Forex News
- USD/JPY consolidates near 158.00 as Japan’s fiscal worries keep the Yen on the defensive.
- Excessive weakness in the Yen leave markets alert to intervention risk.
- The US Dollar steadies after softer geopolitical rhetoric from Donald Trump.
The Japanese Yen (JPY) is little changed against the US Dollar (USD) on Wednesday, as rising political and fiscal concerns in Japan continue to weigh on sentiment. Meanwhile, a modest rebound in the Greenback is limiting the pair’s downside. At the time of writing, USD/JPY is trading around 158.15.
The Yen remains under sustained selling pressure after Prime Minister Sanae Takaichi said she will dissolve the lower house on Friday and call a snap general election for February 8. Her proposal to suspend the 8% food consumption tax for two years has revived fears about Japan’s already heavy public debt, pushing Japanese government bond (JGB) yields sharply higher.
The recent bond market turmoil, along with the Bank of Japan’s (BoJ) gradual pivot toward policy normalization, is fueling fears of a potential yen carry trade unwind. While rising domestic yields would normally support the Japanese currency, this time the move reflects fiscal stress, making investors wary of Japanese assets.
Finance Minister Satsuki Katayama said on Tuesday that Japan’s fiscal position remains stable, urging calm after the sharp sell-off in government bonds and warning investors not to overreact. Meanwhile, Japanese authorities remain vigilant against excessive one-sided moves in the Yen, keeping the risk of intervention firmly on the table.
Attention now turns to the Bank of Japan’s interest rate decision on Friday, where markets widely expect the central bank to keep interest rates unchanged after December’s hike. Investors will watch the BoJ’s statement and outlook closely for any signals on the timing of the next rate increase later this year, especially as bond market volatility and political uncertainty continue to build.
In the United States, President Donald Trump’s disruptive trade policies and growing interference with the Federal Reserve (Fed) are adding to investor unease, keeping markets cautious. However, Trump softened his stance on Greenland, saying during his speech at the World Economic Forum in Davos that he would not use force to acquire the territory, helping the US Dollar stabilize after coming under renewed selling pressure earlier this week.
Looking ahead, traders await the delayed Personal Consumption Expenditures (PCE) inflation data and the annualized third-quarter Gross Domestic Product (GDP) figures due on Thursday.
Here is what you need to know on Thursday, January 22:
United States (US) President Donald Trump was once again the main market mover on Wednesday, saying they are seeking immediate talks with Europe on Greenland. He added Greenland would not be a threat to NATO if the territory were under US control. He also said he wouldn’t use excessive force, only to later say he would bring back battleships and that he wouldn’t defend Greenland under a lease, during a speech at the World Economic Forum in Davos.
President Trump also referred to the US economy. Among other things, he said that inflation has been defeated, that they can now have nuclear energy at good prices and safely, and that he intends to raise living standards. Nevertheless, relief hit markets after Trump said the US does not want to use excessive force to obtain Greenland. Stocks and the US Dollar (USD) recovered while bonds eased.
The US Dollar Index (DXY) is trading near the 98.60 price zone, trying to claw back some ground after slipping to a two-week low on Tuesday amid persistent uncertainty following the Trump speech.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.18% | 0.09% | -0.03% | -0.04% | -0.28% | -0.15% | 0.42% | |
| EUR | -0.18% | -0.09% | -0.20% | -0.21% | -0.45% | -0.32% | 0.24% | |
| GBP | -0.09% | 0.09% | -0.13% | -0.13% | -0.37% | -0.24% | 0.33% | |
| JPY | 0.03% | 0.20% | 0.13% | -0.01% | -0.25% | -0.13% | 0.45% | |
| CAD | 0.04% | 0.21% | 0.13% | 0.01% | -0.24% | -0.12% | 0.46% | |
| AUD | 0.28% | 0.45% | 0.37% | 0.25% | 0.24% | 0.13% | 0.70% | |
| NZD | 0.15% | 0.32% | 0.24% | 0.13% | 0.12% | -0.13% | 0.57% | |
| CHF | -0.42% | -0.24% | -0.33% | -0.45% | -0.46% | -0.70% | -0.57% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
EUR/USD is trading near the 1.1700 level, cutting back a big chunk of its weekly gains while losing all of its intraday gains, now siding towards bearish.
AUD/USD trades at levels not seen since October 2024, with the high posted at 0.6777, as the Australian Dollar (AUD) keeps rising against a pressured US Dollar (USD).
