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• The US Dollar trades flat against the Swiss Franc as USD strength is balanced by CHF safe-haven demand.
• Inflation data reinforce the case for a near-term pause in monetary policy by the US central bank.
• Political and geopolitical risks, however, continue to underpin the Swiss Franc’s safe-haven appeal.

USD/CHF trades around 0.8010 on Wednesday, virtually unchanged on the day at the time of writing. The pair draws mild support from the US Dollar (USD) after US inflation data were released broadly in line with market expectations.

Figures published by the Bureau of Labor Statistics showed that the Consumer Price Index (CPI) rose by 2.7% YoY in December, matching both the previous reading and market forecasts. Core inflation, which excludes the more volatile food and energy components, came in at 2.6% YoY, missing expectations for an uptick to 2.7%. On a monthly basis, headline inflation increased by 0.3%, while the core measure rose by 0.2%.

These figures strengthen the view that the Federal Reserve (Fed) is likely to keep interest rates unchanged at its upcoming meeting. Market pricing continues to suggest that the first rate cut is unlikely before mid-year, providing fundamental support to the US Dollar against the Swiss Franc (CHF). In this context, investors are now turning their attention to upcoming US releases, including Retail Sales and the Producer Price Index (PPI), to further assess the outlook for the US economy.

At the same time, the political backdrop in the United States (US) and ongoing geopolitical tensions remain a potential source of support for safe-haven currencies, such as the CHF. Concerns surrounding the independence of the Federal Reserve, along with rising tensions in the Middle East, continue to underpin demand for the Swiss Franc. This environment is limiting the upside in USD/CHF, despite the recent resilience of the US Dollar, as investors continue to balance yield considerations against the need for safety.

• EUR/USD edges up above 1.1650, but remains close to one-month lows, near 1.1620.
• The US Dollar gives away gains ahead of US PPI, Retail Sales data
• The pair remains in a bearish channel with one-month lows at 1.1618 in sight.

EUR/USD remains hovering within a tight range around the 1.1650 level, showing a flat performance on the daily chart. The softer-than-expected US core Consumer Price Index (CPI) data released on Tuesday failed to dent the US Dollar's (USD) recovery, and investors await US retail consumption and factory inflation figures for further insight into the US economic momentum

Figures from the US Bureau of Labour Statistics (BLS) revealed that price pressures remained fairly steady in December, against market hopes of an uptick in the core inflation. The data, however, did not change the Federal Reserve's (Fed) monetary policy expectations. Futures market is practically fully pricing a steady interest rate decision in the late-January meeting, and the chances of a rate cut in March have dropped to 26% from nearly 40% one week ago, according to the CME FedWatch tool.

Market volatility remains subdued in Europe in the absence of key macroeconomic releases. In the US, Retail Sales data and an array of Fed speakers will be in focus, although traders will keep an eye on the US Supreme Court, which might rule on US President Donald Trump’s tariffs later on Wednesday.

Daily Digest Market Movers: US CPI data failed to hurt the US Dollar

• The US Dollar maintains its moderate constructive tone intact, despite the softer-than-expected core CPI figure seen on Tuesday. Headline US inflation grew 0.3% pace in December and 2.7% year-on-year, in line with market expectations, while the core CPI slowed to 0.2% from 0.3% the previous month and grew at a steady 2.6% annual pace, against market expectations of 0.3% and 2.7% increases, respectively.
• The US ADP employment 4-week average report, on the other hand, revealed an 11.75K increase in the first week of 2026, following the previous 11K. This reading marks the fifth consecutive week with a net increase in jobs, which has contributed to easing concerns about the labour market and strengthens the case for steady Fed interest rates in the coming months.
• Also on Tuesday, the heads of the European Central Bank (ECB), the Bank of England (BoE), the Bank of Canada (BoC), and nine other central banks released a statement showing their solidarity with Federal Reserve Chairman Powell in reaction to the unprecedented attacks from US President Donald Trump. The central bankers defended the independence of their institutions as a cornerstone for price, financial, and economic stability in the interest of the citizens that they serve.
• Later on Wednesday, November's US Retail Sales are expected to show that consumption bounced up 0.4% after a flat performance in October, boosted by higher car sales. Excluding autos, sales of all other items are seen growing at a 0.4% pace, unchanged from last month.
• A slew of Fed speakers will also take the stage during the American session. The focus will be on Governor Stephen Miran, Trump's latest pick for the Board, and a vocal dove. Philadelphia Fed President Anna Paulson, Atlanta Fed President Raphael Bostic, Minneapolis Fed President Neel Kashkari, and New York Fed President John Williams will also meet the press on Wednesday.

