USD/JPY traded steadily after the Bank of Japan signaled that the risk of falling behind the curve has not increased meaningfully. Japanese Prime Minister Sanae Takaichi noted that a weaker Yen supports exports and helps offset the impact of US tariffs on the auto sector. Meanwhile, the US Dollar gained support following Kevin Warsh’s nomination as Federal Reserve Chair.
USD/JPY is holding steady after three consecutive days of gains, trading near 155.20 during Asian hours on Monday. Upside momentum may be capped as the Japanese Yen remains relatively calm following the Bank of Japan’s January Summary of Opinions.
The BoJ’s Summary of Opinions indicated that the risk of falling behind the policy curve has not increased materially, though members emphasized that timely policy action is becoming more important. With real interest rates still deeply negative, policymakers agreed that additional rate hikes would be appropriate if the outlook for growth and inflation remains intact, while continuing to favor a gradual tightening path. Over the weekend, Japanese Prime Minister Sanae Takaichi said a weaker Yen could benefit export-driven industries and help shield the auto sector from the impact of US tariffs.
The pair may still find support as the US Dollar strengthens following President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve Chair. Markets view Warsh’s appointment as signaling a more disciplined and cautious approach to monetary easing.
US producer inflation data also underpinned the Dollar, reinforcing the Federal Reserve’s restrictive policy stance. Headline PPI remained unchanged at 3.0% year over year in December, above expectations for a slowdown to 2.7%, while core PPI accelerated to 3.3% from 3.0%, defying forecasts for a decline to 2.9% and highlighting persistent upstream price pressures.
Echoing this view, St. Louis Fed President Alberto Musalem said further rate cuts are not justified at this stage, describing the current 3.50%–3.75% policy rate range as broadly neutral. Atlanta Fed President Raphael Bostic also urged patience, arguing that monetary policy should remain modestly restrictive.
NZD/USD edged higher to around 0.6025 during early Asian trading on Monday. China’s RatingDog Manufacturing PMI increased to 50.3 in January 2026, in line with expectations. Meanwhile, US producer prices rose strongly in December, with PPI climbing 0.5% month over month.
The NZD/USD pair is trading on a positive note around 0.6025 during early Asian hours on Monday. The New Zealand Dollar remains supported against the US Dollar following the release of China’s Manufacturing PMI data, while traders await further direction from the US ISM Manufacturing PMI report due later in the day.
Data published by RatingDog showed that China’s Manufacturing Purchasing Managers’ Index rose to 50.3 in January from 50.1 in December, marking the highest reading since October 2025 and coming in line with market expectations. The data may offer modest support to the China-sensitive Kiwi, given China’s status as New Zealand’s largest trading partner.
US President Donald Trump’s selection of Kevin Warsh as the next Federal Reserve (Fed) Chair could boost the US dollar. Markets expect Warsh may lean toward a smaller Fed balance sheet and likely favor lower interest rates but would stop well short of the more aggressive easing associated with some of the other potential candidates.
Additionally, hotter-than-expected US producer price inflation could lift the Greenback and create a headwind for the pair. The Bureau of Labor Statistics revealed on Friday that US Producer Price Index (PPI) rose to 3.0% year-over-year (YoY) in December, beating estimates of 2.7%. Meanwhile, the PPI rose to 0.5% month-over-month (MoM) in December, above the market consensus and the previous reading of 0.2%. This report could further strengthen the case for the Fed to hold rates steady while policymakers monitor how inflation trends.
Silver prices are struggling to regain momentum after a sharp selloff on Friday. The metal came under heavy pressure as a stronger US Dollar—boosted by Kevin Warsh’s nomination as the next Federal Reserve Chair—combined with profit-taking to trigger a steep decline.
Market participants are now turning their attention to the upcoming US Nonfarm Payrolls report for fresh clues on the Federal Reserve’s monetary policy outlook.
Silver (XAG/USD) is trading cautiously around $80 during the Asian session at the start of the week, holding slightly above Friday’s fresh four-week low of $73.33. The white metal is attempting to stabilize after last week’s sharp selloff, during which it shed more than 30% from its record high of $121.66. The decline was driven by a stronger US Dollar, profit-taking following a strong rally, and expectations of a more hawkish Federal Reserve policy outlook.
From a technical perspective, the firmer US Dollar continues to undermine Silver’s risk-reward profile. At the time of writing, the US Dollar Index, which measures the Greenback against six major currencies, remains near its weekly high at around 97.33.
The US Dollar drew strong support on Friday after the White House nominated former Federal Reserve Governor Kevin Warsh to succeed Jerome Powell as Fed Chair. Analysts see Warsh’s nomination as preserving the central bank’s independence, countering earlier concerns sparked by President Donald Trump’s repeated comments that the next Chair would deliver additional rate cuts.
Warsh is known for favoring a strong US Dollar during his previous tenure at the Fed, suggesting monetary conditions could remain relatively tight going forward.
Looking ahead, investor focus will turn to the US Nonfarm Payrolls report for January, which is expected to play a key role in shaping expectations for the Federal Reserve’s future policy path.
Silver technical analysis
On the daily chart, XAG/USD is trading around $81.38, holding above the rising 50-day Exponential Moving Average near $79.50 and preserving the medium-term uptrend. The upward slope of the moving average continues to underpin the broader bullish bias. Meanwhile, the Relative Strength Index sits near 44, in neutral territory, reflecting a cooling in momentum after a previously overbought phase.
As long as prices remain supported above the 50-day EMA, pullbacks are likely to attract initial buying interest around that dynamic level. However, the RSI’s position below 50 limits near-term upside, with a recovery above the midline needed to strengthen bullish momentum. If momentum stabilizes, buyers may look to extend the rebound, while a failure to regain traction could keep price action range-bound or tilt risks to the downside.
The Australian Dollar softened even as China’s RatingDog Manufacturing PMI edged up to 50.3 in January from 50.1. Meanwhile, Australia’s TD-MI Inflation climbed 3.6% year over year, though the monthly increase eased to 0.2%, its slowest pace since August. The US Dollar could gain further support after Donald Trump nominated Kevin Warsh as Fed Chair, a move seen as signaling a more cautious stance on monetary easing.
The Australian Dollar weakened against the US Dollar on Monday, extending losses after falling more than 1% in the prior session. The AUD/USD pair stayed under pressure despite China’s RatingDog Manufacturing PMI ticking up to 50.3 in January from 50.1 in December, in line with market expectations. While the reading signaled a modest expansion in factory activity, it marked the strongest growth since October.
Meanwhile, Australia’s TD-MI Inflation Gauge rose to 3.6% year over year in January from 3.5% previously. On a monthly basis, inflation increased by 0.2%, easing sharply from December’s two-year high of 1% and registering its slowest pace since August.
ANZ Job Advertisements surged 4.4% month over month in December 2025, rebounding from a revised 0.8% decline and marking the first increase since July. The rise was also the strongest monthly gain since February 2022, pointing to renewed hiring momentum toward the end of the year.
The data come ahead of the Reserve Bank of Australia’s policy meeting on Tuesday, following the central bank’s decision to keep the cash rate unchanged at 3.6% for a third consecutive meeting in December. Policymakers are widely expected to maintain a cautious stance, as underlying inflation remains above target and labor market conditions stay relatively tight, supporting a restrictive and data-dependent policy approach.
Meanwhile, Australia’s Consumer Price Index increased 3.8% year over year in December, up from 3.4% previously. With headline inflation still exceeding the RBA’s 2–3% target range, recent PMI and employment indicators strengthen the argument for a tighter monetary policy bias.
US Dollar edges lower ahead of ISM Manufacturing PMI
The US Dollar Index (DXY), which tracks the Greenback against six major currencies, is edging lower after posting gains of more than 1% in the previous session, trading near 97.10 at the time of writing. Market attention is turning to the release of the US ISM Manufacturing PMI for January later in the day.
Despite the modest pullback, the US Dollar had recently drawn support following President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve Chair, a move markets viewed as signaling a more disciplined and cautious approach to monetary easing. The Greenback also benefited from improved risk sentiment after the US Senate reached an agreement to advance a government funding package, averting a potential shutdown, according to Politico.
US producer-side inflation data further underpinned the Dollar, reinforcing the Federal Reserve’s restrictive policy stance. Headline PPI remained unchanged at 3.0% year over year in December, exceeding expectations for a slowdown to 2.7%. Core PPI, which excludes food and energy, accelerated to 3.3% YoY from 3.0%, defying forecasts for a decline to 2.9% and highlighting persistent upstream price pressures.
Federal Reserve officials echoed a cautious tone on easing. St. Louis Fed President Alberto Musalem said additional rate cuts are not justified at present, describing the current 3.50%–3.75% policy rate range as broadly neutral. Atlanta Fed President Raphael Bostic also urged patience, arguing that monetary policy should remain modestly restrictive.
In Australia, inflation and trade data pointed to continued price pressures. The RBA’s Trimmed Mean inflation rose 0.2% month over month and 3.3% year over year, while the monthly CPI jumped 1.0% in December from zero previously, exceeding forecasts of 0.7%. Export prices increased 3.2% quarter over quarter in Q4 2025, rebounding from a 0.9% decline in Q3 and marking the strongest gain in a year, while import prices climbed 0.9%, beating expectations for a fall and reversing a prior decline.
Following the data, markets now price in more than a 70% probability of a 25-basis-point rate hike by the Reserve Bank of Australia from the current 3.6% cash rate, up from around 60% previously. Rates are fully priced at 3.85% by May and near 4.10% by September.
Australian Dollar slides toward key confluence support near 0.6900
The AUD/USD pair is trading near 0.6940 on Monday. Analysis of the daily chart shows the pair continuing to move higher within an ascending channel, pointing to a sustained bullish bias. The 14-day Relative Strength Index has eased from the 70 level to around 67, suggesting a cooling in bullish momentum rather than a trend reversal.
On the upside, AUD/USD could recover toward 0.7093, its highest level since February 2023, reached on January 29. A sustained break above this level would open the door for a test of the channel’s upper boundary near 0.7190. On the downside, initial support is seen at a confluence zone around the nine-day Exponential Moving Average at 0.6927, which aligns closely with the lower boundary of the ascending channel near 0.6920.
Shares of Australia’s GrainCorp (ASX: GNC) fell to four-year lows on Monday after the company issued a weaker earnings outlook for fiscal 2026, citing depressed global grain prices and continued pressure on export margins.
The grain handler forecast underlying EBITDA of A$200 million to A$240 million for FY26, down from A$308 million a year earlier, while underlying net profit after tax is expected to come in between A$20 million and A$50 million, compared with A$87 million in FY25.
GrainCorp’s Sydney-listed shares dropped as much as 19.3% to A$5.81, their lowest level since November 2021.
The company said global grain markets remain constrained by cyclical oversupply and subdued pricing, despite a strong winter harvest along Australia’s east coast. Slower grower selling and export margins at multi-year lows are also expected to weigh on earnings this year.
GrainCorp anticipates grain receivals of 11.0 million to 12.0 million tonnes in FY26, compared with 13.3 million tonnes last year, while exports are forecast at 5.5 million to 6.5 million tonnes.
The company added that it is stepping up cost-control efforts while continuing to maintain service levels.
Most Asian currencies traded in narrow ranges on Monday, while the dollar strengthened as investors assessed U.S. President Donald Trump’s nomination for the next Federal Reserve chair.
The Japanese yen weakened in volatile trading after remarks from Prime Minister Sanae Takaichi suggested a reduced likelihood of currency market intervention by Japanese authorities.
Broader moves across Asian currencies were subdued as investors awaited further economic signals this week, including a policy meeting by the Reserve Bank of Australia and the release of key U.S. jobs data.
Dollar gains after Trump taps Warsh as Fed chair nominee
The dollar index and its futures each rose around 0.1% in Asian trading, extending last week’s gains after the greenback staged a sharp rebound from a near four-year low.
The dollar’s advance was driven largely by U.S. President Donald Trump’s nomination of former Federal Reserve governor Kevin Warsh to succeed Jerome Powell as Fed chair.
Warsh is broadly seen as aligned with Trump’s push for significantly lower interest rates, but is also viewed as a critic of the Fed’s asset-purchase programs—suggesting that longer-term monetary policy under his leadership may prove less dovish than markets initially expected.
“We expect a Warsh-led Fed to favour a smaller balance sheet, limiting support for large-scale fiscal expansion,” ANZ analysts said in a note.
The analysts added that Warsh may view labour market weakness as the greater threat to the Fed’s dual mandate of maximum employment and price stability, and would likely back additional rate cuts if confirmed in the months ahead.
Powell’s term is set to expire in May. The current Fed chair said last week that his successor should remain independent of political pressures.
Yen weakens after Takaichi remarks
The Japanese yen underperformed its Asian peers on Monday, with USD/JPY climbing as much as 0.5% to trade above the 155 level.
The currency weakened after comments from Sanae Takaichi highlighted the benefits of a softer yen during a recent campaign speech—remarks that contrasted with earlier warnings from her administration against sustained currency weakness. Takaichi later appeared to moderate her stance, noting that a weaker yen supports exporters.
Previously, a series of comments from Japanese officials, including Takaichi, cautioning against excessive yen moves had fueled speculation of possible government intervention. That speculation helped the yen strengthen sharply in January, though it remains near levels that have triggered intervention in the past. Recent media reports have suggested Japan and the United States may be considering coordinated measures to support the currency.
Elsewhere in Asia, currencies traded in a narrow to softer range amid a lack of near-term catalysts. The Australian dollar slipped about 0.2% against the U.S. dollar, with attention focused on Tuesday’s Reserve Bank of Australia meeting, where a 25-basis-point rate hike is widely expected.
Expectations of a rate hike by the Reserve Bank of Australia were driven mainly by data pointing to a rebound in Australian inflation during the second half of 2025.
The South Korean won weakened, with USD/KRW climbing about 0.5%, as heavy outflows from domestic equity markets weighed on the currency amid selloffs in major technology stocks.
The Chinese yuan was largely unchanged, with USD/CNY flat as markets showed little response to mixed January purchasing managers’ index readings.
The Singapore dollar edged higher, with USD/SGD slipping 0.1%, while the Taiwan dollar was steady against the greenback.