GBP/USD trades flat on the day near the 1.3430 price zone, trimming some of its earlier sessions' gains as the USD regains some traction. The United Kingdom (UK) published December inflation data that came broadly in line with market expectations. The annual reading ticked modestly higher to 3.4% from 3.2% in November and above the 3.3% expected.
USD/JPY has seen little movement throughout the day, trading near 158.10 and staying on the green side on a weekly view.
Gold hit a fresh all-time high of $4,888 before retreating somewhat, and trades in the $4,810 region.
(This story was corrected on January 21 at 19:20 GMT to fix the month of the date, which is January instead of December.)
Coming up next:
- Australian employment data will be released early Thursday.
- US GDP and PCE will be printed alongside Initial Jobless Claims in the American session on Thursday.
- New Zealand Q4 CPI will be released early Friday.
- The BoJ interest rate decision and monetary policy decisions alongside UK Retail Sales, Germany, and the Eurozone HCOB PMIs and UK S&P PMIs will be released on Friday.
(This story was corrected on January 21 at 19:20 GMT to fix the month of the date, which is January instead of December.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
- US stocks rebounded after Trump ruled out military action on Greenland
- Gains faded as tariff risks and EU-US trade tensions remained in focus
- Yields fell and banks rose, but policy uncertainty kept investors cautious
US equities rebounded on Wednesday after President Trump ruled out using military force to acquire Greenland, easing a key source of market anxiety. In comments delivered at the World Economic Forum in Davos, Trump said he would not use excessive force, calming fears that had driven a sharp sell-off in the prior session. Stocks moved higher alongside falling Treasury yields, while the dollar stabilized after earlier weakness.
The Dow Jones Industrial Average rose about 160 points, or 0.33 percent, while the S&P 500 gained 0.25 percent and the Nasdaq Composite advanced just 0.1 percent. Gains were more pronounced earlier in the session, but stocks faded from their highs as investors weighed ongoing tariff risks between the US and Europe. Despite ruling out military action, Trump reiterated that he is seeking immediate negotiations over Greenland, keeping geopolitical uncertainty in focus.
Sector performance reflected selective relief rather than broad risk-on positioning. Bank stocks outperformed after Trump said he would ask Congress to pursue a 10 percent credit card interest rate cap, with shares of major lenders posting modest gains. Bond prices rose and yields fell following Trump’s remarks, reversing part of Tuesday’s sharp move higher. The prior session’s sell-off had marked the worst day for US equities since October and briefly pushed the S&P 500 and Nasdaq into negative territory for 2026.
Policy and Trade Risks Remain in Focus
Despite Wednesday’s rebound, investor caution remained elevated. European lawmakers suspended approval of the EU-US trade deal agreed in July, citing Trump’s proposed tariffs of 10 to 25 percent on European goods tied to Greenland negotiations. European leaders warned that escalating tariffs could trigger retaliatory measures, including restrictions on US companies’ access to the single market.
Adding to the policy backdrop, Supreme Court justices expressed skepticism over whether President Trump has the authority to dismiss Federal Reserve Governor Lisa Cook. Comments from the bench highlighted concerns about preserving Fed independence, a factor closely watched by markets amid elevated political uncertainty. While the immediate tail risk around Greenland eased, investors remain focused on how trade policy, institutional independence, and geopolitical negotiations may shape market volatility in the days ahead.
Dow Jones daily chart
Dow Jones FAQs
The Dow Jones Industrial Average, one of the oldest stock market indices in the world, is compiled of the 30 most traded stocks in the US. The index is price-weighted rather than weighted by capitalization. It is calculated by summing the prices of the constituent stocks and dividing them by a factor, currently 0.152. The index was founded by Charles Dow, who also founded the Wall Street Journal. In later years it has been criticized for not being broadly representative enough because it only tracks 30 conglomerates, unlike broader indices such as the S&P 500.
Many different factors drive the Dow Jones Industrial Average (DJIA). The aggregate performance of the component companies revealed in quarterly company earnings reports is the main one. US and global macroeconomic data also contributes as it impacts on investor sentiment. The level of interest rates, set by the Federal Reserve (Fed), also influences the DJIA as it affects the cost of credit, on which many corporations are heavily reliant. Therefore, inflation can be a major driver as well as other metrics which impact the Fed decisions.
Dow Theory is a method for identifying the primary trend of the stock market developed by Charles Dow. A key step is to compare the direction of the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA) and only follow trends where both are moving in the same direction. Volume is a confirmatory criteria. The theory uses elements of peak and trough analysis. Dow’s theory posits three trend phases: accumulation, when smart money starts buying or selling; public participation, when the wider public joins in; and distribution, when the smart money exits.
