Forex News

• S&P 500 briefly topped 7,000, then stalled as gains failed to broaden
• Fed held rates at 3.5–3.75%, yields rose as policy seen not restrictive
• AI and chip stocks led on strong earnings and demand, pushing semis higher
• Big Tech earnings ahead as markets await signals for broader growth support

US equities tested fresh highs but struggled to build momentum as investors digested the Federal Reserve’s latest policy decision and a market rally that remained narrowly focused. The S&P 500 briefly crossed the 7,000 level for the first time before retreating to trade near flat, while the Dow was little changed and the Nasdaq edged modestly higher.

The Fed held its benchmark rate steady in the 3.5-3.75% range, as expected, and emphasized that economic activity continues to expand at a solid pace with signs of stabilization in the labor market, even as inflation remains somewhat elevated. Treasury yields moved higher following the statement and Chair Jerome Powell’s comments, which suggested policymakers do not yet view policy as meaningfully restrictive. Futures markets continue to price in the possibility of two quarter-point rate cuts by the end of 2026.

Fed stays on-balance, investors shift focus to earnings

Market strength earlier in the session was driven largely by semiconductors and AI-related names after strong earnings and optimistic outlooks reinforced the durability of AI-driven demand. Seagate surged after beating expectations and highlighting robust AI data storage needs, while ASML reported record orders and upbeat longer-term guidance tied to the AI buildout. Reports that Chinese technology giants received approval to purchase Nvidia’s advanced AI chips further supported the sector, lifting Nvidia and peers such as Micron and Taiwan Semiconductor, and pushing the VanEck Semiconductor ETF to a new 52-week high. Despite these gains, the rally failed to broaden meaningfully beyond chips, leaving the broader index vulnerable as attention shifted to the Fed.

Earnings remain a key near term focus, with results from Microsoft, Meta Platforms and Tesla due after the close, followed by Apple on Thursday. Outside of big tech, Starbucks posted its first traffic growth in two years and beat revenue expectations, though earnings fell short. Market internals showed a mixed picture, with several industrial, energy and semiconductor stocks reaching new highs, including Johnson & Johnson, Northrop Grumman, Lam Research and Micron, while a smaller group of financial services, healthcare and payroll processing names slid to new lows. Overall, the session underscored a market still leaning heavily on AI driven leadership while investors await clearer signals on monetary policy and earnings growth to support a broader advance.

Dow Jones daily chart

Here is what you need to know on Thursday, January 29:

The US Dollar Index (DXY) rebounded above 96.60 on Wednesday after White House Treasury Secretary Scott Bessent said the US has a strong-dollar policy, implying the right fundamentals are in place. Bessent also denied that the US was intervening in currency markets to support the Japanese Yen.

The DXY fell to four-year lows near 95.50 late on Tuesday, after United States (US) President Donald Trump said he was comfortable with a weak US Dollar when asked whether it had declined too much. Trump further stated that he will announce his pick for the new Fed Chair soon and that interest rates will be lower under new leadership at the US central bank.

The US Federal Reserve (Fed) announced its interest rate decision to leave the rate unchanged at 3.50%-3.75%, as expected.

Key takeaways from the Federal Open Market Committee (FOMC) statement:

Uncertainty about the economic outlook remains elevated.

The unemployment rate has shown some signs of stabilization, but job gains have remained low.

The vote in favor of the policy was 10-2, with governors Miran and Waller dissenting in favor of a 25-basis-point cut.

Finally, Fed Chair Jerome Powell held a press conference to provide more cues on future monetary policy, but offered little on that and more about politics, questions that Powell refused to answer.

Regarding the economy, Powell noted that inflation remains somewhat elevated relative to the goal and that the shutdown likely weighed on Q4 growth, which he believes will be reversed. Additionally, he stated that the labour market may be stabilising as hiring, openings, and wage growth showed little change. By the end of the day, the DXY recovered and held around 96.50.

AUD/USD is trading near the 0.7000 price region, crossing levels it hasn’t touched since February 2023. The Australian Dollar was bolstered by stronger-than-expected Australian inflation data, which boosted expectations of a Reserve Bank of Australia (RBA) interest rate hike. Australia’s Consumer Price Index (CPI) inflation rose to 3.8% YoY in December from a 3.4% increase reported in November. This figure came in hotter than the 3.6% expected. Meanwhile, the monthly CPI climbed 1% in December, compared to the previous reading of 0%, above the market consensus of 0.7%.

