens. Oil has surged to a four-month high on rising fears of US military action against Iran, with Brent around 69 dollars and WTI near 64 dollars, supported by supply worries and a surprise draw in US inventories. That combination adds an energy premium back into global inflation expectations, even as core measures grind lower.
The Fed’s statement described growth as “solid” and inflation as “somewhat elevated,” and the press conference emphasised data dependence and a desire not to overreact to market volatility or political pressure. The overall impression for markets is a central bank that is in no hurry to cut, but not eager to hike either.
In FX, the yen story remains front page. USDJPY is trading near 153, after sliding from above 159 in recent days on speculation about Japanese intervention and talk of US “rate checks” in the pair. US officials have since pushed back against the idea of coordinated intervention and reiterated a “strong dollar” line, which has helped the dollar find a short-term floor but has not reversed the broader sell-off.
Key global barometers to watch today:
• Gold near 5,550–5,600 dollars as the flagship macro hedge.
• DXY around 96.0, weak over the month but stabilising after the Fed.
• Brent near 69 dollars and WTI around 64 dollars as the geopolitical risk gauge.
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Today and the rest of the week
Today, Thursday
• First full day of trading after the FOMC decision, so markets are digesting Powell’s tone and re-positioning across FX and metals. The key question is whether this is just a short-covering bounce in the dollar or the start of a more durable floor.
• Focus stays on USDJPY and gold as the pressure points where policy, geopolitics and positioning all meet.
Friday and into next week
• In the US, follow-up data on the labour market and activity will test the Fed’s “solid growth, somewhat elevated inflation” description and help shape how many cuts are priced for later in 2026.
• In Europe, German and Eurozone data due at the end of the week will be important for judging whether the euro move toward 1.20 against the dollar is fundamentally justified or mainly a mirror image of US weakness.
• In commodities, markets will watch whether oil can hold above the mid-60s for WTI and near 70 for Brent or whether a diplomatic cooling in US–Iran tensions takes some of the risk premium out again.
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Currency outlooks
🔻 USD – Fed on hold, dollar still under macro and credibility pressure
The Fed has delivered what markets expected: policy held at 3.50–3.75 percent, recognition that activity is still solid and inflation not yet at target, and no rush to start cutting. Even with a slightly hawkish flavour, that has not stopped the broader dollar slide, because the greenback came into this meeting with heavy long positioning and rising concerns around political noise, trade policy and talk of possible involvement in yen dynamics.
The Dollar Index around 96.0 is up a touch after the Fed but still roughly 2 percent lower over the month and near a four year low, which tells you that investors have been reallocating toward non-US assets and alternative havens such as gold, CHF and JPY. For the days ahead, risks for USD remain tilted to the downside overall: a patient Fed, persistent gold strength and high oil prices are a mix that typically keeps the dollar from regaining strong upward momentum unless risk sentiment deteriorates sharply.
Key reference area: markets are watching the 95.5–96.0 zone on DXY as near support; a convincing break below would signal that the weak-dollar regime still has room to run.
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🔺 EUR – Riding dollar softness, but ECB unease caps the upside
EURUSD has pulled back slightly after touching a new 2026 high around 1.2045 yesterday, and is now trading roughly around 1.20, helped by the softer dollar and better risk sentiment. The euro has benefited from the “Sell America” mood, fading tariff risks and a perception that the ECB will cut more slowly than the Fed once easing finally begins.
That said, ECB officials have started to push back against excessive euro strength, noting that the economy is still only growing modestly and that too rapid a currency rise could tighten financial conditions unnecessarily. For the rest of the week, risks for EUR versus USD remain mildly to the upside, but from stretched levels: a still-soft dollar and firm gold support the euro, yet disappointing German or Eurozone numbers or a stronger-than-expected US data run could trigger a healthy correction.
Key levels: the 1.19 area is now seen as first support, with 1.21–1.22 flagged as the next resistance band that would mark a more extended euro regime if broken.
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🔺 GBP – Holding high ground while markets reassess BoE path
GBPUSD is trading in the 1.37 area, close to a four month peak, after a strong run supported by firmer UK data and the broader dollar slump. Markets still assume the Bank of England will be slower to cut than earlier thought, given sticky wage and services inflation, even though growth is nothing to brag about.
Near term, risks for GBP versus USD lean slightly bullish, as long as the Fed does not turn more hawkish and risk appetite remains constructive. The pound is more vulnerable against the euro, where relative growth and yield differentials are more finely balanced and UK political noise can occasionally re-enter the picture.
Key levels: markets are watching 1.36 as near support and 1.38–1.40 as the resistance zone that would look stretched without another upside surprise in UK data.
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⚖️ CAD – Benefiting from oil and dollar weakness, but move already advanced
USDCAD is trading around 1.35, having broken below recent support near 1.3565 as the dollar softened and oil jumped to four month highs on Iran concerns. Domestic data have been decent and inflation is sitting in the middle of the Bank of Canada’s target band, which leaves the BoC with a little more room to ease than the Fed if needed, but no immediate urgency to act.
For the coming days, CAD risks versus USD look fairly balanced. Continued strength in oil and a still-soft dollar would support further mild CAD outperformance, but after a sizable move lower in USDCAD over the month, the bar for additional follow-through is getting higher and the pair is sensitive to any risk-off wobble tied to Iran or global equities.
