Good morning traders from a frosty, cloud-blanketed IntelliTrade desk; it is sitting around freezing outside, so let your coffee and the screens warm you up because today’s macro picture is anything but cold.
Overall Market Sentiment
Markets are in a cautious but not panicked mood. The US Dollar Index has slipped toward the 97.0 area, a three month low, as traders digest intervention chatter around USDJPY and political pressure on the Fed ahead this week’s meeting.
The real story is in metals and FX havens: gold has jumped above 5,000 dollars, trading around 5,070–5,090, and silver is up sharply as investors hedge against policy uncertainty and currency devaluation risk. Equities are comparatively calm, with the S&P 500 hovering near 6,915 after a choppy week and the VIX in the mid teens.
Geopolitics and policy
Tariff risk has moved from front page to background hum. Earlier threats of new US tariffs tied to the Greenland dispute have been dialed back into talk of frameworks and negotiations, which helped global stocks stabilise, but the episode has left a lingering question mark over the reliability of US trade policy.
The bigger drivers now are institutional and fiscal. In the US, a criminal probe into Fed Chair Powell and legal battles around Governor Cook are keeping Fed independence and the future policy path under scrutiny just as the FOMC meets on 27–28 January. Markets price roughly a 99 percent chance of no move, with the funds range staying at 3.5–3.75 percent, but there is wide debate about how many cuts, if any, come later this year.
In Japan, suspected or at least heavily signalled FX intervention has turned USDJPY from a one way carry trade into a source of volatility. Spot has dropped into the mid 154s after trading above 158 last week, and officials have openly warned against “speculative” moves, which markets interpret as a readiness to act again if needed.
Geopolitically, tensions around Iran and sanctions continue to underpin energy markets. Brent is trading near 66 dollars and WTI around 61 dollars, firm but not disorderly, which feeds into inflation and risk premia without fully derailing the soft landing narrative yet.
Today and week ahead: what actually matters
Today, Monday 26 January
- There are no blockbuster data releases, but US durable goods orders can still jolt short term USD pricing if they surprise significantly from recent negative readings.
- FX is focused on how far authorities let the yen and gold moves run into Wednesday’s Fed decision.
Mid week (Tuesday–Wednesday)
- US consumer confidence on Tuesday will be watched for any sign that political noise and market volatility are denting households.
- FOMC decision and press conference on Wednesday 28 January are the main global event. No change in rates is expected, so the focus is on Powell’s tone and any guidance on how the Fed looks through political pressure and a still strong economy with core inflation around 2.8 percent.
Late week (Thursday–Friday)
- Attention then shifts to German Q4 GDP and January CPI on Friday, which will shape views on whether the euro area is still flirting with stagnation or beginning a slow recovery.
- Producer price data in the US round out the week and feed into the discussion about how quickly inflation can be guided back to target without more hikes or deeper cuts.
Currency outlooks
🔻 USD – Under pressure as gold and yen steal the haven spotlight
The dollar is having a rough start to the week. The DXY is trading near 97.0, having broken below recent support and marking its weakest level since late 2025, as safe haven hedging rotates into gold and, increasingly, into the yen and the Swiss franc instead of the dollar itself.
Yet the macro fundamentals still offer support. US GDP growth around 4.4 percent annualised and core PCE inflation at roughly 2.8 percent give the Fed little urgency to cut further, and futures markets largely price a steady policy rate at 3.5–3.75 percent at this week’s meeting and only very gradual easing later in 2026.
The tension is between solid data and fragile confidence in US institutions. Intervention speculation around USDJPY, political attacks on the Fed and the optics of the gold surge are all eroding some of the dollar’s traditional “ultimate safe haven” status. For the next few days, risks for the dollar remain tilted to the downside, especially if the Fed sounds patient and avoids signalling any pushback against weaker USD, although any surprise hawkish hint or equity wobble could still trigger a sharp short covering bounce.