The Indian rupee also weakened, with USD/INR rising roughly 0.2% and hovering near record levels, after investors reacted cautiously to the government’s fiscal 2027 budget, which signaled increased spending to bolster the manufacturing sector.
Oil prices slid sharply in Asian trading on Monday after reports of talks between the U.S. and Iran reduced some of the geopolitical risk premium in crude, while traders also took profits following recent gains.
The decline came after the Organization of the Petroleum Exporting Countries and its allies (OPEC+) kept output levels unchanged at a weekend meeting, in line with expectations.
Brent crude futures for April delivery plunged 3.3% to $67.07 a barrel by 20:31 ET (01:31 GMT).
Oil had climbed to near six-month highs last week amid fears of increased U.S. military action against Iran, while severe cold weather in North America was also seen as a threat to supply. However, prices came under pressure on Monday as traders moved to lock in profits.
Crude was further weighed down by a rebound in the U.S. dollar from recent four-year lows, after the greenback strengthened following President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve chair.
Trump says Iran is in “serious talks” with the U.S.
U.S. President Donald Trump said over the weekend that Iran was engaged in “serious talks” with his administration, raising the prospect of a possible easing of tensions between the two countries.
His remarks followed statements from Iranian officials indicating that preparations were underway for negotiations with Washington.
Trump has repeatedly warned of potential military action against Iran amid disputes over its nuclear program and domestic unrest, and has ordered the deployment of U.S. naval forces to the Middle East.
The move heightened fears of renewed U.S. strikes on Iran, raising the risk of further geopolitical instability in the Middle East and potential disruptions to regional oil supply. Crude prices surged as markets factored in a higher geopolitical risk premium.
Escalating tensions, alongside recent weather-related disruptions in the United States, helped lift oil prices despite lingering concerns over weak global demand and the possibility of an oversupplied market in 2026.
More recently, a significant production outage in Kazakhstan has also provided support to oil prices.
OPEC+ keeps output levels unchanged
OPEC+ on Sunday kept its oil output for March unchanged, reinforcing its decision to pause further production increases despite a recent rise in crude prices.
The group has raised output by roughly 2.9 million barrels per day through 2025, but announced an open-ended halt to additional hikes in November, after oil prices fell by around 20% over the past year.
OPEC+ also offered no forward guidance on production, likely reflecting elevated uncertainty surrounding the global economic outlook and ongoing geopolitical risks.
U.S. stock futures ticked down Sunday night as investors grew more cautious ahead of a heavy slate of earnings reports and economic releases, after technology stocks retreated following Microsoft’s results last week.
S&P 500 futures slid 0.7% to 6,915.25, while Nasdaq 100 futures dropped 0.9% to 25,428.75 as of 21:51 ET (02:51 GMT). Dow Jones futures were marginally lower, down 0.1% at 48,825.0.
Alphabet Amazon earnings loom amid AI worries
The move follows a weak finish for U.S. stocks last week, led by losses in the Nasdaq Composite as investors re-evaluated optimistic assumptions about artificial intelligence spending and its potential returns.
Market sentiment took a hit after Microsoft’s (NASDAQ:MSFT) earnings report, which, despite continued revenue growth, did little to ease concerns about the near-term benefits of its heavy investment in AI infrastructure.
The update pressured the broader tech sector and reignited worries that large-scale AI spending could take longer than expected to generate meaningful profits.
Adding to the unease, a Wall Street Journal report over the weekend said Nvidia’s (NASDAQ:NVDA) planned investment of up to $100 billion in OpenAI has been put on hold following internal deliberations at the chipmaker.
Focus now turns to upcoming results from other megacap tech companies, which are likely to influence market direction. Google parent Alphabet (NASDAQ:GOOGL) is set to report on Tuesday, with investors closely monitoring advertising performance, cloud momentum, and management’s outlook on AI-related capital spending.
Amazon (NASDAQ:AMZN) is scheduled to report on Thursday, with investors focusing on results from its Amazon Web Services cloud division and margin trends in its core retail operations.
Attention turns to the Fed nomination, with key jobs data also in the spotlight.
Beyond corporate earnings, investors are also parsing political and policy signals. President Donald Trump on Friday announced Kevin Warsh as his nominee for Federal Reserve chair.
Markets are assessing the implications of a Warsh-led Fed for interest rates, inflation management, and the trade-off between supporting growth and maintaining financial stability, at a time when policy guidance remains especially influential.
Upcoming economic data could further shape rate expectations. The U.S. January jobs report, due Friday, is expected to point to solid employment growth and an unchanged unemployment rate.
A large ETH liquidation on Hyperliquid triggered a leverage-driven cascade, sending total crypto liquidations above $2.5 billion in 24 hours.
What to know:
More than $2.5 billion in crypto positions were liquidated over 24 hours, including a single $222.65 million ether position on the Hyperliquid exchange.
Ether led the sell-off, with over $1.15 billion in liquidations as prices dropped by as much as 17%, followed by roughly $788 million in bitcoin and nearly $200 million in Solana.
The liquidation wave was heavily skewed toward long positions and amplified by thin market liquidity, highlighting how leverage can fuel cascading price declines and sudden market reversals.
One trader suffered losses exceeding $220 million on an ether position as a renewed wave of forced liquidations rippled through crypto markets, driving total liquidations over the past 24 hours to nearly $2.6 billion.
The largest individual liquidation took place on decentralized derivatives exchange Hyperliquid, where an ETH-USD position valued at $222.65 million was erased, according to data from CoinGlass.
The sell-off unfolded as ether fell by as much as 17% over the past 24 hours, dragging down bitcoin and other major tokens in a thinly traded market.
In total, 434,945 traders were liquidated during the period, with losses overwhelmingly concentrated in long positions. About $2.42 billion of the $2.58 billion in total liquidations came from bullish bets, while short positions accounted for just $163 million.
Hyperliquid suffered the most severe impact, logging $1.09 billion in liquidations — almost entirely from long positions — representing more than 40% of total losses across exchanges. Bybit followed with $574.8 million, while Binance recorded roughly $258 million in liquidations.
Ether absorbed the bulk of the damage, with more than $1.15 billion in ETH positions wiped out over 24 hours. Bitcoin saw about $788 million in liquidations, and nearly $200 million in Solana positions were erased, according to liquidation heatmap data.
Liquidations happen when leveraged positions are automatically closed after prices move beyond a trader’s margin limits. These forced exits often lock in large losses and can amplify price swings by setting off cascading sell-offs during volatile periods.
Market participants track liquidation data to assess positioning and sentiment. Heavy long liquidations can point to panic-driven bottoms, while large short liquidations may signal the start of a squeeze. Sudden spikes also highlight overcrowded trades and areas where reversals may emerge.
When combined with open interest and funding rate data, liquidation metrics can help identify potential entry and exit points, particularly in overleveraged markets vulnerable to abrupt flushes or sharp rebounds.
Such liquidation-driven moves have become increasingly frequent during low-liquidity conditions, where relatively modest price moves can ripple through derivatives markets and trigger outsized reactions.
Morgan Stanley said the recent pullback in Nvidia shares appears disconnected from the company’s strong near-term fundamentals, noting that investors remain puzzled by the stock’s underperformance despite a “very robust AI environment.”
Analyst Joseph Moore said his team was “somewhat surprised” by Nvidia’s year-to-date weakness following a soft finish to 2025. He added that investors frequently ask what factors drove the decline and how those pressures could dissipate in 2026.
Moore said business checks remain “very strong and getting stronger,” while market optimism around upcoming earnings is building. He noted growing discussion of Nvidia’s earnings power exceeding $9 per share this year, well above the consensus estimate of $7.75, which he believes makes near-term upside “highly likely.”
In his view, several concerns weighing on sentiment are exaggerated. Moore said AI beneficiaries are expanding as demand accelerates and supply constraints spread across the industry. He also addressed investor focus on financing risks tied to frontier AI model developers and Nvidia’s involvement, saying this will require some recalibration in how the market assesses the risk.
Concerns about rising competition from custom ASICs and AMD persist, but Moore described them as overblown. Looking ahead, he highlighted Nvidia’s upcoming Vera Rubin platform as a key catalyst that should reinforce the company’s technology leadership and help alleviate momentum concerns.
“Ultimately, we expect the stock to outperform from here,” Moore wrote, adding that while Nvidia still faces a “wall of worry,” it appears well positioned to move past it.
Lynx warns Apple margins under renewed pressure as NAND prices jump
Lynx Equity Strategy warned that Apple could be facing a deeper profitability squeeze than investors currently expect, arguing there is “further downside” to the stock even after its roughly 10% decline this year.
The brokerage said channel checks point to rising memory costs, with Apple confronting a sharp increase in NAND flash prices after talks with long-time supplier Kioxia broke down. Lynx said tensions emerged after Apple secured lower long-term pricing that created a margin gap for Kioxia, potentially leading the supplier to ship below Apple’s projected demand.
As a result, Apple has reportedly turned to Samsung to cover the shortfall. Without long-term supply agreements, Lynx said Samsung can charge prevailing market rates, which may be significantly higher. A Taiwan report cited by the firm suggested Samsung may have lifted NAND prices by as much as 100%, with Apple likely among the affected customers.
Lynx also highlighted technical risks, noting that Apple’s flash controller is optimized for Kioxia’s NAND process and may not perform as effectively with Samsung’s chips, increasing the possibility of performance issues or product returns.
“The Street is underestimating the impact,” Lynx said, warning that both Apple’s margins and its share price could remain under pressure in the coming period.
Barclays upgrades ASML on record orders, sees further upside
ASML shares moved higher earlier in the week after Barclays upgraded the stock to Overweight, pointing to record order growth, accelerating AI-driven demand and upside potential that it says the market has yet to fully reflect.
Analyst Simon Coles said expectations were already elevated going into the results, but those hopes were exceeded as orders hit record levels, prompting significant upward revisions to forecasts. Barclays raised its price target to €1,500 from €1,200, arguing there is still “room for further upside” given what it views as conservative guidance despite improving fundamentals.
ASML reported record order intake of €13.2 billion, almost double last year’s figure and well above market expectations. The company also increased its 2026 revenue outlook to a range of €34 billion to €39 billion, surpassing consensus estimates and improving on its prior outlook for largely flat growth versus 2025.
In addition to the strong demand outlook, ASML announced plans to reduce its workforce by around 1,700 roles as part of a broader restructuring effort aimed at simplifying management structures while increasing investment in engineering capacity.
Barclays said lithography demand linked to large-scale data center construction remains a key growth driver for ASML, while further upside could emerge from consumer AI adoption, humanoid robotics and a more resilient memory spending cycle.
The bank also highlighted intensifying foundry competition as a particularly supportive factor. Analyst Simon Coles said increased rivalry is likely to spur higher capital investment, creating upside risk that should benefit ASML and the broader semiconductor capital equipment sector through 2027.
Concerns around China were described as overstated. Coles noted that ASML’s guidance already assumes China revenue declines of more than 10% year over year at the start of 2026, but recent strength in imports suggests demand remains robust.
Barclays now forecasts low-teens revenue growth for ASML in both 2026 and 2027, translating into mid- to high-teens earnings upgrades, with additional upside possible if AI investment and foundry spending accelerate beyond current expectations.
Mizuho lifts Applied Materials on strengthening chip equipment demand
Applied Materials was upgraded to Outperform from Neutral by Mizuho, which cited a sharp rebound in semiconductor capital spending and improving demand from foundry and logic customers.
Analyst Vijay Rakesh raised the firm’s price target to $370 from $275, saying Applied Materials is positioned to benefit from a “meaningful acceleration” in wafer fab equipment (WFE) spending through 2027. Mizuho now forecasts WFE growth of 13% year over year in 2026, followed by 12% growth in 2027, marking a notable step-up from its prior outlook.
With roughly 65% of revenue exposed to foundry and logic customers, Rakesh highlighted rising capital expenditures from TSMC and improving tool spending at Intel as key growth drivers. TSMC’s capital spending from 2026 to 2028 is expected to be significantly higher than in the 2023–25 period, with 2026 outlays alone projected to climb 32% to about $54 billion.
Memory demand is also seen as supportive, with DRAM tied to high-bandwidth memory accounting for roughly 30% of Applied Materials’ revenue base. While China remains a headwind, with revenue from the region expected to decline 4% this year, Rakesh said growth elsewhere — representing about 70% of sales — is accelerating more rapidly.
He added that AI-driven investment is pushing leading-edge development below the 2-nanometer node, and said the broader recovery in global WFE spending is creating “strong tailwinds” for equipment suppliers, underpinning the upgrade and higher earnings estimates for 2026 and 2027.
BofA reiterates Snowflake as top software pick, says AI to accelerate growth
Bank of America said Snowflake remains “one of the fastest-growing stories in software,” reaffirming its Buy rating and keeping the stock as a top pick within infrastructure software.
Analyst Koji Ikeda said Snowflake is well positioned to benefit from accelerating enterprise investment in data analytics and artificial intelligence, given its role as a core cloud data platform. He said the key investor debate is whether Snowflake can sustain product revenue growth in the high-20% year over year range or even reaccelerate into the 30s — an outcome he believes is achievable.
Ikeda pointed to Snowflake’s expanding product portfolio, strong AI-related demand and rising customer consumption as key growth drivers. “The blizzard is just starting to form around broad AI adoption, and we believe Snowflake will play a foundational role,” he wrote.
BofA expects Snowflake’s growth to remain top-tier within infrastructure software, far outpacing peers growing at around 10%. The bank also raised its price target to $275, reflecting an updated valuation framework incorporating its revised growth outlook, risk assessment and peer multiple trends.
Ikeda described Snowflake as increasingly becoming the “king of enterprise data in the cloud,” highlighting its OLAP data lakehouse architecture, which enables customers to scale compute and storage independently to optimize performance and costs.
While acknowledging that the shares are not inexpensive — trading at a roughly 123% premium to peers — Ikeda said the valuation appears more reasonable on a growth-adjusted basis, where Snowflake trades in line with its peer group.
Gold and Bitcoin have diverged sharply in recent months, with Yardeni Research arguing that currency movements are becoming a key driver of that split.
In its latest report, the firm revisited the long-standing question of whether Bitcoin can be considered “digital gold,” pointing out that both assets are difficult to value since neither generates interest or dividends. However, Yardeni cautioned that Bitcoin’s purely digital form could make it “potentially vulnerable someday to hacking by quantum-computing algorithms,” whereas gold’s main drawback is the need for physical storage.