Technical Analysis: EUR/USD bears eye the 1.1615 support area

The EUR/USD pair treads water below the 1.1650 line, after pulling back from the 1.1700 area earlier this week. Technical indicators show a neutral-to-bearish tone. The Moving Average Convergence Divergence (MACD) is practically flat on the 4-hour chart, showing a lack of momentum, while the Relative Strength Index (RSI) has dropped below 43, pointing to fading demand.

Price action remains trapped within a descending channel from late December highs. The intraday low is near 1.1635, and the one-month low of 1.1618 remains in the bears' sight. Further down, the confluence of the channel bottom and December 2 lows, right below 1.1600, is a key area.

Immediate resistance stands at the channel top, now around 1.1685, ahead of Monday's high, near 1.1700. Further up, the target is the January 6 high, in the area of 1.1740.

(The technical analysis of this story was written with the help of an AI tool.)

• Gold hits a fresh record high above $4,630 as Trump mulls an intervention in Iran.
• Moderate US CPI inflation keeps hopes of two rate cuts in 2026 intact.
• Technical indicators are giving signs of an overstretched Gold rally.

Gold (XAU/USD) extends gains on Wednesday, reaching a fresh all-time high above $4,630 ahead of the US session opening. Precious metals remain firm, underpinned by safe-haven demand, amid geopolitical tensions and moderate US inflation figures.

US President Donald Trump urged Iranians to keep protesting on Tuesday, promising them that “help is on its way, as the victims of Tehran’s repression likely extend into the thousands. Meanwhile, US inflation figures have curbed expectations of an immediate Federal Reserve rate cut, though they keep hopes of two rate cuts in 2026 alive.

Technical analysis: Gold’s rally starts to look overstretched

XAU/USD trades at record highs at $4,634 at the time of writing. The bullish bias remains in play with moving averages trending higher. Technical indicators, however, are starting to give signs of an overstretched rally.

The 4-Hour Relative Strength Index (RSI) stands just below overbought levels, revealing a bearish divergence. The Moving Average Convergence Divergence (MACD) turns lower with the histogram contracting, which suggests that the bullish momentum is stalling.

Above $4,630, the next targets would be at the 127.2% and the 161.8% Fibonacci extensions of the January 8-12 rally, at $4,689 and $4,763, respectively. Support is seen at Tuesday's low, near $4,570, and the January 2 low, right below $4,500.

(The technical analysis of this story was written with the help of an AI tool.)

• Silver posts a strong rally and hits a new all-time high above the $90 mark.
• Geopolitical tensions in the Middle East strengthen demand for safe-haven assets.
• Concerns over the independence of US monetary policy weigh on the US Dollar and support precious metals.

Silver (XAG/USD) extends its bullish momentum on Wednesday and trades around $90.50 at the time of writing, up 4.30% on the day. The white metal records a fourth consecutive day of gains and reaches a new all-time high, supported by a macroeconomic and geopolitical backdrop that remains highly favorable for safe-haven assets.

Demand for Silver continues to be underpinned by rising geopolitical tensions, particularly in Iran, where widespread public protests linked to high inflation, the sharp depreciation of the Iranian Rial (IRR) and allegations of government corruption are challenging the authorities. The violent crackdown on demonstrators, which has reportedly resulted in hundreds of deaths according to human rights groups, has intensified risk aversion across global markets. Statements from US President Donald Trump, warning that military action could be considered if the repression continues, further add to the sense of uncertainty.