USD/JPY is trading near the 153.80 price region, trimming a big part of its weekly losses as the USD recovers some ground. Meanwhile, Japan’s fiscal health stays in focus as Prime Minister Sanae Takaichi pushes aggressive spending and tax-cut plans.

EUR/USD is trading near the 1.1930 price region, trimming half of its weekly gains, holding on to modest gains after the Fed’s interest rate decision.

GBP/USD is trading near 1.3770 after the Fed’s interest rate decision and Trump-related turmoil

USD/CAD is trading near the 1.3600 price region after the Bank of Canada (BoC) also announced its interest rate decision, holding rates at 2.25%, as expected.

Gold is trading near an all-time high above $5,330 amid geopolitical uncertainty and a weak USD.

What’s next in the docket:

Thursday:

• US Initial Jobless Claims.
• Tokyo January CPI.
• Japanese December employment data.

Friday:

• Flash Germany Gross Domestic Product (GDP).
• Flash Eurozone GDP.
• Flash German CPI.
• US Producer Price Index (PPI).

At the post-meeting press conference, Fed Chair Jerome Powell explained why policymakers decided to keep interest rates unchanged following the January meeting and took questions from reporters on the decision.

Powell's press conference highlights

The US economy is on firm footing.

Current stance of the policy is appropriate.

Current policy promotes progress toward two goals.

Activity in the housing sector is weak.

Government shutdown effects should be reversed this quarter.

Labour market may be stabilising.

Slowing job growth reflects a decline in the labour force, though labour demand has clearly softened as well.

Inflation remains somewhat elevated relative to the goal.

Total core PCE inflation in December probably rose 3%.

Disinflation appears to be continuing in the services sector.

Disinflation appears to be continuing in the services sector.

Policy rate within range of plausible estimates of neutral.

Well positioned to determine the extent and timing of additional rate adjustments.

Policy not on preset course.

Decisions are made on a meeting-by-meeting basis.

At the higher end of the range of neutral.

I think it's hard to look at incoming data and say policy is significantly restrictive and may be loosely neutral, or somewhat restrictive.

Hard to say policy is significantly restrictive from data.

Committee was pretty broadly for holding today.

Risks to both sides of the mandate have diminished a bit.

Most of the overrun in inflation is from tariffs, not demand.

Core PCE ex-effects of tariffs on goods is running just a bit above 2%, and that's a healthy development in inflation.

Expect to see the tariff effect on goods peaking and then coming down this year.

Upside risks to inflation and downside risks to employment have diminished.

Hard to say if mandate risks are fully in balance.

Short-term inflation expectations have fully retraced; that’s very comforting.

Longer-term inflation expectations reflect confidence in a return to 2% inflation.

We will always act to address when the economy moves away from goals.

A weakening labour market calls for cutting; a strong labour market for not.

No one’s base case is a rate hike for the next move.

Job availability read from Conference Board is an indication of softening.

Labour market has softened.

If labour supply and demand are even but no jobs are being created, it’s hard to say if that’s really full employment.

Economy has once again surprised us with its strength.

Consumer spending is uneven across income levels, but overall it’s good.

Most of the inflation overshoot was in goods, related to tariffs, and was one-time.

There is an expectation that the middle quarters of the year will see tariff inflation topping out.

Estimate goods inflation peaking in the middle of the year.

So far, the economy has pulled through well despite big changes in trade policy.

This section below was published at 19:00 GMT to cover the Federal Reserve's policy decisions and the immediate market reaction.

At its January meeting, the Federal Reserve (Fed) kept its Fed Funds Target Range (FFTR) unchanged at 3.50%–3.75%, right in line with what markets were expecting.

Highlights from the FOMC statement

Inflation remains somewhat elevated.

Federal Reserve leaves key overnight interest rate unchanged in 3.50–3.75% range, no longer judges downside risks to employment as rising.

Unemployment rate has shown some signs of stabilisation, job gains have remained low.

Uncertainty about the economic outlook remains elevated.

Upgrades assessment of economic activity, says it has been expanding at a “solid” pace.

Attentive to risks to both sides of dual mandate.

Reaffirms statement on longer-run goals, monetary policy strategy.