Bitcoin’s volatility has persisted. Yardeni noted that the cryptocurrency surged to a record near $125,000 in late 2025 before retreating toward $90,000.
Gold, by contrast, has been in a strong uptrend since it “decisively broke out” in March 2024. Prices have climbed roughly 2.5 times since then, moving above $3,000 an ounce in early 2025. The firm maintains its long-term outlook that gold could reach $10,000 by the end of the decade.
According to Yardeni Research, recent currency shifts are widening the gap between the two assets. The firm said a weaker U.S. dollar tends to hurt Bitcoin because it lowers Bitcoin’s value in other currencies, potentially encouraging foreign investors to sell. Some of those flows, it suggested, may be rotating into gold instead.
In addition, a softer dollar can put upward pressure on U.S. inflation, which would further support gold prices. Yardeni also noted that dollar weakness generally favors U.S. investors in overseas markets, reinforcing its overweight stance on emerging-market equities.
SpaceX, widely regarded as the most sought-after and richly valued private company, is widely expected to list publicly this year in what could become the biggest IPO on record. The Financial Times reports that the company aims to raise up to $50 billion, implying a valuation of roughly $1.5 trillion.
Why Everyone Wants a Slice of SpaceX
Elon Musk founded SpaceX in May 2002, predating his involvement with Tesla (NASDAQ: TSLA). Today, the company effectively dominates the global rocket-launch market, while its satellite internet unit, Starlink, is widely viewed as a major profit engine. Musk has said that SpaceX has generated positive cash flow for many years.
Like many marquee startups, SpaceX opted to stay private as institutional capital continued to flow in. More recently, Musk’s vision of building data centers in orbit has emerged as a key catalyst behind the company’s push toward a public listing.
SpaceX is not alone in pursuing solar-powered space-based data centers. Jeff Bezos’ Blue Origin is developing a competing concept, while Google (GOOG) is working on its own orbital data center initiative, known as Project Suncatcher.
Constructing data centers in space would require hundreds of billions of dollars in investment, with major technical challenges including thermal management, radiation shielding, and ultra-low-latency data transmission back to Earth.
By combining two of today’s most compelling investment themes—artificial intelligence and space—SpaceX has attracted intense investor interest.
Because SpaceX remains privately held, gaining exposure is difficult for most investors unless they are private equity firms, venture capitalists, or company employees. As a result, retail investors are increasingly seeking indirect exposure by investing in funds that hold SpaceX shares.
Baron Capital–Managed ETFs and Mutual Funds
Billionaire investor Ron Baron has long been a vocal backer of Elon Musk. According to a letter dated July 16, 2024, Baron has been steadily adding SpaceX shares each year since 2017 across his mutual funds and other investment vehicles.
The Baron First Principles ETF (NYSE: RONB) currently allocates roughly 16% of its portfolio to SpaceX. Launched just last month, the fund has already attracted about $124 million in assets.
Meanwhile, SpaceX represents 29% of assets in the Baron Partners Fund (BPTRX) and 19% of net assets in the Baron Focused Growth Fund (BFGFX) as of December 31, 2025. Both funds have delivered substantial outperformance relative to their benchmarks since inception.
Under SEC rules, open-ended funds are generally capped at 15% exposure to illiquid investments, defined as securities that cannot be sold within seven days without materially affecting their price. However, Baron funds no longer classify SpaceX as illiquid, citing the depth and activity of its secondary market, according to Bloomberg.
Entrepreneur Private-Public Crossover ETF (XOVR)
XOVR is the first exchange-traded fund to hold a private company. Although the fund revised its ticker and investment strategy in August 2024, it has continued to focus on entrepreneur-led businesses.
The ETF gained exposure to SpaceX last year through a special-purpose vehicle (SPV), a move that has coincided with a sharp increase in assets. However, as The Wall Street Journal has noted, SPVs can charge performance fees of up to 25%, raising questions about how such costs may affect the value of XOVR’s SpaceX stake.
There is also limited transparency around how the ETF determines the fair value of its SpaceX holdings, a requirement under SEC rules.
Driven by investor demand for indirect access to SpaceX, the fund’s assets have surged to more than $1.6 billion. NVIDIA (NVDA) and Meta Platforms (META) rank among its other largest holdings. Despite the inflows, the ETF has significantly lagged the S&P 500 over the past year.
The $66 level in WTI crude oil has proven to be a notable resistance zone, and prices are now retreating from that area. There is considerable uncertainty in the market over whether potential strikes against Iran could occur over the weekend, adding a layer of geopolitical risk.
Even so, underlying supply-and-demand dynamics remain a significant constraint on price action. As a result, large, sustained moves appear unlikely, and the prevailing strategy may continue to favor selling into rallies rather than chasing upside momentum.
British Pound
The British pound pushed above the 1.3750 level, but buying momentum now appears to be fading as selling pressure shows signs of exhaustion. Notably, the weekly candlestick resembles a shooting star, a pattern that often signals difficulty in sustaining further gains.
From here, a pullback could see GBP/USD slide toward the 1.35 area, a major round number with strong psychological significance. Part of this shift in sentiment may be tied to Kevin Warsh’s nomination as the next Federal Reserve Chair, as his comparatively hawkish stance has strengthened expectations for tighter U.S. monetary policy, weighing on the pound.
EUR/USD
The euro staged a strong rally earlier in the week but then reversed sharply after the initial upside move. This price action suggests the market may be entering a period of consolidation, raising the possibility that the recent breakout was a false move.
Much will depend on how traders respond to the nomination of the new Federal Reserve Chair. For now, the euro appears to be losing momentum. On the downside, the 1.16 level could come into play. However, if buyers step back in quickly over the coming week, the pair could regain strength and push higher, potentially revisiting the 1.20 area, with a further extension toward 1.23 if bullish momentum builds.
DAX
The German DAX has spent most of the week in negative territory but continues to hold above the 24,500 level, an area that has become important support after previously acting as resistance. This ability to stabilize at a former breakout zone suggests underlying buying interest remains intact.
Overall, the index appears to be in the process of bottoming and potentially turning higher, with scope for a renewed push to the upside. Looking further ahead, the outlook remains constructive. Ongoing fiscal support and heavy government spending in Germany should provide a tailwind for equities, leading to expectations that the DAX could be among the stronger-performing indices this year. As a result, the broader bias remains bullish.
Silver
Silver has become the focal point of market discussion after an extraordinary week of price action. After surging to around $122, the metal suffered a dramatic reversal, ending Friday in what can only be described as a sharp selloff.
In a single session, silver plunged below the $90 level, and momentum now suggests a potential move toward $80. After such an extreme rally, a correction was inevitable, and the market now appears to be experiencing that long-overdue pullback.
The selloff was likely exacerbated by the nomination of a more hawkish-than-expected Federal Reserve Chair, adding pressure to precious metals. Even in normal conditions, silver is known for its volatility, and the current environment has only amplified those swings. For now, price action has become exceptionally unstable, making silver largely untradeable for many participants.
Gold
Gold has been hit hard as well, but unlike silver, it benefits from strong central bank support, which should help it recover more quickly. Silver had moved so far beyond its fundamental norms that it began to resemble the kind of speculative excess often seen in smaller cryptocurrencies.
Gold, by contrast, continues to attract substantial institutional and central bank demand. That said, it is possible the market has already set a peak, although it may be too soon to say so definitively. Given the way trading unfolded on Friday, it is difficult to ignore the risk of continued downside follow-through.
Still, considering that gold was trading near $1,700 just two years ago, some form of correction was inevitable. When markets become stretched and overheated, this kind of reset is ultimately unavoidable.
USD/JPY
The U.S. dollar initially sank sharply against the Japanese yen over the week, but that move has since reversed decisively. The rebound suggests markets may be reassessing what now appears to have been an overly aggressive bet against the dollar.
Given the significant interest rate differential between the two currencies, this type of recovery is broadly in line with how the pair might be expected to trade. Technically, USD/JPY found support at the 50-week EMA, and if prices can reclaim the 155 level, the next upside target could be a move toward 158 yen.
USD/CHF
The U.S. dollar declined sharply against the Swiss franc, briefly testing the 0.76 level. While that price point may not be especially significant on its own, it does raise the possibility of Swiss National Bank intervention if franc strength becomes excessive—a risk that remains in the background.
Technically, the pair appears to be forming a hammer pattern following the breakdown, and more importantly, the U.S. dollar has begun to strengthen more broadly across global markets. Taken together, these factors suggest USD/CHF could be setting up for a rebound in the near term.
WTI crude oil has delivered two consecutive weeks of gains, giving day traders a favorable backdrop, and closed the weekend trading near $65.73. Prices at this level were last seen in the final week of September.
The previous period when WTI consistently held at similar elevated levels was from mid-June through the end of July 2025. While crude has traded higher at times since then, the notable development for technical traders is the growing durability of the current upward momentum.
From a chart perspective, support around $60.00 per barrel remained intact throughout the past week and began to demonstrate strength as early as Friday, January 23. As the new trading week gets underway, this technical stability may encourage renewed speculative buying, with some traders positioning for further upside in WTI prices.
Volatility and Turmoil Mark Commodity Markets Over the Past Week
In reality, WTI crude oil has remained relatively orderly, particularly given the absence of any extreme or destabilizing price swings. While the commodity did move higher, the advance was measured rather than explosive.
On Tuesday, WTI rose from the mid-$60 range to around the mid-$62 level, showing early signs of upward pressure. By Wednesday, prices continued to firm, reaching the mid-$63 area. Momentum strengthened further into Thursday and Friday, when price action clearly accelerated to the upside, reinforcing the constructive tone in crude oil trading.
By comparison with the turmoil seen in metals markets—and even in soft commodities such as cocoa and coffee—WTI crude oil has remained relatively restrained. Whether that composure will persist is an open question.
Commodity markets often experience bursts of speculative intensity in cycles, yet WTI has been notably subdued over the past several months. That said, the prolonged bearish trend, marked by steadily declining prices, appears to have paused and reversed, with crude moving higher over the last two weeks.
While geopolitical risks tied to Iran remain in the background, they are unlikely to be the primary driver behind the recent upside move in WTI prices.
Iran, Venezuela, and Shifting Dynamics in the Global Energy Market
Few things dominate markets like noise, with well-intentioned commentary offering countless explanations for sudden price moves in commodities. Weather events, wars, politics, trade agreements—even trivial anecdotes—are all quickly cited as causes. But the question remains: how many of these explanations actually reflect the true drivers behind price changes?
Commodity traders are highly seasoned, and major market participants operate with extensive intelligence gathered over months and even years. They work within long-term outlooks, but there is also one unavoidable factor: speculation.
At times, commodities move quickly simply because large orders enter the market and collective sentiment shifts. WTI crude oil is no exception to these forces. Over the past two weeks, buying interest in the energy sector has clearly increased.
Is this driven by speculative positioning, concerns about potential instability in the Middle East, or a blend of both? Beyond those considerations, fundamentals such as supply and demand also play a role—and by most measures, they remain relatively strong.
WTI Crude Oil Weekly Outlook: Market Poised After Recent Stabilization
The speculative trading range for WTI crude oil is seen between $59.20 and $70.10.
WTI has clearly pushed higher, with the $60.00 level and the mid-$60s now appearing to act as near-term support. As the new week begins, the key question is whether the $65.00 area can hold and establish itself as a more durable floor. Broader commodity markets have displayed renewed strength across several sectors in recent weeks.
The sharp advance in WTI may seem sudden, but it reflects a noticeable return of buying interest. Seasoned traders know crude oil has sustained higher price levels in the past, and its ability to post and maintain incremental gains has been evident over the last two weeks.
That said, risk management remains critical when trading WTI. Price reversals can occur quickly, and without disciplined controls, such moves can result in significant losses for speculative traders.
Ethereum was trading at $2,434.30 as of 12:14 local time (17:14 GMT) on Saturday, according to the Investing.com Index, marking a 10.26% daily decline. This represented its steepest one-day percentage drop since October 10, 2025.
The selloff reduced Ethereum’s market capitalization to $298.41 billion, accounting for about 11.08% of the total crypto market. At its peak, Ethereum’s market cap had reached $583.89 billion.
Over the past 24 hours, Ether fluctuated between $2,378.01 and $2,714.59. Weekly performance has also been weak, with Ethereum down 16.31% over the last seven days. Trading volume during the most recent 24-hour period totaled $36.56 billion, representing 25.68% of overall cryptocurrency turnover. Over the past week, prices ranged from $2,378.01 to $3,044.24.
Despite its recent rebound attempts, Ethereum remains 50.88% below its all-time high of $4,955.90, recorded on August 24, 2025.
Elsewhere in crypto markets, Bitcoin was last seen at $79,266.0, down 4.65% on the day. Tether USDt was effectively flat at $0.9990.
Bitcoin’s market capitalization stood at $1.60 trillion, representing 59.35% of the total crypto market, while Tether’s market cap was $185.07 billion, or 6.87% of the overall market value.
Canada’s opposition Conservative Party has voted by a wide margin to keep Pierre Poilievre as leader following a mandatory leadership review triggered by its loss in the last federal election.
At a party convention in Calgary on Saturday, Conservatives backed Poilievre with 87.4% of the vote, reaffirming his leadership after the party was defeated by the Liberals under Prime Minister Mark Carney in April.
The result comes after a sharp political reversal. In January, the Conservatives were polling more than 20 points ahead of the Liberals, but momentum shifted after repeated remarks by U.S. President Donald Trump about Canada becoming the 51st U.S. state helped rally voters around Carney.
Although Poilievre lost his own parliamentary seat in the election, he returned to the House of Commons after winning a by-election in August.
Ahead of the vote, Ashton Arsenault, a former aide in Stephen Harper’s Conservative government, said Poilievre needed at least 75% support to clearly demonstrate confidence in his leadership. The final result exceeded that threshold comfortably, signaling unity within the party heading into the next election cycle.
Meanwhile, public opinion remains mixed. Pollster Angus Reid reports Carney’s approval rating has climbed to 60%, the highest since he became Liberal leader. While about 80% of Conservative supporters back Poilievre, broader public sentiment is less favorable, with 58% of Canadians viewing him negatively.
What’s going on? On Monday, Needham upgraded AppLovin Corp (NASDAQ: APP) to Buy and set a $700 price target.