Against this backdrop, Silver fully benefits from its safe-haven status. Investors are seeking protection not only from geopolitical risks but also from growing institutional concerns in the United States (US). Worries surrounding the independence of the Federal Reserve (Fed) have intensified following the launch of criminal charges against its Chair, Jerome Powell, related to the management of funds allocated to the renovation of the Fed’s headquarters in Washington. Jerome Powell has denounced the move as politically motivated, arguing that it represents a pretext to influence monetary policy decisions.

These developments initially weighed heavily on the US Dollar (USD), as markets feared that an attack on the autonomy of the US central bank could undermine the country’s financial credibility and, potentially, its sovereign credit rating. Although the Greenback has shown signs of stabilization after strong public support for Jerome Powell from several major global central banks, including the European Central Bank (ECB) and the Bank of England (BoE), the broader backdrop remains supportive for precious metals.

In addition, expectations of interest rate cuts by the Federal Reserve continue to play a key role. In an environment where real yields are expected to decline and the US Dollar remains structurally under pressure, Silver retains a strong appeal for investors, especially as persistent tightness in the physical market and robust demand continue to underpin its outlook.

• The Pound Sterling outperforms its major peers ahead of the UK monthly GDP data on Thursday.
• BoE’s Taylor expects monetary policy to normalise at neutral levels soon.
• The US Dollar gains ground as US inflation remained steady in December.

The Pound Sterling (GBP) gains against its major peers, except antipodeans, on Wednesday. The British currency trades higher ahead of the United Kingdom (UK) monthly Gross Domestic Product (GDP) and factory data, which will be released on Thursday.

The UK Office for National Statistics (ONS) is expected to show that the economy expanded 0.1% in November. Meanwhile, month-on-month (MoM) Manufacturing Production is estimated to have grown steadily by 0.5%, with Industrial Production remaining broadly flat.

Investors will pay close attention to the UK GDP growth data to get cues on the current state of the economy. The UK GDP declined by 0.1% in both September and October after remaining flat in August.

The data will also drive market expectations for the Bank of England’s (BoE) monetary policy outlook. In the December policy meeting, the BoE guided that monetary policy will remain on a gradual downward path.

During European trading hours, BoE policymaker Alan Taylor said in a summit in Singapore that he expects interest rates to fall to their neutral levels soon, citing that price pressures could return to target by mid of 2026.

Daily digest market movers: US Dollar remains broadly firm

• The Pound Sterling trades 0.2% higher to near 1.3445 against the US Dollar (USD) during the European trading session on Wednesday. The GBP/USD pair rises amid Sterling’s outperformance, while the US Dollar ticks lower.
• As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges down to near 99.10, but is still close to its monthly high near 99.26.
• The US Dollar gained sharply on Tuesday after the release of the US Consumer Price Index (CPI) data for December. The CPI report showed that both headline and core inflation remained steady at 2.7% and 2.6% year-on-year (YoY), respectively, firming expectations that the Federal Reserve (Fed) will not cut interest rates in its policy meeting later this month.
• However, US President Donald continued to increase the pressure on Fed Chair Jerome Powell to cut interest rates further, while praising steady inflation figures. “We have very low inflation. That would give ’too late Powell’ the chance to give us a nice beautiful big rate cut," Trump said, according to a Reuters report.
• For more cues on inflation, investors will focus on the United States (US) Producer Price Index (PPI) data for October and November, which will be published at 13:30 GMT.
• Meanwhile, chiefs of global central banks have shown support towards Fed Chair Jerome Powell over his criminal charges, which he called a “pretext” for refraining from follow the president’s preferences. Chiefs from the European Central Bank (ECB), the BoE, and nine other central banks said collectively that “independence of central banks is a cornerstone of price, financial and economic stability in the interest of the citizens that we serve”, and “we stand in full solidarity with the Fed System and its Chair Jerome H. Powell”.