There are a number of ways to trade the DJIA. One is to use ETFs which allow investors to trade the DJIA as a single security, rather than having to buy shares in all 30 constituent companies. A leading example is the SPDR Dow Jones Industrial Average ETF (DIA). DJIA futures contracts enable traders to speculate on the future value of the index and Options provide the right, but not the obligation, to buy or sell the index at a predetermined price in the future. Mutual funds enable investors to buy a share of a diversified portfolio of DJIA stocks thus providing exposure to the overall index.
- Euro snaps two-day win streak, slipping 0.2% on Wednesday
- Greenland headlines drive swings in USD, yields, and intraday FX sentiment
- Focus shifts to ECB accounts and US GDP, inflation, and jobless claims
The Euro (EUR) traded softer on Wednesday after two days of strong gains, with price action reflecting shifting US political headlines and their impact on the US Dollar (USD) and bond yields. Early in the session, comments from US President Donald Trump that the US was seeking immediate talks on Greenland briefly supported the Greenback. That move was later reversed after Trump stated that the US would not use excessive force to obtain Greenland, followed by Denmark rejecting any negotiations over a takeover. As these headlines crossed, US bond yields fell alongside the US Dollar, allowing the Euro to stabilize after an initial pullback.
European fundamentals provided a steadier backdrop. Sentiment indicators, particularly from Germany, have helped reinforce the view that eurozone growth risks may be moderating. While the macro outlook remains uneven, improved confidence data has limited downside pressure on the euro, even as geopolitical developments drove intraday volatility. This has helped the single currency consolidate rather than unwind this week’s earlier gains.
Looking ahead to Thursday, focus turns to scheduled macro catalysts that may outweigh headline risk. In the eurozone, ECB monetary policy meeting accounts will be closely watched for guidance on inflation confidence and the future rate path. In the US, GDP revisions, inflation indicators, and weekly jobless claims are expected to shape rate expectations. Any divergence between US macro momentum and ECB policy messaging could meaningfully influence near-term EUR/USD direction.
EUR/USD price forecast
EUR/USD rallied strongly at the start of the week, gaining approximately 1.16 percent across Monday and Tuesday, before giving back around 0.2 percent on Wednesday, according to the current week’s daily candlestick structure. The mid-week pullback appears corrective rather than trend-changing, with the pair consolidating near recent highs rather than retracing the bulk of earlier gains.
From a broader perspective, the pair remains supported above key short-term levels, suggesting underlying resilience despite today’s softer close. Momentum indicators reflect cooling upside pressure rather than a reversal, consistent with a market that is pausing ahead of major data rather than aggressively re-pricing risk. Thursday’s economic releases may determine whether the euro resumes its advance or extends this consolidation phase.
EUR/USD daily chart
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
- Silver retreats over 1% after Trump signals willingness to negotiate Greenland with Denmark.
- RSI exits overbought territory, hinting at fading momentum after a parabolic rally.
- Bulls target $95.86 and $100.00, while $90.00 remains key downside support.
Silver price (XAG/USD) retreats on Wednesday after reaching a daily high of $95.56 after US President Donald Trump eased his tone in his Davos speech, saying that he is ready to negotiate Greenland with Denmark. At the time of writing, XAG/USD trades at $93.57, down over 1% after reaching a record high of $95.89 on Tuesday.
XAG/USD Price Forecast: Technical outlook
Silver’s daily chart suggests the grey metal is upward biased, but the parabolic move seems to have paused as the Relative Strength Index (RSI) exited from overbought territory and shows signs of negative divergence.
Despite this, bears are not out of the woods as they must clear the $90.00 figure before challenging the latest cycle low of $86.45 reached on January 15. In that outcome, Silver could dive towards the 20-day SMA at $80.63.
On the flip side, if XAG/USD is to extend its gains, buyers need to push prices above the record high of $95.89, followed by the $100.00 milestone.
XAG/USD Price Chart – Daily
(This story was corrected on January 21 at 17:11 to say in the first paragraph that the $95.56 price is a daily high, not an all-time high.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
- GBP/USD turns marginally negative as Trump tones down tariff threats, lifting broader market sentiment.
- UK inflation beats forecasts, but softer jobs data keeps Bank of England easing bets intact.
- Traders await US GDP and PCE data for clarity on growth and inflation trends.
GBP/USD turns negative on Wednesday following remarks by US President Donald Trump in Davos, who said that he would not use excessive force to get Greenland. At the time of writing, the pair trades at 1.3433, down 0.03%.