TL;DR: Needham turns bullish, lifting its 2026 ecommerce revenue forecast to $1.45B.
The full picture: Needham raised its rating after a deeper dive into AppLovin’s ecommerce business, strengthening its conviction in accelerating revenue growth by 2026—particularly as the stock has pulled back from last month’s highs. The firm views the recent weakness as a market mispricing, arguing that opportunistic advertisers are stepping in despite typical seasonal softness.
Needham increased its 2026 ecommerce revenue estimate to $1.45B from $1.05B, citing upcoming self-service launches that should expand the advertiser base and drive higher spending. This, in their view, could overpower usual Q1 seasonality and deliver sequential growth.
Even with the higher forecast, Needham sees further upside in a bull-case scenario—especially if AppLovin’s ecommerce trajectory begins to resemble TikTok’s rapid monetization curve, reinforcing the idea that in markets, replication can be a powerful catalyst for outsized returns.
American Axle
What’s going on? On Tuesday, BWS Financial launched coverage of American Axle & Manufacturing with a Buy rating and set a $17 price target.
TL;DR: AXL is merging with Dowlais, and the shares appear undervalued.
The bigger picture: American Axle & Manufacturing Holdings Inc. (AXL), which plans to rebrand as Dauch Corp. (NYSE: AXL), is nearing completion of its merger with Dowlais Group plc (DWLAF). According to BWS Financial, the deal will significantly diversify the business—expanding its automaker customer base, strengthening its global footprint, and broadening its product offerings. The combined company is expected to become a major force among auto suppliers, able to capitalize on greater scale, geographic reach, and meaningful operating efficiencies.
These advantages are projected to drive a sharp increase in free cash flow starting in 2027.
At the same time, AXL is adjusting its pricing and bidding approach to improve gross margins. While this strategy may weigh on revenue in 2025, it should support stronger cash generation. The analyst believes this near-term revenue softness has pushed the stock into deeply discounted territory.
Despite trading at valuation levels often associated with distressed companies, AXL remains profitable and continues to generate free cash flow. For investors searching for overlooked value opportunities, BWS Financial sees a compelling disconnect between fundamentals and the current share price.
Applied Materials
What happened? On Wednesday, Mizuho raised its rating on Applied Materials (NASDAQ: AMAT) to Outperform and lifted its price target to $370.
TL;DR: Mizuho expects stronger wafer fab equipment (WFE) growth and rising global capex to power further upside for AMAT.
The full story: Mizuho upgraded AMAT from Neutral with a $275 target to Outperform at $370, citing a much more favorable industry backdrop. As the world’s second-largest supplier of wafer fab equipment, Applied Materials is seen as a prime beneficiary of a powerful upswing in semiconductor capital spending across the U.S., Taiwan, and Japan.
The bank points to sharply improving WFE forecasts, with 2026 estimates now projected to jump 13% year over year, followed by another 12% increase in 2027—a dramatic acceleration compared with earlier expectations and a meaningful boost to AMAT’s earnings potential.
Core growth drivers include foundry and logic, which account for about 65% of revenue, supported by TSMC’s substantially higher capital spending plans for 2026–2028 versus 2023–2025, alongside a more constructive outlook for Intel’s tool purchases in 2026. On the memory side, DRAM—roughly 30% of revenue—stands to benefit from strong demand for high-bandwidth memory.
Concerns around China have also eased, as about 70% of AMAT’s revenue now comes from outside China, where growth is accelerating. With global WFE momentum building and major customers like TSMC and Intel increasing investment, Mizuho believes the setup strongly favors AMAT and justifies the Outperform call.
First Solar
What happened? On Thursday, BMO Capital Markets cut its rating on First Solar (NASDAQ: FSLR) to Market Perform and set a $263 price target.
TL;DR: BMO turns cautious on FSLR, citing competitive risks from Tesla and concerns that rising capacity could pressure module pricing.
The full story: BMO downgraded First Solar amid growing uncertainty around Tesla’s expanding solar ambitions. The firm questions how much of Tesla’s excess module capacity—given its proven ability to scale clean-energy platforms such as energy storage systems and inverters—could spill into the broader market rather than being used internally.
With U.S. utility-scale solar demand running at roughly 45–50 GW per year, First Solar’s 14.1 GW of capacity, alongside T1 Energy’s 2.1 GW (with potential expansion to 5.3 GW), could face intensified competition if Tesla moves toward its stated 100 GW capacity goal. Such a scenario could weigh on long-term module pricing or leave a persistent overhang on FSLR shares.
BMO notes that the bullish case for First Solar depends heavily on elevated U.S. module average selling prices (ASPs). However, after the stock’s 56% gain over the past 12 months, valuation now implies module pricing of about $0.29 per watt, even as backlog pricing sits closer to $0.30–$0.33 per watt. Earlier analysis suggested prices could climb into the high-$0.30s or low-$0.40s if Section 232 tariffs on polysilicon imports tightened supply—each $0.01 per watt increase potentially adding $23 per share in value.
That upside, however, may be tempered by a recent presidential order on semiconductors that includes exemptions for data centers, an area where Tesla could focus its solar deployments, potentially easing pressure from polysilicon-related restrictions.
Taken together—rising industry capacity, uncertain pricing durability, and Tesla’s looming presence—BMO sees limited justification for sustained pricing optimism and adopts a more neutral stance on First Solar.
Broadcom Inc.
What happened? On Friday, Wolfe Research upgraded Broadcom (NASDAQ: AVGO) to Outperform and raised its price target to around $370–$400.
TL;DR: Stronger expectations for TPU-driven AI growth led Wolfe to lift its outlook for Broadcom.
The full story: Wolfe Research upgraded Broadcom to Outperform, citing accelerating demand tied to the AI buildout—particularly from Google’s Tensor Processing Units (TPUs). Channel checks suggest TPU deployments could reach 7 million units by 2028, and Alphabet’s decision to offer TPUs to external customers is seen as creating a credible alternative to Nvidia’s ecosystem. Wolfe views Broadcom as the primary beneficiary of this shift.
As a result, the firm raised its long-term forecasts, projecting CY27 revenue of $154.5 billion and EPS of $16, implying a valuation of roughly 21x earnings. Additional upside could come from AI accelerator (XPU) programs at companies like Meta and OpenAI that are not yet fully reflected in estimates.
Wolfe also revised its AI ASIC revenue outlook higher, estimating $44 billion in CY26 based on 3.3 million TPU shipments, rising sharply to $78.4 billion in CY27 on 5.1 million units. TPUs are expected to account for the bulk of this growth, with other AI projects contributing smaller portions. Networking revenue is forecast to jump 75% to $15.1 billion in CY26, followed by 55% growth in CY27, while non-AI semiconductor and software segments are expected to remain relatively stable.
From a valuation standpoint, Wolfe argues the stock remains attractive. Its base case of $16 EPS in CY27 suggests room for multiple expansion, while a bullish scenario—with AI revenue doubling again—could push earnings toward $18 per share. Wolfe’s upper-end target reflects a valuation below Broadcom’s three-year average multiple of around 25x since the AI cycle began, reinforcing its positive stance on the stock.
The U.K. economy is at risk of a “significant recession,” a scenario that could force the Bank of England into a far more aggressive easing cycle, according to BCA Research.
In a research note, analysts led by Robert Timper said key indicators of U.K. economic growth continue to show weakness, with business sentiment and labor market data sending what they described as recession-like signals.
They noted that although layoffs remain relatively contained for now, slowing profit growth increases the risk of deeper job cuts ahead.
“The bottom line is that the U.K. labor market is deteriorating at a concerning pace and, in many respects, already appears recessionary,” the analysts wrote. “If incoming data fails to improve, labor market conditions could tip the U.K. economy into recession.”
At the same time, wage growth has moderated and price pressures in the services sector have normalized, reinforcing expectations that underlying inflation will ease toward the Bank of England’s 2% target later this year.
Against this backdrop, the BoE is expected to deliver rate cuts broadly in line with market pricing, totaling around 41 basis points this year. The central bank cut interest rates by 100 basis points in 2025.
From an investment perspective, BCA Research said U.K. equities remain appealing despite domestic economic softness, supported by the prospect of lower borrowing costs, a weaker pound, and strong overseas revenue exposure. The firm favors U.K. stocks over Eurozone equities over the next three to six months.
The analysts said U.K. equities remain attractively valued and have yet to show signs of being overbought.
They added that energy markets could again provide support, noting that a potential collapse of Iran’s ruling regime could trigger what they described as a historic shock to global oil supply.
Given the heavy weighting of oil and gas companies in major U.K. indexes, they said the broader U.K. market has historically outperformed Eurozone equities during periods of rising oil prices.
The United Steelworkers (USW) said late Saturday that it had agreed to extend negotiations with Marathon Petroleum, temporarily avoiding a strike involving roughly 30,000 workers at U.S. refineries and chemical plants.
Under the rolling 24-hour extension, the existing labor contract—originally set to expire at 12:01 a.m. ET on Sunday—will remain in force unless either the union issues a 24-hour strike notice or Marathon provides a 24-hour lockout notice.
Since talks began just over a week ago, the union has turned down at least five proposals from Marathon. The most recent offer, made Saturday, included a 14% wage increase over a four-year contract for refinery and chemical plant employees.
Marathon is serving as the lead negotiator for 26 U.S. refining and chemical companies, including Exxon Mobil, Chevron, and Valero Energy. The USW represents workers at facilities that together account for about two-thirds of U.S. crude oil refining capacity.
Earlier Saturday, Marathon spokesperson Jamal Kheiry said the company continued to meet with USW representatives and remained committed to bargaining in good faith toward a mutually acceptable agreement.
Meanwhile, Mike Smith, chairman of the Steelworkers’ National Oil Bargaining Program, said union members were pushing for fairness and justice, emphasizing that their industry-wide unity demonstrated readiness to fight for a fair contract.
People familiar with the negotiations said key sticking points include cost-of-living adjustments for the roughly 30,000 union-represented oil workers, healthcare expenses, and rules governing the use of artificial intelligence at refinery and chemical plants.
The United Steelworkers is also seeking stronger safety standards, though sources said this demand appears unacceptable to Marathon.
“Marathon believes workers in this industry are already overpaid,” one source said, speaking on condition of anonymity because they were not authorized to comment publicly. “There’s very little movement on economic issues, and aside from AI, they aren’t seriously engaging with the rest of our proposals. Even on AI, the approach hasn’t been constructive.”
In past contract negotiations, the USW has repeatedly agreed to roll over contracts for several days beyond their expiration through 24-hour extensions.
The current talks are focused on a national pattern agreement that establishes wages for hourly union workers, healthcare costs, and nationwide standards on safety and other matters.
Refinery operators typically earn around $50 an hour after completing their probationary period.
The national framework is paired with site-specific agreements to form individual contracts at each facility.
On Friday, Marathon and workers reached agreement on local issues at the company’s largest facility, the Galveston Bay Refinery, which has a capacity of 631,000 barrels per day.
The euro’s recent surge has brought renewed attention to the European Central Bank, though economists argue it is unlikely to prompt any near-term policy action.
Last week, the single currency climbed to $1.20 against the U.S. dollar for the first time since mid-2021, marking an unusually swift move by historical standards. According to Capital Economics, the euro has strengthened by a similar scale over a 10-day period only a few times in the past decade, while its trade-weighted exchange rate has reached a record high.
Even so, analysts expect the inflationary impact across the euro zone to remain modest. Capital Economics cited ECB sensitivity analysis showing that if the euro stabilizes at current levels, headline inflation next year would be roughly 0.1 percentage points lower than projected in the ECB’s December forecasts.
While this slightly increases downside risks to inflation, the brokerage said it falls far short of the threshold that would justify foreign-exchange intervention on price-stability grounds.
The ECB is likely to address the euro’s strength at its meeting next week, but concrete action appears improbable. Although the central bank has the authority to intervene in currency markets to prevent disorderly moves that could threaten price stability, Capital Economics noted that the euro would need to rise much further before such measures were considered. Even then, intervention through dollar purchases is viewed as highly unlikely.
Historically, the ECB has stepped into currency markets only twice—once in late 2000 and again in March 2011—both times to support, rather than weaken, the euro. Those interventions were coordinated with other major central banks. Capital Economics added that a coordinated effort to push the euro lower now looks extremely unlikely, particularly given the U.S. administration’s preference for a weaker dollar.
ECB officials have so far played down the recent appreciation. Vice President Luis de Guindos has previously described levels above $1.20 as “complicated,” while also calling the level itself “perfectly acceptable.” Meanwhile, Austria’s central bank governor has characterized the latest rise as “modest.”
Capital Economics expects ECB President Christine Lagarde to reiterate that policymakers are closely monitoring exchange-rate developments, but not to actively try to talk the currency down.
Although intervention is unlikely in the near term, prolonged euro strength could influence policy over time. Capital Economics said ECB analysis suggests that if the euro were to appreciate gradually to between $1.25 and $1.30 over the next three years, headline inflation in 2028 would be about 0.3 percentage points lower.
Under such conditions, policymakers would be more inclined to respond through stronger verbal guidance and lower interest rates rather than direct currency market intervention.
For now, economists say the euro’s rise largely reflects U.S. dollar weakness rather than stronger euro zone fundamentals, reducing the need for an immediate response. As a result, the ECB is expected to remain on the sidelines unless the appreciation becomes substantially larger and more persistent, according to Capital Economics.
Gold prices climbed to a new record above $5,600 an ounce this week, as persistent economic and geopolitical uncertainty continued to push investors toward traditional safe-haven assets.
The metal is up more than 17% so far this year, building on last year’s strong advance. Gold’s sustained rally has been driven by a combination of heightened global uncertainty, expectations of lower U.S. interest rates, and consistent purchases by central banks as part of a broader move to diversify away from the U.S. dollar.
Market anxiety has intensified in recent days after President Donald Trump said he intends to impose new tariffs on imports from South Korea, while concerns over a potential partial U.S. government shutdown re-emerged ahead of the January 30 funding deadline.
Following bullion’s surge to record highs, Investing.com spoke with John McCluskey, chief executive of Canadian miner Alamos Gold (NYSE: AGI), to explore the factors behind the rally and his outlook for gold prices over the rest of the year.