🔺 EUR – Tariff clouds thin, but ECB still behind the Fed
EURUSD has broken higher through 1.18, with spot trading in the 1.182–1.188 area after clearing a key resistance zone last week. The move reflects broad dollar weakness, the fading threat of fresh US tariffs on Europe and improving survey expectations for German business sentiment.
Euro area growth is still mediocre, but the worst stagnation fears have eased. Markets assume the ECB will be slower and more cautious than the Fed in cutting rates this year, which helps narrow the policy gap even though 10 year Bund yields near 2.9 percent remain well below Treasuries above 4.2 percent.
With tariff risk lower, the near term focus is German data at the end of the week and any hints from ECB speakers on how comfortable they are with inflation at target and a slightly softer euro. For the days ahead, risks for EUR lean mildly to the upside versus USD, though much of the easy move has already been done and volatility around Wednesday’s Fed press conference could deliver quick two way swings.
Reference areas: markets are watching 1.18 as first support and the 1.20 region as the bigger resistance zone that historically separates “subdued” from “stronger” euro regimes.
🔺 GBP – Riding services strength and softer USD to multi month highs
GBPUSD is trading around 1.365–1.37, close to a six month high, after UK services PMI beat expectations and the broader dollar selloff opened the door for sterling to extend its recent rebound.
Markets now see the Bank of England cutting later and more slowly than previously thought, which keeps UK front end yields relatively elevated even as inflation drifts down. That combination supports GBP in the near term, especially when global risk sentiment is broadly constructive.
Over the week ahead, risks for sterling look modestly tilted toward continued strength versus USD, provided incoming data do not suddenly flag a bigger growth problem and the Fed sticks to a cautious “on hold” message. Versus EUR, however, the picture is more mixed, since both regions share similar growth challenges and policy trajectories.
Reference areas: the 1.35 handle is now seen as initial support and 1.38 as the next resistance zone that markets would treat as quite stretched for the current fundamentals.
⚖️ CAD – Stronger domestic data meet high but steady oil
USDCAD trades near 1.368–1.37, close to the low end of its recent range, after stronger than expected Canadian retail sales and a softer dollar pushed the pair down from above 1.38.
Oil is a support rather than a rocket. Brent around 65–66 dollars and WTI near 61 keep Canada’s terms of trade healthy without creating the kind of spike that would force the Bank of Canada into a more hawkish stance. With inflation hovering in the mid 2s and the policy rate around the low 2 percent area, the BoC still has a bit more room to ease than the Fed if needed.
Short term, CAD risks versus USD look fairly balanced. If the Fed underwhelms and equities stay firm, USDCAD can grind lower toward 1.36–1.37. A hawkish surprise from Washington or a risk off wobble would likely send it back toward 1.38–1.39.
Reference areas: roughly 1.36 as near support and the 1.39–1.40 region still acting as the broader resistance band markets monitor.
🔺 CHF – Benefiting from the search for “quiet” havens
USDCHF sits around 0.778, at the lower end of the last six month range, as the franc quietly extends gains on the back of safe haven demand that is less politicised than the flows into gold or the yen.
With Swiss inflation very low and the SNB’s policy rate around zero, a somewhat stronger CHF is acceptable as a buffer against imported price shocks. The franc also benefits from lower perceived fiscal risk compared with larger economies, which matters now that gold is sending a loud signal about concerns over sovereign balance sheets and central bank independence.
Near term, risks continue to lean toward gradual CHF outperformance, particularly against higher beta currencies and, to a lesser extent, against USD if the Fed stays cautious and political headlines remain noisy.
Reference areas: markets see 0.77–0.78 in USDCHF as a strong support band for CHF strength, while 0.80–0.81 would mark a meaningful reversal if reached.
🔺 JPY – Intervention talk and BoJ tone keep the squeeze risk alive
USDJPY has dropped into the 154–155 area after trading near 159 earlier in the month, as suspected or threatened intervention and a more hawkish BoJ inflation stance push investors to trim carry positions.