Vote in favour of policy was 10–2, with Governors Miran and Waller dissenting in favour of a 25-basis-point cut.

Market reaction to Fed policy announcements

The US Dollar keeps pushing higher on Wednesday, extending its U-turn from Tuesday’s multi-year lows near 95.50 when tracked by the US Dollar Index (DXY). The move higher in the buck appears propped up by a marked bounce in US Treasury yields across the curve as investors assess the Fed’s interest rate decision.

This section below was published at 10:00 GMT as a preview of the Federal Reserve's policy announcements.

• The US Federal Reserve is expected to leave the policy rate unchanged after the first meeting of 2026. 
• Fed Chair Powell’s comments on the policy outlook will be watched closely by investors.
• The US Dollar struggles to stay resilient against its rivals following a bullish start to the year.

The United States (US) Federal Reserve (Fed) announces its interest rate decision on Wednesday. Markets widely expect the US central bank to keep the policy rate unchanged in the range of 3.5%-3.75%. As this decision is nearly fully priced in, Fed Chair Jerome Powell’s comments in the post-meeting press conference could impact the US Dollar’s (USD) performance. 

The CME FedWatch Tool shows that investors see about a 98% probability of a policy hold in January, and price in a 15% chance of a 25-basis-point (bps) rate cut in March.

According to a recently conducted Reuters poll, all 100 economists surveyed expect the Fed to hold the federal funds rate unchanged in January. Moreover, 58% of respondents forecast no rate changes during the first quarter, compared with December’s poll, when at least one cut by March was anticipated.

TD Securities analysts agree that the Fed will keep rates on hold at the 3.50%-3.75% range, arguing that risk-management cuts are now over and the policy is closer to neutral.

"While Powell is likely to sound noncommittal around near term rate cuts, we expect him to remind market participants that the median Fed official still looks for easing this year," they add. "Overall, we expect a relatively neutral reaction from the FOMC meeting. While we continue to look for rates to move lower later this year amid a combination of less prohibitive supply dynamics, strong demand, and further Fed rate cuts, the risk in the near-term is a Fed on hold for longer."

When will the Fed announce its interest rate decision and how could it affect EUR/USD?

The Fed is scheduled to announce its interest rate decision and publish the monetary policy statement at 19:00 GMT. This will be followed by Fed Chair Jerome Powell's press conference starting at 19:30 GMT. 

The rate decision itself is unlikely to trigger a significant market reaction, but Powell’s tone could influence the USD valuation and drive EUR/USD price action.

In case Powell adopts an optimistic tone on the inflation outlook and emphasizes the need to support the labor market amid worsening conditions, investors could see this as a dovish sign. In this scenario, the USD could come under renewed selling pressure and allow EUR/USD to gather bullish momentum. Conversely, the pair could turn south if Powell notes that the central bank is not as concerned about the labor market as it was at the end of 2025 and that there are still upside risks to inflation. Investors could remain convinced of another monetary policy hold in March as a result, and the market positioning suggests that there is some room for USD gains.

Market participants will also pay close attention to headlines over the nomination of the next Fed chair. US President Donald Trump could take the opportunity to criticize Powell and announce his nomination just before or after the Fed event, ramping up the market volatility and clouding the market reaction.

US Treasury Secretary Scott Bessent said recently that Trump could reach a decision by the end of the month. The US president also told CNBC that he would prefer to keep White House economic adviser Kevin Hassett in his current position.

BlackRock's chief bond investment manager, Rick Rieder, Fed Governor Christopher Waller and former Fed Governor Kevin ‍Warsh are the last three candidates in the race. Powell’s term as head of the Fed ends in May, but his term on the central bank runs through 2028. During the press conference, he is likely to be asked whether he intends to finish out his term. If Powell hints that his retirement will be sooner rather than later, and Trump names either Waller or Warsh as the next Fed chair, markets could lean toward a more dovish policy outlook,  hurting the USD and boosting EUR/USD.

On the other hand, Rieder is widely seen as someone who would be less influenced by politics and who would assess economic conditions to make the right policy decisions. Although that doesn’t necessarily mean he wouldn’t embrace a dovish stance, he is a market person after all, and his nomination could at least ease market concerns over the Fed losing its independence. 