To what extent is today’s gold price driven by long-term structural demand, as opposed to short-term momentum and fear of missing out (FOMO)?
McCluskey noted that gold prices are currently strongly underpinned by sustained central bank purchases from at least six countries, including China, Russia, and their trading partners. This long-term structural demand has steadily pushed gold higher over the past decade, with prices hitting a new peak above $5,000 this week.
That rise has increasingly drawn in retail investors. According to fund managers, gold funds are experiencing record inflows, which is boosting both bullion prices and gold equities. Overall, structural demand remains the primary driver of current prices, but it has now spilled over into momentum-driven buying from retail investors.
How much does gold’s outlook hinge on additional U.S. interest rate cuts, and what would be the impact if the easing cycle ends earlier than markets anticipate?
“While U.S. Fed rate cuts may play a role, I don’t think gold’s outlook hinges on further easing, as prices have been—and continue to be—strongly supported by central bank buying. This trend has been in place for around a decade, and I believe there is still plenty of upside, with or without rate cuts,” McCluskey said.
Would a potential easing of global geopolitical tensions be sufficient to trigger a significant pullback in gold prices?
“While de-escalation could weigh on gold prices, there are numerous other tailwinds supporting the market, and I don’t see those trends fading anytime soon,” McCluskey told Investing.com.
“I expect gold prices to continue rising. And it’s not just gold mining CEOs saying this—chief executives at major banks are also pointing to a stronger gold outlook,” he added.
What is your outlook for gold prices by year-end?
I believe the fundamental drivers supporting gold remain firmly in place, pointing to a sustained bull market. With retail investors only now beginning to participate, gold could consolidate around the current $5,000 level and potentially move toward analysts’ year-end targets in the $5,400–$6,000 range.
Despite hitting record highs earlier in the week, precious and industrial metals retreated on Friday, as gold, silver, and copper declined amid profit-taking. The pullback followed a reassessment of expectations for aggressive U.S. interest rate cuts, alongside a stronger dollar.
Spot gold slid more than 6% to $5,042 by 10:55 ET (15:55 GMT).
The dollar gained after President Donald Trump announced former Federal Reserve Governor Kevin Warsh as his choice to lead the central bank, boosting the greenback against major currencies.
Bitcoin, the world’s largest cryptocurrency by market capitalisation, slid 6.53% to $78,719.63 by 12:48 p.m. ET (1748 GMT) on Saturday, extending losses from the previous session.
On Friday, bitcoin touched a low of $81,104 — its weakest level since November 21 — as the U.S. dollar strengthened following the selection of former Federal Reserve Governor Kevin Warsh as the next Fed chair. Investors have voiced concerns that Warsh could pursue tighter liquidity conditions across the financial system.
Warsh has argued for sweeping changes at the central bank and has advocated, among other measures, reducing the size of the Federal Reserve’s balance sheet.
Bitcoin and other digital assets have often benefited from an expanded Fed balance sheet, typically gaining when abundant liquidity supported risk and speculative investments.
Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin, said the Fed’s “oversized balance sheet, coupled with heavy-handed banking regulation,” had effectively trapped liquidity within Wall Street rather than allowing it to flow to the broader economy, contributing to asset bubbles in areas such as bonds, cryptocurrencies, metals and meme stocks.
Ether also dropped sharply, falling 11.76% to $2,387.77 on Saturday afternoon. Cryptocurrencies have struggled to find clear direction since their sharp decline last year, lagging behind strong rallies in gold and equities.
“Sometimes these price corrections can become self-reinforcing,” Jacobsen said, noting that Friday’s sudden sell-off had served as a reminder of market risk. He added that further selling in the coming days was “possible, if not likely.”
Cryptocurrencies are struggling during what had been expected to be a period of strong inflows and supportive regulation under President Donald Trump. Bitcoin, the market leader, has shed about one-third of its value since hitting record highs last October.
Japanese Prime Minister Sanae Takaichi highlighted the advantages of a weaker yen during a campaign speech, striking a note that contrasted with her finance ministry’s stance, which has kept all measures on the table to address excessive currency volatility.
She later walked back her remarks, clarifying that she holds no particular preference regarding the yen’s direction.
“Many people argue that the weak yen is a negative at the moment, but for exporters it represents a significant opportunity,” Takaichi said on Saturday, ahead of the snap election scheduled for February 8.
“Whether in food exports or automobile sales, even with U.S. tariffs in place, the weaker yen has acted as a cushion. That support has been extremely valuable,” she added.
Takaichi also said she aims to strengthen Japan’s economy against currency swings by encouraging greater domestic investment.
FILE PHOTO: Japan’s Internal Affairs Minister Sanae Takaichi attends a news conference at Prime Minister Shinzo Abe’s official residence in Tokyo, Japan September 11, 2019. REUTERS/Issei Kato/File Photo
The yen has been trading near 18-month lows against the U.S. dollar, fuelling inflation and raising expectations of potential interest-rate increases by the central bank. Finance Minister Satsuki Katayama has repeatedly stated that authorities are prepared to step in to stabilise the currency if needed — comments widely interpreted by markets as a signal of possible intervention.
In a post on X on Sunday, Takaichi reiterated that she does not support either a strong or weak yen.
“I did not state that one is better or worse,” she wrote, adding that the government is closely watching financial markets and that, as prime minister, she will avoid making specific remarks on exchange-rate levels.
“My intention was simply to say that we want to build an economic framework capable of withstanding exchange-rate volatility, not — as some reports have implied — to promote the advantages of a weak yen.”
Former prime minister and finance minister Yoshihiko Noda, who co-leads the largest and newly formed opposition group, the Centrist Reform Alliance, said a weak yen is hurting households, according to Nikkei on Sunday.
“Amid an excessive depreciation of the yen, no one feels comfortable when they look at their household finances,” Noda was quoted as saying. “The viewpoint of ordinary citizens is absent, which once again raises serious concerns for me.”
The yen jumped after reports that the New York Federal Reserve had joined Japanese authorities in contacting banks to inquire about exchange rates for potential yen purchases — a move traders often view as a signal that intervention could be imminent.
The currency’s prolonged slide, alongside a recent surge in Japanese government bond yields to record levels, underscores investor unease over the country’s stretched fiscal position.
Takaichi is seeking voter approval for her push to revive inflation and reflate the economy.
The total cryptocurrency market capitalisation dropped by about 5% to $2.82 trillion over the past 24 hours, briefly touching $2.78 trillion twice—its lowest level since April last year. As anticipated, weakness in commodity and equity markets added further pressure to crypto, triggering a sell-off on elevated volumes as traders tightened stop-loss orders after a prolonged period of consolidation. In our worst-case scenario, market cap could fall into the $1.8–2.0 trillion range, corresponding to a 161.8% extension of the initial downside move seen in October–November.
The Crypto Sentiment Index dropped to 16 by Friday, marking its lowest reading in six weeks and a return to extreme fear—a zone the market managed to escape for only two days this week. While such depressed sentiment is often viewed as a buying opportunity, we continue to stress that a more prudent strategy is to wait for a clear exit from extreme fear, helping to reduce the risk of sudden and sharp downside moves.
Bitcoin has fallen 6% over the past 24 hours, briefly dropping to $81K and revisiting the lows seen in late November. The market is now testing the resilience of a support level that previously absorbed heavy selling pressure last year. About $10K lower lies a zone where prior cycle highs from 2021–2022 and the first half of 2024 converge. If that area fails to hold, Bitcoin could slide toward the $52–60K range.
In the near term, however, attention should remain on BTC’s price action around $80K. This level may prove difficult to break decisively and is viewed by many market participants as an attractive buying zone.
More than 22% of Bitcoin’s circulating supply is now underwater. Glassnode identifies a key support level at $83,400; a break below this could open the door to a drop toward the “true average market price” near $80,700. A deeper decline risks pushing long-term holders into losses, potentially accelerating selling pressure.
According to Wintermute Ventures, speculative excess in crypto is likely to fade this year, with digital assets evolving into the core financial and settlement layer of the internet. In this scenario, stablecoins are expected to emerge as the primary medium of exchange in the digital economy.
Santiment reports that Ethereum balances held on exchanges have fallen for a sixth straight month, driven by strong interest in staking. Since July last year, exchange-held ETH has declined by roughly one-third to about 8.15 million tokens.
TRM Labs estimates that illegal cryptocurrency transaction volumes hit a record $158 billion in 2025, up 145% year on year. During the same period, hackers stole $2.87 billion across nearly 150 separate attacks.
Meanwhile, the USD1 stablecoin issued by World Liberty Financial, a company linked to US President Donald Trump, reached a market capitalisation of $5 billion in under a year, making it the world’s fifth-largest stablecoin.
Over the past year, market focus has largely centered on gold and silver, with investors weighing safe-haven demand, central bank purchases, and inflation concerns. Meanwhile, copper has been quietly revaluing. So far this year, copper is up about 4%, following a roughly 40% surge in 2025. Analysts increasingly warn that copper demand could exceed supply within the next decade.
Introduction
When Thomas Edison brought electricity to cities in the late 1800s, copper was essential for carrying power from generating stations to homes, factories, and public lighting. Over time, it has become a cornerstone of modern economies, deeply integrated into energy networks, industrial activity, transportation, and communications. Today, its role is more critical than ever.
Copper now underpins electrification, AI infrastructure, electric vehicles, and defence systems. Yet the pace and scale of this shift are pushing the limits of global supply. According to S&P Global, without substantial new investment, the world could face a copper deficit of roughly 10 million metric tons by 2040.
Copper’s record-high prices point to a fundamental shift in demand dynamics.
At the start of the year, copper prices reached new record highs on the London Metal Exchange (LME), climbing to $13,407 per metric ton. So far this year, copper is up about 3%, building on a strong rally of roughly 40% in 2025.
Historically, copper has behaved as a cyclical commodity, moving in step with global economic growth, especially construction and manufacturing. In past upswings, prices typically weakened once growth cooled or inventories were replenished. This time, though, the forces supporting demand look wider in scope and more enduring.
A growing proportion of copper use is now tied to long-term electrification trends that are far less sensitive to short-term economic cycles.
From the demand side, copper is indispensable as an electrical conductor. It allows efficient power transmission, resists corrosion, has inherent antimicrobial properties, and can be recycled repeatedly without losing performance. Viable substitutes are scarce. Aluminium is often mentioned as an alternative, but with only about 60% of copper’s conductivity, it requires thicker cables to deliver the same current and typically needs extra insulation because it dissipates heat less effectively.
S&P Global projects that global copper demand will rise by roughly 50% by 2040, increasing from about 28 million metric tons today to around 42 million. This expansion is being driven by four key forces: baseline economic demand, the energy transition and new capacity build-out, AI and data centres, and defence modernisation.
While traditional economic uses and energy-transition applications are expected to remain the dominant sources of growth, Asia is likely to account for around 60% of the additional demand.
Around three-quarters of global copper demand comes from electrical uses, including power generation, transmission and distribution, electronics, and electrical equipment. Construction remains the largest single end-market, with copper heavily used in building wiring, plumbing, heating and cooling systems, and renovation projects. This provides a relatively stable foundation for demand, even when economic growth slows.
The energy transition adds another powerful layer of demand. As transport and power systems become increasingly electrified, copper usage is rising across the economy. Electric vehicles are a key driver of this shift, as they contain nearly three times as much copper as internal combustion engine vehicles—about 2.9 times more—reflecting the added requirements for wiring, batteries, power electronics, and electric motors.
More recently, AI and data centres have become a rapidly expanding source of copper demand. S&P Global estimates that copper consumption from data centres could increase from about 1.1 million metric tons in 2025 to roughly 2.5 million metric tons by 2040. Much of this growth reflects the copper needed for internal power distribution, cooling infrastructure, and the grid connections that supply these facilities. By the end of the decade, AI training data centres alone are expected to represent more than half of total data-centre-related copper demand.
Beyond these established drivers, emerging technologies may provide additional upside. Humanoid robotics is still in its early stages, but it is relatively copper-intensive. A single humanoid robot typically contains between 4 and 8 kilograms of copper, used across motors, actuators, wiring, sensors, batteries, and semiconductors. Even modest adoption scenarios could therefore have a meaningful impact on demand.
Defence is another area where copper consumption is set to rise. Heightened geopolitical tensions and the modernisation of military capabilities are leading to higher defence spending and quicker deployment of advanced technologies. Copper is extensively used in military equipment and infrastructure due to its conductivity, durability, and reliability in electrical systems, communications, and propulsion.
Given copper’s strategic role, much of this investment is relatively insensitive to price. At the 2025 NATO summit in The Hague, member states committed to lifting defence spending to 5% of GDP. As a result, annual copper demand from defence applications is expected to approach 1 million metric tons by 2040—around three times current levels.
A Constrained and Rigid Supply Landscape
While global demand continues to rise, supply is expected to stay tight as existing mining assets age. Without substantial additions to capacity, the market could face a shortfall of roughly 10 million metric tons by 2040.
Bridging this gap will be one of the major challenges of the coming decades, as the supply response is both complex and structurally limited. Substitution offers little relief, given copper’s unmatched conductivity, durability, and recyclability.
Over time, mine depletion has made copper extraction more technically difficult and more expensive, while producers are also contending with tighter regulation and rising environmental and social opposition from local communities.
These vulnerabilities have already led to repeated supply disruptions. Freeport-McMoRan has declared force majeure at its Grasberg mine—the world’s second-largest copper operation, accounting for roughly 4% of global output—with a full recovery not expected until 2027. Disruptions are also set to continue this month following strikes at Capstone Copper’s Mantoverde mine in Chile.
Source: Morgan Stanley
Bringing new copper projects online is a lengthy process, typically taking close to two decades—around 17 years—from initial discovery to first production, reflecting regulatory, environmental, political, and cost hurdles. Even so, today’s price levels do not provide strong enough incentives to develop major new deposits by 2040. Most high-quality, easily accessible resources have already been exhausted or are currently in production.
This underscores the importance of maximising output from existing mines, improving operational efficiency, and simplifying permitting processes and incentive structures for new developments. Future supply growth will increasingly rely on deeper exploration, which is both more expensive and technically challenging. Although several deposits have been identified that could theoretically help meet future demand, many are unlikely to be developed because they are not viable under current prices or with existing technologies.