Key zones: around 1.35–1.36 as support, with 1.37–1.38 as the resistance band that would likely come back into play if the dollar rebounds or risk sentiment deteriorates.
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🔺 CHF – Quietly strong as investors seek “non-dramatic” havens
The Swiss franc remains one of the strongest major currencies. USDCHF is trading around 0.766, close to multi year lows in the pair, while EURCHF is hovering near 0.918–0.92, toward the stronger end of the franc’s range against the euro.
With Swiss inflation still very low and the SNB policy rate near zero, a firmer franc is an acceptable trade-off for price stability and a buffer against imported inflation, especially in an environment of record gold and elevated political risk elsewhere. For the near term, risks continue to lean toward gradual CHF strength, particularly versus USD and higher beta currencies, although investors are mindful of the possibility that the SNB could lean verbally against an overly rapid move.
Key levels: 0.76–0.78 in USDCHF and 0.91–0.92 in EURCHF are the zones markets see as the current comfort area for a strong yet manageable franc.
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🔺 JPY – Intervention risk keeps yen bid even after Fed
USDJPY is trading just under 153, after sliding from near 160 over recent days as intervention speculation, talk of US “rate checks” and the broader dollar sell-off forced a rethink of the carry trade. The Bank of Japan still has its policy rate at 0.75 percent, far below US levels, so structurally the yen is still a funding currency, but the perceived tolerance for further yen weakness has clearly shifted.
US officials have now ruled out intervening to support the yen and reiterated a “strong dollar” policy, which suggests that Japan is effectively on its own in managing FX, but that has not removed the threat of further local action if USDJPY spikes again. Over the next few sessions, risks for JPY remain tilted toward further strength, especially if yields stay contained and risk sentiment remains decent, though day-to-day moves are likely to be choppy around headlines.
Key zones: the 152–153 band as immediate support for further yen gains, and 155–157 above as the area where intervention chatter would likely become loud again if revisited.
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🔺 AUD – Multi-year highs on RBA expectations and commodity support
AUDUSD has pushed to its highest level in about two years, trading around 0.708–0.709 after a strong seven-session rally and a supportive inflation backdrop that keeps the prospect of further RBA tightening alive. The Australian dollar is also riding the broader weak-USD theme and the rebound in commodities, particularly as oil and metals remain firm.
The challenge is that AUD is now quite extended. Positioning is cleaner than last year, but the pair is near a key resistance zone around 0.71 at a time when risk sentiment could turn quickly if US data or Iran headlines surprise. For the rest of this week, risks for AUD still lean to the upside, yet the probability of sharper pullbacks on negative surprises is higher than it was earlier in the month.
Key reference: the 0.70–0.71 band is the main zone markets are watching, with 0.695 as the first notable support on any post-Fed or post-data shakeout.
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🔺 NZD – Above 0.60 and quietly following AUD’s lead
NZDUSD is holding just above 0.60, with recent trades around 0.607, after extending gains to an expected technical target and benefiting from the same weak-dollar and strong-gold mix that is lifting the rest of the commodity bloc. Recent inflation around 3.1 percent year on year keeps the RBNZ comfortably above target and allows it to stay patient on rate cuts, which provides some rate support despite only moderate growth.
The kiwi remains a classic higher beta currency, so it tends to do well when risk appetite is constructive and the dollar is soft, as today, but can underperform quickly if equities wobble or yields spike. For the week ahead, NZD risks stay gently tilted to further strength versus USD, likely in the slipstream of AUD, as long as the Fed’s hold is not followed by meaningfully weaker global data.
Key levels: 0.60 as nearby support and the 0.61–0.62 region as the next resistance band that would mark a more decisive break from last year’s trading ranges if cleared.
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Cross-asset wrap
• 🪙 Gold:
Gold has surged to fresh record highs above 5,500 dollars an ounce, up several percent this week alone, as uncertainty around US policy, Iran tensions and Fed timing drives demand for hedges. This is not just a simple inflation trade; it reflects concerns about fiscal sustainability, central bank independence and geopolitics, all at once, which is why rallies have been broad based across bullion markets and ETFs.
• 🛢 Oil:
Brent is trading close to 69 dollars and WTI around 64 dollars, their highest levels since late September, after escalating US–Iran tensions, a naval build-up and an unexpected draw in US inventories. At these levels, oil is adding a meaningful headline inflation impulse back into the system and supporting commodity exporters, while also acting as another channel through which geopolitical risk feeds into macro pricing.
• 📈 Stocks:
The S&P 500 has again flirted with the 7,000 level, closing essentially flat yesterday after setting another intraday high, while the Dow ticked slightly higher and the Nasdaq was marginally softer as investors balanced Fed messaging with a heavy earnings slate. Overall, equities are signalling that investors are willing to stay in risk assets, but the combination of record gold, high oil and a soft dollar shows that hedging demand is elevated beneath the surface.
• ₿ Crypto:
Bitcoin is trading in a broad range in the high 80,000s to low 90,000s, lagging gold’s explosive move and behaving more like a high beta macro asset than a pure haven. Price is tracking shifts in dollar liquidity, real yields and tech sentiment, so the same forces that are nudging the dollar lower and equities sideways are steering BTC, just with bigger swings.
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This is general, educational macro and FX commentary. It is not investment advice and not a trading signal.
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