In a post published on X in response to the inflation data, “we think the Fed is likely to become increasingly concerned about genuine labor market weakness and will respond with modest reductions in the policy interest rate,” said Rieder and added: 

“However, given the noisiness of recent data, including this report, the Fed will probably choose to wait a meeting, or so, to begin cutting rates again. 2026 is likely to bring much greater dispersion across monetary policy paths, economic growth trends, and credit markets.”

Eren Sengezer, European Session Lead Analyst at FXStreet, provides a short-term technical outlook for EUR/USD:

“The Relative Strength Index (RSI) indicator keeps near overbought conditions on the daily chart, and EUR/USD holds firm above its 20-day and 100-day Simple Moving Averages (SMA), highlighting a bullish tilt in the short-term technical outlook. On the upside, 1.1918 (September high) aligns as the immediate resistance level ahead of 1.2000 (round level). On the flip side, 1.1821 (Friday’s close) could be seen as the first support level before 1.1760 (static level), followed by 1.1710 (20-day SMA). A daily close below the latter could open the door for a steeper slide toward the 1.1600 mark.”

The Australian Dollar (AUD) trades slightly lower against the US Dollar (USD) on Wednesday, with AUD/USD stuck in a narrow intraday range as traders show a muted reaction to the Federal Reserve’s (Fed) monetary policy announcement. At the time of writing, the pair is trading around 0.6995, holding near its highest levels in nearly three years.

The Fed kept its benchmark interest rate unchanged at 3.50%-3.75% range, in line with market expectations. The decision reflects a cautious approach as policymakers assess incoming economic data and evolving risks, following three consecutive 25-basis-point rate cuts last year

The decision passed with a 10-2 vote, with Governors Stephen Miran and Christopher Waller dissenting in favor of a 25-basis-point rate cut.

In its statement, the Fed said the economy continues to expand at a solid pace, but acknowledged that job gains have remained low and that the unemployment rate is showing signs of stabilization. Officials added that inflation remains somewhat elevated and warned that uncertainty around the outlook is still high.

The Committee said it will keep a close watch on incoming data and is prepared to adjust policy if risks emerge that could hinder progress toward its goals.

The Japanese Yen (JPY) remains under pressure against the US Dollar (USD) on Wednesday, with USD/JPY consolidating gains after the Federal Reserve’s (Fed) monetary policy announcement. At the time of writing, the pair is trading around 153.92, up nearly 1% on the day.

The Fed left its benchmark interest rate unchanged at the 3.50%-3.75% range, in line with market expectations. The decision was passed by a 10-2 vote, with Fed Governors Stephen Miran and Christopher Waller dissenting in favor of a 25-basis-point rate cut.

In its accompanying statement, the Fed said that economic activity has been expanding at a solid pace, while noting that job gains have remained low and the unemployment rate is showing signs of stabilization.

Policymakers acknowledged that inflation remains somewhat elevated and stressed that uncertainty around the economic outlook remains high, reiterating that the Committee is attentive to risks on both sides of its dual mandate.

The central bank reaffirmed that future policy decisions will remain data-dependent and repeated its commitment to supporting maximum employment and returning inflation to its 2% objective.

With the decision fully priced in, the immediate market reaction has been somewhat muted. The US Dollar remains supported, with the US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trading around 96.70, rebounding after slipping to four-year lows.

Traders now look ahead to Fed Chair Jerome Powell’s post-meeting press conference for clues on the future path of monetary policy, particularly on the timing and pace of any potential rate cuts.

• GBP/USD remains capped below 1.3800 after the Fed holds rates in a 10–2 decision split.
• Two dissenters initially fuel a dovish reaction, but labor market stability supports the Dollar.
• Traders await Powell’s press conference for clarity on the Fed’s 2026 policy path.

GBP/USD stays below the 1.3800 figure after the Federal Reserve (Fed) decided to keep interest rates on hold on Wednesday, on a 10-2 vote split as two Fed Governors opted for a rate cut of 25 basis points. The pair trades volatile within the 1.3740-1.3790 range, ahead of the Fed Chair Jerome Powell press conference.

Sterling trades sideways as the Fed signals caution, offsetting dissenters who favored an immediate rate cut

The Federal Reserve held interest rates steady at 3.50%–3.75%, following a vote split at its latest policy meeting. Stephen Miran and Christopher Waller—one of President Trump’s nominees to succeed Jerome Powell—dissented in favor of a 25-basis-point rate cut.