The basic rate picture still disfavors the yen. The BoJ policy rate at 0.75 percent is far below US levels, and Japanese government yields have risen but remain modest. However, once authorities signal they are willing to act against “excessive” weakness, the asymmetry changes: the upside for USDJPY carries more political risk than the downside.
Into and through the Fed meeting, risks for JPY lean toward further strength on net, especially if Washington does nothing to discourage the current soft dollar environment and if Japanese officials keep jawboning. That said, moves are likely to be choppy rather than in a straight line, given how heavily positioned markets have been in yen-funded trades.
Reference areas: roughly 153–155 is now seen as the first big support zone for USDJPY, with the 157–159 area above still remembered as a region where authorities grew visibly uncomfortable.
🔺 AUD – Inflation and yield story keep Aussie near cycle highs
AUDUSD is trading close to 0.69, its highest level since late 2024, after a strong run supported by upside inflation surprises, solid labour data and an improving China tone.
Markets now assign a meaningful probability to another RBA hike in coming meetings, which narrows the rate gap with the US at a time when the dollar is weak and risk sentiment is reasonably constructive. Commodity prices, especially for metals, remain a tailwind.
Over the rest of this week, risks for AUD look skewed toward continued strength, as long as the Fed does not shock markets with a hawkish turn and there is no sudden deterioration in global growth data.
Reference areas: about 0.675 now acts as first support, with the 0.69–0.70 band flagged as resistance that, if broken, would underscore the change in trend.
🔺 NZD – Supported by hot CPI and a softer dollar
NZDUSD is holding just under 0.596, near the top of its recent range, after Q4 inflation surprised slightly on the high side and markets pushed back expectations for RBNZ cuts.
With CPI around 3.1 percent year on year, still above the top of the 1–3 percent target band, the central bank can justify staying on hold for longer, which provides some rate support for the kiwi even if domestic growth is only moderate. At the same time, NZD remains a high beta currency that typically underperforms in risk off periods and overperforms when global liquidity and sentiment are friendly.
For the week ahead, risks for NZD lean gently bullish versus USD, largely as a continuation of the broader weak dollar theme, though the kiwi may still lag AUD which has a stronger commodity and rates narrative behind it.
Reference areas:0.58 is seen as key support and 0.60 as the big upside level that would need to break to confirm a more durable trend change.
Cross-asset wrap
- 🪙 Gold:
Gold has pushed into truly historic territory, trading around 5,070–5,090 dollars an ounce, up almost 2 percent on the day and more than 15 percent this month. The move reflects a mix of weaker dollar, intervention and policy fears, and hedging against institutional risk rather than a simple inflation story. Unless the Fed pushes back clearly against the current narrative or real yields spike higher, it is hard for the gold risk premium to vanish quickly. - 🛢 Oil:
Brent is trading near 66 dollars and WTI around 61, supported by sanctions and tensions around Iran but capped by comfortable inventories and still decent growth data. Prices at these levels keep some upward pressure under headline inflation without yet forcing central banks to change their core message this week. - 📈 Stocks:
The S&P 500 sits just above 6,910, only a couple of tenths below recent highs, after a volatile week that saw a sharp drop on trade and Fed worries followed by a steady grind higher. Indices in Europe and Asia show a similar pattern. Equity investors seem willing to look through political noise as long as earnings hold up and the Fed stays on pause, but the combination of record gold and intervention talk in FX is a reminder that hedging demand is elevated under the surface. - ₿ Crypto:
Bitcoin is trading around the high 80,000s to low 90,000s, consolidating after ETF outflows and macro jitters earlier in the month. Crypto continues to behave like a high beta macro asset, tracking swings in dollar liquidity, real yields and equity volatility rather than offering a consistent hedge when gold spikes. Into the Fed, funding conditions and ETF flows will likely matter more than coin specific headlines.
This is general, educational macro and FX commentary. It is not investment advice and not a trading signal.
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