Secondary supply from recycling offers an important supplementary source but cannot fully bridge the gap. Unlike many other metals, copper retains its key properties when recycled, making recycled material virtually indistinguishable from newly mined copper. As copper use expands across the economy, more scrap will become available as equipment and infrastructure reach the end of their life cycles.
End-of-life copper waste is expected to grow by about 4% annually, surpassing 15 million metric tons by 2040. S&P Global estimates that if recycling rates increase from 50% in 2025 to 66% by 2040, recycled copper from end-of-life sources could add roughly 6 million metric tons to total supply.
The expansion of recycling hinges on more efficient collection and processing systems. While scrap supply is more flexible than mined output, policy support will be critical to scaling recycling globally. Regions such as the United States, the European Union, and China have already implemented measures to set recycling targets or invest in supporting infrastructure.
These initiatives are designed to boost secondary copper supply while lowering environmental impacts. Even with significant gains in processing efficiency, recycling is expected to account for at least one-third of total copper supply by 2040.
Meanwhile, smelting and refining are heavily concentrated in China, making them a strategic chokepoint in the global supply chain. China controls a large share of global smelting capacity—around 12 out of 29 million metric tons worldwide—and continues to expand this position, further increasing industry concentration.
Processing margins are coming under growing pressure as treatment and refining charges decline, while costs and regulatory burdens vary widely by region. At the same time, the high concentration of capacity—estimated at around 40–50% of the global total—adds to systemic fragility and increases exposure to geopolitical disruptions.
For these reasons, governments increasingly view mineral supply chains as strategically vital. New models of international cooperation, along with greater participation by sovereign wealth funds, are emerging as alternative ways to strengthen and diversify access to critical minerals and reduce reliance on China-centric supply chains.
Conclusion: A Global Race for Critical Metals
The global economy is entering a phase of exceptional expansion in renewable energy, electric vehicles, artificial intelligence, data centres, and defence, all of which are driving a sharp increase in copper demand—the cornerstone metal of electrification. New technologies, ranging from electrified military systems to advanced robotics, are likely to intensify this trend further. The pace of electrification is now running ahead of the growth in copper supply.
This race extends beyond geological availability to the downstream stages that determine mineral quality and value. China’s dominance in copper refining and magnet production represents a major vulnerability for global supply chains, prompting advanced economies such as the European Union to launch initiatives aimed at securing alternative sources and accelerating the development of domestic capabilities.
During and in the aftermath of 9/11, Nassim Taleb—a Lebanese-born former options trader and quantitative analyst—published Fooled by Randomness. He later refined and formalized the idea in his 2007 book The Black Swan, drawing on the metaphor of the rare black swan, an anomaly among typically white birds.
Taleb defined a Black Swan as an event that meets three criteria: first, it is an extreme outlier, often without historical precedent; second, it carries an immediate and profound impact; and third, it becomes explainable only in hindsight, after the event has occurred.
Forty years ago tomorrow, on the morning of Tuesday, January 28, 1986, tens of millions of Americans watched live as the Space Shuttle Challenger lifted off—only to explode 73 seconds into flight, killing all seven crew members, including the widely admired teacher-astronaut Christa McAuliffe.
The tragedy met all of Nassim Taleb’s criteria for a Black Swan event. First, it was unprecedented, marking the first fatal in-flight disaster involving a US spacecraft. Second, its impact was immediate: President Ronald Reagan postponed his State of the Union address scheduled for that evening. Third, the cause was only fully understood after the fact, when physicist Richard Feynman explained during televised hearings that the disaster resulted from O-ring failure in unusually cold conditions.
One response that did not occur—then or in most Black Swan events—was a meaningful stock market selloff. Markets were largely indifferent. The S&P 500 rose on the day of the explosion and continued higher, gaining 2.6% for the week and 16.8% over the remainder of 1986. The Dow Jones Industrial Average also advanced, rising 1.2% on the day, 2.7% for the week, and 22.6% for the year.
Another Black Swan touched Great Britain exactly fifty years earlier, when global stock markets closed on January 28, 1936, to mark the funeral of King George V. He was succeeded by Edward VIII, whose relationship with an American divorcée triggered a constitutional crisis that lasted much of the year. The turmoil ended with Edward’s abdication in favor of his younger brother, who became King George VI and later passed the crown to his daughter, Elizabeth II—the longest-reigning and arguably most popular British monarch—suggesting the succession ultimately resolved smoothly.
Despite the political uncertainty, 1936 proved to be a strong year for markets during an otherwise bleak Depression-era decade, with the Dow Jones Industrial Average rising 25%.
Across the past century, several other major Black Swan events have reshaped history, including the outbreak of World War I following the assassination in Sarajevo on June 28, 1914; Japan’s attack on Pearl Harbor on December 7, 1941; the assassination of President John F. Kennedy on November 22, 1963; and the September 11, 2001 attacks.
History also shows a striking pattern in which US presidents elected in seven consecutive election years, spaced 20 years apart, died in office: William Henry Harrison (1840), Abraham Lincoln (1860), James Garfield (1880), William McKinley (1900), Warren Harding (1920), Franklin Roosevelt (1940), and John F. Kennedy (1960). One might argue that this grim sequence made the outcome seem almost “predictable.” The streak ended two decades later, when Ronald Reagan survived an assassination attempt in March 1981, with John Hinckley’s bullet narrowly missing his heart.
Following the survival of Reagan—and Pope John Paul II six weeks later—three major Black Swan events marked the late 1980s. The first was the 1986 Challenger explosion, followed by the 1987 Black Monday market crash, which shocked investors far more than the general public. The decade closed with the fall of the Berlin Wall in 1989, a swan-like event, even though many had anticipated the eventual collapse of Gorbachev’s Soviet Union.
The stock market shrugs off most Black Swan events
The stock market posted an unexpected rally in the week and year following President Kennedy’s assassination and rebounded swiftly after the September 11, 2001 attacks. These Black Swan events appeared to have little lasting effect on Wall Street, as traders largely focused on other—primarily financial—developments and trends.
Markets also tended to rise during many 20th-century wars, most of which began with surprise attacks. The abrupt onset of World Wars I and II, the unexpected outbreak of the Korean War, and the August 1964 Gulf of Tonkin escalation of the Vietnam War all triggered initial sell-offs that were followed by strong market recoveries.
The accompanying diagram illustrates the market’s detailed reaction after the attack on Pearl Harbor in late 1941 and following the North Korean invasion in June 1950. These two episodes were separated by a period of post-war, largely “Swan-less,” malaise in the late 1940s.
In the two most recent Black Swan episodes, markets followed a familiar pattern. First, the abrupt escalation of the COVID-19 crisis in March 2020 triggered a stunning 35% market collapse in just 35 days, which was then followed by one of the strongest recoveries on record later that year. Second, markets sold off sharply after President Trump and Interior Secretary Lutnick unveiled sweeping high-tariff measures on “Liberation Day” in April 2025, yet the S&P 500 has since rebounded and is now up roughly 40% from those lows.
Most of the Dow’s top five annual gains over its 130-year history followed major Black Swan events.
By definition, the next Black Swan event is unknowable, but the market’s response may not be. With or without a short-term correction, prices are likely to be higher a year later.
EUR/USD drops 0.75% as Kevin Warsh’s Fed nomination lifts US yields and fuels Dollar demand.
Hot US producer inflation reinforces expectations for a steady Fed, pushing Treasury yields above 4.25%.
Solid German and Eurozone GDP figures fail to counter Dollar strength driven by policy repricing.
EUR/USD slid 0.75% in the North American session as broad US Dollar strength followed Trump’s mildly hawkish Fed nominee and an inflation report supporting a steady-rate stance. The pair was trading at 1.1882 at the time of writing, down from a session high of 1.1974.
Euro sinks below 1.19 as hawkish Fed leadership signals and sticky inflation crush rate-cut hopes
Kevin Warsh has been named by President Trump as the next Chair of the Federal Reserve, confirming rumors that surfaced late Thursday. Financial markets reacted swiftly, sending precious metals sharply lower while the US Dollar climbed nearly 1%, as measured by the US Dollar Index (DXY), which tracks the greenback against six major peers. The DXY is on course to close above the 97.00 mark.
US Treasury yields also advanced, with the 10-year yield rising toward 4.25%. Meanwhile, US producer-side inflation edged higher, moving further away from the Federal Reserve’s 2% target and reinforcing the case for keeping interest rates unchanged. In addition to the December Producer Price Index (PPI) release, comments from Federal Reserve officials remained in focus.
Separately, breaking news reported that the US Senate reached an agreement to pass a government funding package later tonight, averting a potential shutdown, according to Politico.
Rising Treasury yields suggest investors see reduced odds that Warsh would pursue aggressive rate cuts to appease the White House. At the time of writing, the US 10-year Treasury yield was up around 1.5 basis points at 4.247%.
In Europe, Germany’s economy expanded by 0.4% year-on-year, beating expectations. However, stronger-than-forecast GDP readings for Germany and the Eurozone, along with an uptick in German inflation, failed to offer meaningful support to EUR/USD.
Looking ahead, the US economic calendar will feature a batch of labor market data, speeches from Fed officials, and January ISM Manufacturing and Services PMIs. In Europe, HCOB flash PMIs for the Eurozone, Germany, and France, alongside the European Central Bank’s monetary policy meeting, could inject volatility into EUR/USD.
Daily market movers: Dollar comeback sends Euro tumbling
St. Louis Fed President Alberto Musalem said there is no need for further rate cuts at present, noting that the current 3.50%–3.75% policy range is broadly neutral. He added that easing would only be warranted if the labor market weakens significantly or inflation falls materially.
Fed Governor Stephen Miran backed Kevin Warsh as a strong candidate for Fed Chair, attributing the recent rise in producer prices largely to housing costs and portfolio management fees. Meanwhile, Fed Governor Christopher Waller said the labor market remains soft despite steady growth, arguing inflation would be closer to 2% without tariffs, which he said are keeping price growth near 3%. Waller added that policy should be closer to neutral, around 3%.
Atlanta Fed President Raphael Bostic called for patience, stressing that interest rates should remain somewhat restrictive. He warned that the full inflationary impact of tariffs has yet to be felt and expects price pressures to persist.
US producer inflation data reinforced the cautious tone. The Producer Price Index (PPI) held steady at 3.0% YoY in December, missing expectations for a slowdown to 2.7%. Core PPI accelerated to 3.3% YoY from 3.0%, defying forecasts for a decline and highlighting ongoing upstream price pressures.
In Europe, EU GDP grew 1.4% YoY in Q4, unchanged from Q3 but above expectations. Germany’s economy expanded 0.4% YoY, beating forecasts and improving from the prior quarter. German inflation, measured by the HICP, edged up to 2.1% in January from 2.0%, remaining within the ECB’s target range.
Technical outlook: EUR/USD uptrend under threat after break below 1.1850
The EUR/USD technical outlook suggests the uptrend is under threat after the pair failed to sustain gains above the 2025 high at 1.1918, accelerating the decline below 1.1850. The Relative Strength Index (RSI) has turned mildly bearish, indicating a shift in momentum that could open the door to further downside.
On the downside, initial support is seen at 1.1800. A decisive break below this level could expose the 20-day simple moving average (SMA) at 1.1743.
On the upside, immediate resistance stands at 1.1900. A move back above this level would bring 1.1950 into focus, followed by the yearly high at 1.2082.
Major stock indexes slipped slightly as markets weighed President Trump’s pick of Kevin Warsh to replace Fed Chair Jerome Powell in May.
Verizon jumped on robust subscriber additions and optimistic guidance for 2026, while American Express declined even after topping revenue expectations.
Silver tumbled more than 17% in a sharp reversal from record levels, sparking broad profit-taking across precious metals.
Even with Friday’s retreat, the three main benchmarks still delivered solid gains for January, rounding off a strong opening to 2026.
The Dow Jones Industrial Average fell about 200 points on Friday, down 0.2%, as investors assessed President Donald Trump’s nomination of former Fed Governor Kevin Warsh to replace Jerome Powell as Federal Reserve Chair when his term ends in May. The S&P 500 also slipped 0.2%, while the Nasdaq Composite declined 0.3%.
Even so, January ended on a strong note overall, with all three major indexes posting solid monthly gains: the Dow climbed 2.1%, the S&P 500 rose 1.8%, and the Nasdaq advanced 1.9%.
Warsh nomination puts an end to months of Fed leadership speculation
President Trump announced on Friday morning that Kevin Warsh would be his choice to lead the Federal Reserve, bringing an end to months of uncertainty over who would succeed Jerome Powell. Warsh, 55, served on the Fed’s Board of Governors from 2006 to 2011 and played a prominent advisory role during the 2008 financial crisis.
Investors generally see Warsh as a relatively hawkish nominee who would favor lower interest rates, though likely with more restraint than some other contenders. His nomination now heads to what could be a difficult Senate confirmation process, as Republican Senator Thom Tillis has warned he will block Fed nominees until a Justice Department investigation into Powell is concluded.
Verizon jumps after posting record subscriber additions
Verizon Communications Inc. (VZ) stood out among Dow stocks, jumping 6.6% after reporting its strongest quarterly subscriber growth since 2019. The telecom operator added 616,000 postpaid wireless phone customers in the fourth quarter, well above forecasts of about 417,000.
The surge was driven by new CEO Dan Schulman’s aggressive promotions, including offers such as four phone lines for $100 a month, which proved popular with holiday shoppers. Investors were further encouraged by Verizon’s 2026 outlook, as the company projected adjusted earnings of $4.90 to $4.95 per share, comfortably exceeding consensus estimates of $4.76.
Financial shares pull back amid mixed earnings results
American Express Company (AXP) slid 3.1% after posting fourth-quarter results that broadly met expectations but failed to excite investors. The payments firm reported earnings of $3.53 per share on revenue of $18.98 billion, marking a 10.5% year-over-year increase. However, sentiment was dampened by higher credit loss provisions and rising costs, despite management lifting its 2026 outlook above consensus and announcing a 16% dividend hike.
Elsewhere in the sector, Visa Inc. (V) fell 2.3% even after beating both revenue and earnings forecasts, while International Business Machines (IBM) declined 1.6%, giving back part of its roughly 5% rally following earnings the previous day.
Big oil companies top forecasts as production hits record levels
Chevron Corporation (CVX) edged up 0.5% after delivering quarterly earnings that topped expectations, despite weaker oil prices weighing on the broader energy sector. The company highlighted record output from the Permian Basin and its offshore Guyana assets.