Fed officials reiterated that inflation remains “somewhat elevated”, while noting that the unemployment rate has shown signs of stabilization. The Fed added that the economic outlook remains uncertain and emphasized its commitment to remain attentive to both sides of the dual mandate when determining the future path of policy.

Up next is the Fed Chair Jerome Powell's press conference.

GBP/USD reaction to the Fed’s decision

GBP/USD seesawed within 1.3752-1.3787 but remains stable below 1.3800. Although there were two dissenters in the decision, which was perceived as dovish, the acknowledgment of a “stable” jobs market decreased the chances for further easing by the Federal Reserve.

• Gold retreats after the Fed keeps rates unchanged and highlights a stabilizing US labor market.
• Initial dovish reaction fades despite two dissenters favoring a cut, boosting Dollar demand.
• Traders await Powell’s press conference for guidance on the path of rates in 2026.

Gold (XAU/USD) price retreats slightly on Wednesday following the Federal Reserve decision to keep rates steady, while also signaling that the labor market stabilized, which warrants maintaining the Fed funds rate higher for longer. XAU/USD trades volatily between $5,250 and $5,300 ahead of the Fed Chair Jerome Powell's press conference.

Bullion turns volatile after the Fed holds rates and flags labor market stabilization, lifting the Dollar

The Federal Reserve’s monetary policy statement revealed that policymakers decided to keep rates unchanged at the 3.50%-3.75% range in a 10-2 vote split, as Fed Governors Stephen Miran and Christopher Waller, one of US President Donald Trump’s nominees to succeed Jerome Powell, both voted for a 25-basis-point rate cut.

In the statement, policymakers reiterated that inflation remains somewhat elevated and that the unemployment rate “has shown signs of stabilization.” They stated that the economic outlook remains uncertain and that they will remain attentive to both sides of the dual mandate.

Gold’s reaction to the Fed’s decision

Gold price edges towards the $5,290 region, before retreating below $5,280. XAU/USD's first reaction to the upside suggested that initially, traders saw the decision as dovish, due to the two dissenters. But the statement revealing that the labor market is showing signs of stabilization prompted traders to buy the Dollar.

• US Dollar maintains heading after Fed holds rates, Powell presser up next.
• Fed political independence remains a key focus point heading into Powell press conference.

The US Dollar Index (DXY) jostled but overall remained in Wednesday’s trading neighborhood after the Federal Reserve (Fed) delivered its standard interest rate decision, holding interest rates steady in the 3.5-3.75% range and noting its data-dependent approach. 

Market action will continue to remain limited but jittery as investors await the latest showing from Fed Chair Jerome Powell. Fed Chair Powell will be in the hotseat as investors keep an eye out for any shifts in his policy rhetoric following the Fed head’s press conference. Markets will also be anticipating questions surrounding the ongoing Department of Justice (DOJ) criminal investigation into Fed Chair Powell, brought forth by the Trump administration largely as retribution for failing to deliver interest rate cuts at a pace that satisfies the current president.

The DOJ has subpoenaed Fed Chair Powell regarding the Fed’s expenditures on a long-planned government office overhaul. The overwhelming majority of expenditures associated with the Fed office refurbishment were assigned and approved during Trump’s first term.

DXY five-minute chart

• Fed holds rates steady at 3.75%, as markets expected.
• Investors are holding out for the latest press conference from Fed Chair Powell.

EUR/USD fluctuated but remained relatively stable within Wednesday’s pre-existing price action range after the Federal Reserve (Fed) announced it would keep interest rates in the 3.5-3.75% range, emphasizing its data-dependent approach.

Market activity is expected to remain cautious, with investors eagerly anticipating remarks from Fed Chair Jerome Powell. He will face scrutiny as market participants look for any changes in his policy statements following the Fed's press conference. Additionally, there is growing interest in questions related to the ongoing criminal investigation by the Department of Justice (DOJ) into Fed Chair Powell. This investigation was initiated by the Trump administration, reportedly as a form of retribution for not delivering interest rate cuts at a pace that satisfies the current president.

The DOJ has issued a subpoena to Fed Chair Powell regarding the central bank's spending on a planned overhaul of a government office. Most of the expenditures related to this refurbishment were initially approved during Trump's first term.

EUR/USD five-minute chart