Sterling edges lower as improving risk sentiment offsets hotter UK inflation and pressures the Dollar less
Market sentiment improved following Trump's comments in Davos. Despite insisting on negotiating with Denmark, he refrained from using the tariff word, which he used over the weekend when he imposed 10% duties on eight European countries, including Denmark.
Economic data has taken a back seat to geopolitical issues, which so far de-escalated following Trump’s speech. Data-wise, Pending Home Sales for December in the US plunged 9.3%, below forecasts of a 0.3% contraction and down from November 3.3% growth.
Across the pond, UK inflation increased above estimates of 3.3%, coming at 3.4% YoY in December, sparked by air fares and tobacco prices. Even though inflation became slightly hot, it remained below the Bank of England’s 3.5% projection.
Despite this, money markets continued to price in 47 basis points of BoE easing towards the end of the year, according to Prime Market Terminal data.
A day ago, the Office for National Statistics (ONS) revealed that the job market weakened in November, which could push the BoE to reduce rates to support the economy.
Ahead in the week, the UK economic docket will be absent. The US docket would feature the release of Gross Domestic Product (GDP) Q3 2025, Initial Jobless Claims and the Personal Consumption Expenditures (PCE) Price Index.
Pound Sterling Price This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.01% | -0.60% | 0.27% | -0.75% | -1.39% | -1.79% | -0.87% | |
| EUR | 1.01% | 0.41% | 1.28% | 0.25% | -0.41% | -0.80% | 0.13% | |
| GBP | 0.60% | -0.41% | 0.62% | -0.16% | -0.81% | -1.20% | -0.28% | |
| JPY | -0.27% | -1.28% | -0.62% | -1.00% | -1.64% | -2.02% | -1.12% | |
| CAD | 0.75% | -0.25% | 0.16% | 1.00% | -0.62% | -1.03% | -0.12% | |
| AUD | 1.39% | 0.41% | 0.81% | 1.64% | 0.62% | -0.39% | 0.54% | |
| NZD | 1.79% | 0.80% | 1.20% | 2.02% | 1.03% | 0.39% | 0.93% | |
| CHF | 0.87% | -0.13% | 0.28% | 1.12% | 0.12% | -0.54% | -0.93% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
GBP/USD Price Forecast: Technical outlook
The GBP has failed to extend its uptrend on Wednesday, consolidated within the 200-day SMA and the 20-day SMA at 1.3403 and 1.3455 range, respectively, as the Dollar trims some of its earlier losses. Nevertheless, buyers remain in charge as the Relative Strength Index (RSI) is bullish, but it has turned flat, an indication of sideways price action.
If GBP/USD clears the 20-day SMA at 1.3455, the next key resistance would be the January 20 high at 1.3491, ahead of 1.3500. A breach of the latter will expose the January 6 peak at 1.3567. Conversely, if the pair slides below the 200-day SMA, the next support would be the January 19 swing low of 1.3338.
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
The Pound Sterling (GBP) is weaker against the dollar, underperforming most G10 currencies as markets digest mixed UK inflation data and a modest repricing of Bank of England easing expectations, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.
Pound under pressure despite improved sentiment signals
"The pound is weak, down 0.3% vs. the USD and underperforming all of the G10 currencies with the exception of CHF."
"Domestic risk remains elevated and markets are digesting the mixed CPI release, offering a marginal surprise on headline (3.4% y/y vs. 3.3% exp) and a marginal disappointment on core (3.2% y/y vs. 3.3% exp). The release has delivered a modest softening in BoE rate expectations, repricing some of the easing that had been priced out over the past week or so."
"UK/US spreads remain soft, and—as with EUR—we note a clear divergence between bearish fundamentals (spreads) and bullish sentiment with a notable rise in risk reversals showing a clear moderation in the premium for protection against GBP weakness."
The Euro (EUR) is soft, down a fractional 0.1% vs. the US Dollar (USD) as it underperforms all of the G10 currencies with the exception of GBP and CHF and fades a minor portion of Tuesday’s gains, Scotiabank's Chief FX Strategists Shaun Osborne and Eric Theoret report.
ECB dovish tilt caps Euro upside
"The shift in the options market has been notable and completely divorced from fundamentals as German-US yield spreads have remained soft. Comments from the ECB have leaned somewhat neutral/dovish, largely in response to the latest tensions between the EU and US."
"President Lagarde suggested that policy was in a good position while GC member Nagel spoke of growth concerns beginning to outweigh risks from inflation. The short term rates market is leaning toward marginal cuts and has added a few bpts over the past week or so."