Technical Analysis: GBP/USD remains close to 20-day EMA

GBP/USD trades at 1.3437 as of writing. The 20-day Exponential Moving Average has stalled around 1.3439, with price testing this dynamic cap. A close above the average would improve near-term traction. The RSI at 52 (neutral) edges higher, but still reflects balanced momentum.

Measured from the 1.3780 high to the 1.3006 low, the 50% Fibonacci retracement at 1.3393 acts as resistance on rebounds, while the 61.8% retracement at 1.3485 caps the upside. A close above the latter would signal the bearish trend is fading and could extend the recovery, while failure there would keep the pair range-bound.

(The technical analysis of this story was written with the help of an AI tool.)

• USD/CAD flattens around 1.3885 ahead of the US PPI and Retail Sales data.
• The Fed is unlikely to cut interest rates in the policy meeting later this month.
• Investors seek fresh cues for BoC’s monetary policy outlook.

The USD/CAD pair trades flat around 1.3885 during the European trading session on Wednesday. The Loonie pair consolidates ahead of the United States (US) Producer Price Index (PPI) data for October and November, and the Retail Sales data for November.

However, the impact of the data is expected to be limited as they are not the latest, and it seems unlikely to influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook.

According to the CME FedWatch tool, the Fed is certain to hold interest rates steady in the current range of 3.50%-3.75% in the policy meeting later this month.

Meanwhile, the Canadian Dollar (CAD) trades steadily, with investors looking for fresh cues on the Bank of Canada’s (BoC) monetary policy outlook. This week, investors will focus on the monthly Manufacturing and Wholesale Sales data for November, which will be released on Thursday.

USD/CAD technical analysis

USD/CAD trades steadily near 1.3885 as of writing. Price holds above the rising 20-day Exponential Moving Average (EMA) at 1.3819, keeping the short-term bias positive.

The 14-day Relative Strength Index (RSI) at 59.87 signals improving bullish momentum without overbought conditions.

Measured from the 1.4143 high to the 1.3641 low, the 50% Fibonacci retracement at 1.3892 acts as initial resistance, and a close above it could open a test higher toward 61.8% Fibo retracement at 1.3931. Failure to clear this barrier would keep consolidation intact, while a break above would underpin an extension.

(The technical analysis of this story was written with the help of an AI tool.)

USD/JPY eased below 159.00 after hitting 159.45 overnight, prompting fresh warnings from Japanese Finance Minister Satsuki Katayama against speculative or excessive yen movements, BBH FX analysts report.

Snap election talk fuels currency volatility in Japan

"USD/JPY slipped under 159.00 after hitting 159.45 overnight, its highest level since July 2024. Japanese Finance Minister Satsuki Katayama issued a fresh warning against excessive yen moves."

"Katayama said “We won’t rule out any means and will respond appropriately to moves that are excessive, including those that are speculative…The kind of sudden moves we saw on Jan. 9 following a newspaper report of a snap election have nothing to do with fundamentals, and are deeply concerning.” Japan’s chief currency official Atsushi Mimura echoed Katayama’s comments."

"Meanwhile, Japanese Prime Minister Sanae Takaichi is expected to dissolve the lower house of the legislature on January 23, paving the way for a snap election in February. Takaichi will give further details on Monday, according to Hirofumi Yoshimura, co-head of junior coalition partner Ishin."

USD/CNH remains just above this week’s cyclical low near 6.9600 as China’s December trade data exceeded expectations, with both exports and imports showing solid year-on-year growth, BBH FX analysts report.

China posts record 2025 trade surplus of $1.19 trillion

"USD/CNH is holding just above this week’s new cyclical low around 6.9600. China’s December trade data is consistent with encouraging economic activity. The trade surplus totaled a record $1190bn in 2025. Both exports and imports overshot expectation in December at 6.6% y/y (consensus: 3.1%, prior: 5.9%) and 5.7% y/y (consensus: 0.9%, prior: 1.9%), respectively."

"In our view, a continued appreciation in China’s currency could help the country shift its growth model towards consumer spending by boosting disposable income through cheaper imports. Bottom line: USD/CNH downtrend is intact."