ExxonMobil Corporation (XOM) also surpassed profit estimates but slipped 0.8% as both oil majors faced pressure from a global supply surplus that has driven crude prices lower. Management at both companies stressed strong cost discipline and resilience, noting they can remain profitable even with oil at $35 a barrel, although full-year profits have fallen from prior peaks.
Apple slips even after posting a blockbuster iPhone quarter
Apple Inc. (AAPL) slipped 1.2% on Friday even after delivering fiscal first-quarter results that far exceeded expectations. The company reported revenue of $143.8 billion, a 16% year-over-year increase, fueled by a 23% surge in iPhone sales to $85.27 billion. CEO Tim Cook described demand for the iPhone 17 lineup as “simply staggering,” with Apple setting record revenues across all geographic regions. The company’s installed base climbed to more than 2.5 billion devices, up from 2.35 billion a year earlier.
Despite the standout performance, some investors chose to lock in profits after Apple’s recent rally. Broader weakness in the technology sector also weighed on the stock, following a sharp 10% drop in Microsoft shares a day earlier after the company issued disappointing cloud guidance.
Silver tumbles sharply in a dramatic pullback from record highs
Silver prices plunged as much as 21% on Friday, pulling back sharply from record highs in what analysts described as the metal’s steepest one-day decline in 14 years. After surging to an all-time peak of $122 an ounce on Thursday, heavy profit-taking sparked a broad selloff across precious metals.
Even with the abrupt correction, silver was still poised to finish the month up more than 30%, underpinned by heightened geopolitical risks, a weaker dollar, and tight physical supply. Trading volumes in the iShares Silver Trust (SLV) spiked as retail investors who had chased the rally rushed to exit positions. Gold also eased, retreating from recent record levels above $5,500 an ounce.
The US Federal Reserve experienced an eventful week. On Monday, it contacted New York–based banks to assess their USD/JPY exposure, sparking speculation that Washington could be coordinating with Japan to address the Japanese Yen’s weakness. This development prompted a sharp sell-off in the US Dollar early in the week.
The Fed’s midweek policy meeting resulted in no change to the federal funds rate, which was kept within the 3.50%–3.75% range, in line with expectations. During his press conference, Chair Jerome Powell avoided questions related to politics, his tenure, and the subpoena. However, he pointed to improving economic momentum and reduced risks to both inflation and the labor market.
The US Dollar Index (DXY) has since rebounded toward the 96.90 level, recovering most of its weekly losses after President Donald Trump nominated former Fed Governor Kevin Warsh as the next Fed Chair on Friday. The nomination now awaits Senate approval. Looking ahead, the US is set to release several key data points next week, including the ISM Manufacturing PMI for January, MBA mortgage applications, Challenger job cuts, and weekly initial jobless claims.
EUR/USD is hovering around the 1.1880 area after the US Dollar rebounded and recovered nearly all of its weekly losses. In the coming week, Hamburg Commercial Bank (HCOB) will release Manufacturing, Services, and Composite PMIs for both Germany and the Eurozone. Additional Eurozone data include the ECB Bank Lending Survey and December Producer Price Index (PPI), while Germany will publish December Factory Orders and Industrial Production figures.
GBP/USD is trading near 1.3600 ahead of the Bank of England’s monetary policy announcement on Thursday. Governor Andrew Bailey’s subsequent press conference is expected to shed further light on the central bank’s outlook for interest rates. UK data releases include the final January S&P Global PMIs and the Halifax House Price Index.
USD/JPY is holding close to the 154.50 level, paring earlier gains after Tokyo CPI data indicated easing inflation in January. Headline inflation slowed to 1.5% year-over-year from 2% in December, while core measures eased to 2%, undershooting forecasts. The softer inflation profile reduces pressure on the Bank of Japan to tighten policy.
USD/CAD is trading around 1.3580, with the Canadian Dollar maintaining a slight edge against the greenback despite data showing economic stagnation in November. Monthly GDP was flat following a 0.3% contraction in the prior month and fell short of expectations for modest growth. Upcoming Canadian releases include January S&P Global PMIs and the Ivey PMI.
Gold is trading near the $4,880 area after surrendering all weekly gains. Prices retreated from a record high of $5,598 as profit-taking emerged and the US Dollar strengthened sharply.
Looking ahead: Emerging views on the economic outlook
Scheduled central bank speakers for the week:
Monday, February 2: – Bank of England’s Breeden – Federal Reserve’s Bostic
Tuesday, February 3: – Federal Reserve’s Barkin
Wednesday, February 4: – Federal Reserve’s Cook
Thursday, February 5: – Bank of England Governor Andrew Bailey – Federal Reserve’s Bostic – Bank of Canada Governor Tiff Macklem
Friday, February 6: – European Central Bank’s Cipollone – European Central Bank’s Kocher – Bank of England’s Pill – Federal Reserve’s Jefferson
Central bank meetings and upcoming data set to influence monetary policy decisions
Key economic data and policy events for the week:
Monday, February 2: – Germany’s December Retail Sales – US ISM Manufacturing PMI
Tuesday, February 3: – Reserve Bank of Australia monetary policy decision – US December JOLTS job openings
Wednesday, February 4: – Eurozone January Harmonized Index of Consumer Prices (HICP) – US January ADP employment report
Thursday, February 5: – Australia’s December trade balance – Eurozone December retail sales – Bank of England monetary policy decision – European Central Bank monetary policy decision
Friday, February 6: – Canada’s January employment change – US January nonfarm payrolls – US February Michigan consumer sentiment
Here is what you need to know on Friday, January 30:
Markets were driven early Friday by the latest political and geopolitical developments linked to US President Donald Trump, as investors focused on the announcement of his pick for Federal Reserve Chair. Bloomberg reported that the Trump administration is preparing to nominate former Fed Governor Kevin Warsh for the role as early as Friday morning in the US.
At the same time, the Wall Street Journal noted that President Trump and Senate Democrats have reached an agreement to avoid a government shutdown.
Together with profit-taking and the Federal Reserve’s recent decision to keep interest rates unchanged, these developments helped revive demand for the US Dollar (USD), pushing it up from four-year lows against its major counterparts.
Despite the rebound, the US Dollar remains on course for a second consecutive weekly decline, weighed down by concerns over President Trump’s unpredictable foreign policy stance and repeated challenges to the Federal Reserve’s independence.
On Thursday, Trump threatened to levy a 50% tariff on all aircraft exported from Canada to the United States, accusing Ottawa of unfairly restricting the certification of Gulfstream business jets.
Reuters also reported that Trump plans to hold talks with Iran, even as the Pentagon readies for potential military action and the US steps up its naval presence in the Middle East.
In addition, the White House confirmed that Trump signed an executive order authorizing tariffs on countries that supply oil to Cuba.
Looking ahead, market attention remains firmly on Trump’s nomination of the next Fed Chair, along with the upcoming US Producer Price Index (PPI) release, which could shape the Dollar’s next move.
Before that, preliminary fourth-quarter 2025 GDP data from Germany and the Eurozone are expected to draw investor interest.
In G10 currencies, AUD/USD remains under heavy pressure below the 0.7000 mark amid profit-taking ahead of a likely Reserve Bank of Australia (RBA) rate hike next week. USD/JPY hovers near 154.00, with the Japanese Yen staying weak after softer Tokyo CPI data reduced expectations for an early Bank of Japan (BoJ) rate increase.
EUR/USD pares losses to reclaim the 1.1900 level, though downside risks persist ahead of key German and Eurozone GDP releases. GBP/USD continues to consolidate around 1.3750, weighed down by the ongoing recovery in the US Dollar.
In commodities, Gold slides nearly 4% to trade around $5,200 in early European hours after briefly testing the $5,100 level during the Asian session. Meanwhile, WTI crude oil extends its retreat from five-month highs near $66.25, trading close to $64 as Trump signals openness to talks with Iran.
Germany’s Federal Statistics Office will publish preliminary fourth-quarter GDP figures at 09:00 GMT on Friday, followed by Eurostat’s release of flash Eurozone GDP data at 10:00 GMT for the same period.
Germany’s economy is expected to expand by 0.2% quarter-over-quarter in Q4, rebounding from stagnation in the previous quarter, while annual growth is forecast to remain unchanged at 0.3%. At the Eurozone level, seasonally adjusted GDP is projected to grow by 0.2% QoQ in the fourth quarter, down from 0.3% previously, with year-over-year growth seen moderating to 1.2% from 1.4%.
How might Germany and the Eurozone’s Q4 GDP data influence the EUR/USD exchange rate?
The EUR/USD pair may face downside pressure if Germany and Eurozone GDP figures come in line with forecasts. Investors will also closely monitor December unemployment data from both regions, as well as Germany’s Consumer Price Index (CPI for January).
ECB policymaker Martin Kocher cautioned that additional strength in the Euro could lead the central bank to restart interest-rate cuts. After his remarks, market expectations for a summer rate reduction edged higher, with the implied probability of a July cut increasing to roughly 25% from around 15%. The ECB is set to meet next week and is broadly expected to leave interest rates unchanged.
Meanwhile, EUR/USD is under strain as the US Dollar gains traction amid speculation that US President Donald Trump may nominate former Federal Reserve Governor Kevin Warsh as the next Fed Chair. Trump indicated late Thursday that he would reveal his decision on Friday morning, with markets leaning toward Warsh, who is perceived as relatively hawkish.
From a technical perspective, EUR/USD is hovering near 1.1920 at the time of writing. Daily chart analysis continues to point to a bullish bias, with the pair holding within an ascending channel. A move toward the upper channel boundary near 1.2050 is possible, followed by 1.2082, the highest level since June 2021. On the downside, initial support is seen at the nine-day Exponential Moving Average (EMA) around 1.1870, with further support near the lower boundary of the channel at approximately 1.1840.
Bitcoin tumbled sharply on Friday, sliding to its lowest level in more than two months as forced liquidations swept through leveraged positions and investors assessed the potential implications of a change in U.S. Federal Reserve leadership.
The world’s largest cryptocurrency was last down 6.4% at $82,620.3 as of 02:15 ET (07:15 GMT). Prices touched an intraday low of $81,201.5, coming close to breaching the April lows had the selloff extended further.
Crypto Markets See $1.7 Billion in Liquidations
Data from CoinGlass showed that roughly $1.68 billion in leveraged positions were liquidated over the past 24 hours amid the selloff, with about 93% of those losses coming from long positions—traders positioned for higher prices.
Approximately 270,000 traders saw their positions forcibly closed, intensifying the decline across Bitcoin and the broader digital asset market.
Liquidations occur when exchanges automatically shut leveraged positions that fail to meet margin requirements as prices move against traders, a dynamic that often amplifies volatility and accelerates downside moves in risk-on markets.
Traders Watch Trump’s Pick for Fed Chair
Friday’s selloff coincided with rising market unease over U.S. monetary policy leadership. President Donald Trump said he would announce his choice to replace Federal Reserve Chair Jerome Powell on Friday morning, fueling speculation that former Fed Governor Kevin Warsh could be nominated for the role. Reports indicate the White House is preparing to put Warsh forward as the next Fed chair.
Warsh is widely viewed as favoring a tighter approach to the Fed’s balance sheet and overall policy stance, a shift that could drain liquidity that has supported risk assets, including cryptocurrencies.
Markets have responded with broader risk-off positioning, a firmer U.S. dollar, and rising yields, while crypto prices have come under renewed pressure. Central bank policy direction plays a crucial role in shaping interest rates, liquidity, and risk-asset valuations—key drivers for high-beta assets such as Bitcoin.
Altcoins Slide as Ether and XRP Fall 7%
Most altcoins also slumped on Friday as liquidation-driven selling rippled through the market.
Ethereum, the world’s second-largest cryptocurrency, fell more than 7% to $2,749.92, while XRP, the third-largest, also dropped 7% to $1.75.
Elsewhere, Solana slid 6.5%, Cardano plunged 8%, and Polygon retreated by more than 5%.
Among meme tokens, Dogecoin declined 6%, while $TRUMP fell 3.5%.
I’ve been highlighting a $120 target for silver for months, most recently again on Monday. In fact, the first time I presented the chart projecting $120 as a long-term objective was years ago. That level has now been reached.
Silver futures peaked at $121.75 before plunging below $107, eventually stabilizing near $110. The magnitude of the intraday reversal is a stark reminder that the white metal can fall even faster than it rises.
Recall that in 2011, silver erased two months of gains in just six trading days. If history were to repeat, prices would be sitting just above $50 before Valentine’s Day. Possible? Yes—but the decline doesn’t need to be nearly as violent.
A Potential Top Forming in Silver
That said, it’s still possible silver pushes higher in the near term. The metal didn’t collapse by tens of dollars—it was simply extremely volatile earlier today. However, with the long-term target now achieved, and considering conditions in the U.S. Dollar Index and the broader equity market, there’s a growing case that silver may have just put in a top.
The equity market may be especially critical in this context. The recent rebound in the U.S. Dollar Index failed to spark meaningful declines in precious metals, but today’s selloff in equities triggered much sharper downside moves. That contrast is an important signal.
Stocks have once again been unable to hold above their 2025 highs, suggesting the rally may be exhausted. While this is another in a series of similar invalidations, the magnitude of today’s intraday decline in precious metals hints that this episode could be different.
Adding to the cautionary tone, short-term weakness in mining stocks is also notable.
I highlighted the red rectangle to illustrate how current prices in GLD, SLV, and GDXJ compare with last week’s levels. In short, gold and silver are higher, while miners are lower—exactly the type of divergence that often marks the end of a rally.
Bitcoin Selloff Gains Momentum
Another important signal is the accelerating decline in Bitcoin.
After confirming its breakdown below the flag pattern, Bitcoin fell roughly 5% today.
I previously noted that for those not yet short Bitcoin, this represented an attractive opportunity to initiate or add to positions if sizing felt insufficient. From a risk–reward perspective, that view still stands. The so-called “new gold” was perched at the edge—and has now taken its first decisive step lower.
Last but not least—gold. The yellow metal initially surged, only to reverse sharply, plunging nearly $500 on an intraday basis. When I first became interested in the precious metals market many years ago, gold’s entire nominal price was well below that amount. Time flies—and so has the price of gold. That said, it appears gravity may be about to reassert itself once again.