"The EUR looks to be consolidating Tuesday’s impressive surge and recent price action is suggestive of near-term resistance above 1.1750. The RSI is bullish and we remain focused on the late December high around 1.18, as well as the mid-September high around 1.1920. We look to a near-term range bound between 1.1680 support and 1.1780 resistance."
- USD/CHF edges higher as the Dollar finds modest support.
- SNB Chair Schlegel says negative inflation in 2026 would not worry the central bank.
- Broader sentiment stays fragile amid trade tensions and political risks in the US.
The Swiss Franc (CHF) trades on the back foot against the US Dollar (USD) on Wednesday, as the Greenback finds some footing after coming under sustained pressure earlier this week. At the time of writing, USD/CHF is trading around 0.7940, snapping a three-day losing streak.
Apart from the modest uptick in the US Dollar, the move appears largely technical in nature, reflecting short-covering and mild profit-taking after the pair’s recent decline.
That said, broader market sentiment remains fragile amid lingering trade tensions between the United States and the European Union, after President Donald Trump recently threatened tariffs as part of his push to gain control of Greenland.
Some of those tensions eased after Trump said during his speech at the World Economic Forum in Davos that he would not use force to acquire Greenland, prompting a modest improvement in risk appetite and easing safe-haven flows into the Franc.
However, upside in USD/CHF may remain limited, as Trump’s protectionist trade agenda and interference with Federal Reserve (Fed) independence continue to fuel “Sell America” narratives, weighing on confidence in US assets.
Trump again criticised Fed Chair Jerome Powell, saying he is “very late” on interest rates and accusing him of raising rates and “stopping us from success.” Trump also said he expects to announce a new Fed chair in the not-too-distant future.
All eyes now turn to Washington, where the US Supreme Court is due to hear arguments at 15:00 GMT in a case linked to President Trump’s efforts to remove Fed Governor Lisa Cook.
Meanwhile, Swiss National Bank (SNB) Chairman Martin Schlegel said at the World Economic Forum in Davos that Swiss inflation could turn negative in some months in 2026, but stressed this would not be a problem for the central bank, which remains focused on medium-term price stability.
Looking ahead, traders await the delayed Personal Consumption Expenditures (PCE) inflation data and the annualized third-quarter Gross Domestic Product (GDP) figures due on Thursday.
Swiss Franc FAQs
The Swiss Franc (CHF) is Switzerland’s official currency. It is among the top ten most traded currencies globally, reaching volumes that well exceed the size of the Swiss economy. Its value is determined by the broad market sentiment, the country’s economic health or action taken by the Swiss National Bank (SNB), among other factors. Between 2011 and 2015, the Swiss Franc was pegged to the Euro (EUR). The peg was abruptly removed, resulting in a more than 20% increase in the Franc’s value, causing a turmoil in markets. Even though the peg isn’t in force anymore, CHF fortunes tend to be highly correlated with the Euro ones due to the high dependency of the Swiss economy on the neighboring Eurozone.
The Swiss Franc (CHF) is considered a safe-haven asset, or a currency that investors tend to buy in times of market stress. This is due to the perceived status of Switzerland in the world: a stable economy, a strong export sector, big central bank reserves or a longstanding political stance towards neutrality in global conflicts make the country’s currency a good choice for investors fleeing from risks. Turbulent times are likely to strengthen CHF value against other currencies that are seen as more risky to invest in.
The Swiss National Bank (SNB) meets four times a year – once every quarter, less than other major central banks – to decide on monetary policy. The bank aims for an annual inflation rate of less than 2%. When inflation is above target or forecasted to be above target in the foreseeable future, the bank will attempt to tame price growth by raising its policy rate. Higher interest rates are generally positive for the Swiss Franc (CHF) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken CHF.
Macroeconomic data releases in Switzerland are key to assessing the state of the economy and can impact the Swiss Franc’s (CHF) valuation. The Swiss economy is broadly stable, but any sudden change in economic growth, inflation, current account or the central bank’s currency reserves have the potential to trigger moves in CHF. Generally, high economic growth, low unemployment and high confidence are good for CHF. Conversely, if economic data points to weakening momentum, CHF is likely to depreciate.
As a small and open economy, Switzerland is heavily dependent on the health of the neighboring Eurozone economies. The broader European Union is Switzerland’s main economic partner and a key political ally, so macroeconomic and monetary policy stability in the Eurozone is essential for Switzerland and, thus, for the Swiss Franc (CHF). With such dependency, some models suggest that the correlation between the fortunes of the Euro (EUR) and the CHF is more than 90%, or close to perfect.
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