Gold futures continue to show strong bullish momentum, holding well above the VC PMI Daily Pivot near $5,329, reinforcing higher-timeframe trend alignment across both daily and weekly cycles. The sharp, near-vertical advance that began earlier this week is characteristic of classic “escape velocity” behavior, with price accelerating away from the mean during a synchronized time-and-price harmonic window.
Within the VC PMI framework, price is now rotating inside the upper volatility band. Daily Sell 1 near $5,465 defines the first layer of structural resistance, while Daily Sell 2 around $5,588 marks the outer boundary of the current expansion envelope. The recent intraday peak near $5,626.8 indicates price is pressing into a late-stage extension phase, where probabilities begin to shift toward consolidation or orderly mean reversion rather than continued vertical advance.
Square of 9 geometry supports this view. Angular projections from the latest weekly VC PMI Pivot near $4,864 project resistance harmonics into the $5,560–$5,620 region, closely overlapping with the Daily Sell 2 band. This confluence of time, price, and geometric resistance elevates the likelihood of a near-term inflection window.
On the downside, rotational support remains layered at Daily Buy 1 near $5,205 and Daily Buy 2 near $5,070, with deeper mean support at the weekly VC PMI Pivot around $4,864 should downside volatility expand.
Cycle analysis further identifies a key timing cluster between January 29 and February 2, derived from overlapping 30-day and 60-day harmonics. Historically, such windows tend to resolve momentum conditions via either range compression or a counter-trend rotation back toward the VC PMI mean. Momentum indicators, including MACD divergence behavior, suggest upside efficiency is fading, reinforcing the risk of a pause or rotational pullback rather than immediate continuation.
From a strategic standpoint, trend-following participants may continue to trail protective stops below $5,205, while mean-reversion traders will look for rejection signals within the $5,560–$5,620 Square of 9 resistance arc. A sustained close above $5,588 would negate the near-term mean-reversion risk and reopen the path toward higher geometric extensions.
Markets absorbed last night’s FOMC decision without much surface reaction, but the takeaway was straightforward: the Fed is content to keep financial conditions accommodative. That stance weighed on the U.S. dollar and pushed yields lower, while gold and equities edged higher on solid earnings. In essence, the Fed did nothing to challenge the prevailing market narrative. Attention now shifts back to the charts, which are beginning to tell a compelling story.
Is It Possible? DXY Slips Back to Its 2008 Trendline
The DXY has drifted back into a long-term monthly trendline zone that has previously served as a key structural floor. For now, this move represents a test rather than a confirmed breakdown.
What matters next:
A decisive weekly close below this support area would confirm a genuine structural breakdown. Conversely, if the DXY stabilizes and rebounds, it would be an early signal that the crowded “short USD” trade may be vulnerable to a squeeze.
This is precisely the kind of setup where long-term sentiment can be right, yet short-term positioning gets punished.
EUR/USD Points to a Near-Term Pause as the Dollar Regains Some Strength
EUR/USD is pushing into a dense resistance cluster, including the 1.20 psychological level, a multi-year trendline, channel alignment, and a bearish divergence on the weekly RSI.
That combination typically leads to at least a pause or pullback, even if the longer-term bias remains bullish for EUR/USD (and bearish for the dollar). If EUR/USD does roll over, it would offer the cleanest “risk-on USD bounce” setup without having to guess.
Key takeaway: A stall in EUR/USD here gives the DXY room to breathe.
USD/CHF Is Also Trading at Extreme Levels
USD/CHF is one of the clearest expressions of U.S. dollar pessimism. When it reaches extreme levels, two patterns typically emerge: downside momentum begins to fade as the trade becomes crowded, and volatility increases as even minor catalysts trigger repositioning.
Even if dollar weakness persists, this is a zone where smooth continuation should no longer be assumed.
USD/JPY: A Key Pressure Zone for a Potential Dollar Reversal
USD/JPY is where macro theory collides with market reality. If a meaningful USD squeeze is going to materialize, this pair is almost certain to play a role.
On the weekly chart, USD/JPY is interacting with a major structural pivot, pulling back into a former resistance area that is now attempting to act as support around 151–153. For now, price has printed a wick at this support zone, suggesting USD/JPY may pause here before any further downside acceleration.
If this support holds, a rotation higher becomes increasingly plausible, with upside targets back toward the prior supply zones at 157.7–158.7, followed by 160.7–161.8.
That wouldn’t imply the start of a new USD bull market, but rather a crowded-trade unwind, especially with the current consensus loudly focused on a yen carry unwind and broad USD bearishness.
Bank of Japan Policy Decision
The next Bank of Japan policy meeting is scheduled for 18–19 March 2026, with market expectations largely aligned:
No rate hike is expected in March
Attention will center on guidance, messaging, and any indications of follow-through later in 2026
A continued bias toward verbal intervention and tactical signaling, rather than immediate or aggressive FX action
In short, the BOJ meeting is unlikely to be the catalyst itself. More often, it serves as the narrative justification after price has already picked a direction.
That’s why USD/JPY should be viewed as a leading indicator rather than a reactive trade. Focus on the key levels, and let positioning and price action do the talking.
This may be the single most important chart in global bond markets right now.
Japanese investors rank among the world’s largest exporters of capital. Collectively, they hold a substantial share of European sovereign debt and U.S. Treasuries, with ownership running into the trillions of dollars. However, the economics underpinning these investments may soon begin to break down.
If that happens, Japan could see a meaningful repatriation of capital—away from foreign bond markets and back into domestic fixed-income assets.
The consequences for both global bond yields and currency markets would be significant. To understand why, it helps to look at the basic math.
The chart compares the 30-year Japanese government bond yield (blue) with the hedged yield on the 30-year U.S. Treasury (orange), adjusted for USD/JPY currency-hedging costs. The scenario assumes the Bank of Japan gradually lifts policy rates toward 1.75%, while the Federal Reserve cuts rates to around 3% over time.
Note how the two yields are now converging.
At current levels, Japanese investors gain little—if any—advantage from purchasing 30-year U.S. Treasuries on a currency-hedged basis versus simply holding long-dated Japanese government bonds at home. The picture becomes even more compelling when considering a longer-standing behavior.
For years, Japanese investors have also allocated heavily to foreign bonds without hedging currency risk—and for a clear reason.
The prevailing assumption was that the yen would continue to depreciate, allowing Japanese investors to benefit not only from higher foreign yields but also from favorable FX moves.
Earn higher yields in foreign bond markets
Gain additional returns from yen depreciation
With the United States signaling its willingness to prevent further yen weakness, and Japanese bond yields having risen sharply, this long-standing equation no longer holds.
Should Japanese investors begin to scale back capital outflows to overseas bond markets, the ripple effects across global bond yields and currency markets could be substantial.
A sharp pullback in Microsoft (MSFT) has cascaded into a broader market correction. While the company beat earnings expectations on both the top and bottom lines, investors were disappointed by slower cloud performance and higher-than-anticipated capital expenditure plans. Microsoft shares have fallen 11.8% on the day (-12.3% YTD, -4.1% LTM), dragging the broader technology sector lower.
The NASDAQ slid 2.3%, with semiconductor stocks posting similar losses. The Magnificent Seven index declined 1.6%, pulling the S&P 500 down 1.3%, although the equal-weighted S&P slipped just 0.3%. The Dow Jones Industrial Average fell 0.4%, while the Russell 2000 dropped 1.1% in sympathy. Market volatility picked up, with the VIX jumping to 19.4.
Adding to the pressure, precious metals sold off, with gold down 2.2% and silver falling 3.5%. By contrast, copper surged 3.4% to a fresh all-time high of $6.58. Crude oil rallied 3.7% to $65.20 per barrel—after briefly touching $66.50—marking a gain of more than 10% over the past week amid rising risks of conflict involving Iran, the highest level since June 2025. Natural gas and gasoline prices also moved higher.
Risk-off sentiment was further evident in cryptocurrencies, with Bitcoin sliding 5% to below $85,000, its lowest level in a year.
Bond markets remained relatively calm. The U.S. 2-year yield eased 2 basis points to 3.55%, while the 10-year slipped 1 basis point to 4.23%. International yields, including those in Japan, were largely unchanged, and the U.S. dollar index was flat on the session.
Overall, the market damage remained concentrated in technology and basic materials. Energy stocks advanced, and communication services outperformed, supported by strength in Meta Platforms (META). Meta shares jumped 7.6% following solid earnings beats and a well-received conference call, lifting the stock to gains of 9% year-to-date and 6.3% over the past 12 months. Meanwhile, consumer staples, utilities, industrials, financials, and real estate sectors all traded in positive territory.
This selloff increasingly looks like a textbook buying opportunity, with early signs of a rebound already emerging across the major equity indexes. Another factor weighing on sentiment is the renewed risk of a government shutdown, which is especially challenging given the ongoing data blackout following last year’s record-length shutdown.
While the recent swing—from the S&P 500 touching 7,000 just yesterday to bottoming near 6,870 today—represents a level of volatility that has unsettled some investors, the fundamental backdrop of the economy remains solid. Volatility has clearly picked up, but the broader trend continues to point higher.
After spending months in the doldrums, Meta Platforms appears to have reshaped the narrative around its business. The Magnificent Seven stock slumped 11% in October following its third-quarter earnings release, as investors grew increasingly concerned about runaway spending on artificial intelligence.
That skepticism now looks to be fading after Meta’s fourth-quarter 2025 earnings report, released on Jan. 28. Shares climbed roughly 8% in after-hours trading by 7:00 p.m. ET, prompting investors to rethink the company’s outlook, with growth prospects increasingly overshadowing prior worries about spending.
Meta delivers strong earnings beat and upbeat guidance
In the fourth quarter, Meta reported revenue of $59.9 billion, representing growth of about 24% and comfortably exceeding expectations of $58.3 billion, or 21% growth. Adjusted earnings per share (EPS) came in at an impressive $8.88, up nearly 11% year over year and well above the consensus estimate of $8.16.
The standout highlight, however, was Meta’s guidance for the first quarter of fiscal 2026. At the midpoint, the company forecasts revenue of $55 billion, far surpassing analysts’ expectations of $51.3 billion.
This outlook implies quarterly revenue growth of roughly 30%, which would mark Meta’s fastest expansion rate since the third quarter of 2021. Such an acceleration is precisely what investors had been hoping for and offers further confirmation that the company’s investments in artificial intelligence are beginning to pay off.
Among Meta’s underlying performance metrics, growth in ad impressions delivered was particularly notable. The measure, which tracks the number of ads shown across Meta’s platforms, rose 18% during the quarter—its strongest pace in nearly two years. Chief Financial Officer Susan Li attributed this performance to robust user engagement and growth, highlighting that watch time on Instagram Reels increased 30% year over year, signaling a meaningful rise in platform engagement.
Stronger engagement is an encouraging signal for Meta, indicating that its AI-driven recommendation and ranking algorithms—responsible for determining what content users see and when—are becoming more effective. As these systems improve, users spend more time across Meta’s platforms, enabling the company to serve a greater volume of advertisements.
Markets shrug off higher-than-expected spending outlook
Expectations of sharply higher capital spending have been the key drag on Meta’s shares in recent months. Against that backdrop, the company’s latest CapEx guidance came in well above even elevated market expectations.
Meta now projects capital expenditures of $115 billion to $135 billion in 2026, compared with Wall Street estimates of roughly $110 billion. At the midpoint, this implies a 73% jump from 2025 CapEx of $72.2 billion.
In addition, Meta guided for total expenses of $162 billion to $169 billion in 2026, materially higher than consensus forecasts of around $150 billion.
Reading between the lines, however, reveals a crucial detail in Meta’s 2026 outlook. Management stated that “despite the meaningful step up in infrastructure investment, in 2026, we expect to deliver operating income that is above 2025 operating income.”
Since revenue equals operating income plus total expenses, this guidance allows for an implied revenue estimate. Meta generated $83.3 billion in operating income in 2025, and using the upper end of its 2026 expense guidance at $169 billion implies potential full-year revenue of roughly $252.3 billion.
That figure would represent about 25.5% growth from Meta’s 2025 revenue of $201 billion—well above the approximately 18.3% growth rate analysts had been projecting for 2026.
Growth eclipses spending concerns as Meta’s AI strategy gains traction
Although Meta’s expense guidance initially appeared to be the primary concern for investors, the company ultimately rose above those figures with exceptionally strong growth projections. While critics continue to argue that Meta has yet to produce a best-in-class general-purpose AI model, the company’s financial performance tells a compelling story.
Meta’s AI strategy is proving effective, driving faster growth in its core business of social media advertising. After a challenging stretch, Meta Platforms appears to have delivered precisely what was needed to restore investor confidence.
The Japanese yen edged lower after softer-than-expected Tokyo CPI data dampened expectations for an imminent Bank of Japan rate hike.
Persistent fiscal challenges and political uncertainty continued to pressure the currency, although fears of official intervention helped limit losses.
Meanwhile, concerns over the Federal Reserve’s independence could restrain any rebound in the U.S. dollar and cap gains in the USD/JPY pair.
The Japanese yen (JPY) came under renewed selling pressure during Asian trading on Friday after data showed consumer inflation in Tokyo, Japan’s capital, slid sharply to a near four-year low in January. The weaker inflation reading reduces urgency for the Bank of Japan (BoJ) to move toward near-term rate hikes. In addition, concerns over Japan’s fiscal outlook, linked to Prime Minister Sanae Takaichi’s reflationary agenda, along with political uncertainty ahead of the February 8 snap election, continue to weigh on the currency. Coupled with modest U.S. dollar (USD) strength, these factors pushed USD/JPY toward the 154.00 level and the key 100-day Simple Moving Average (SMA) resistance.
That said, expectations of coordinated intervention by U.S. and Japanese authorities to support the yen may discourage aggressive bearish positioning. At the same time, lingering trade uncertainty stemming from President Donald Trump’s tariff threats and broader geopolitical risks is tempering risk appetite, as reflected in the cautious tone across equity markets, which could help limit downside in the safe-haven JPY. Meanwhile, the USD may struggle to gain sustained traction amid expectations of further Federal Reserve rate cuts and ongoing concerns over the central bank’s independence, potentially capping further upside in USD/JPY.
Japanese yen comes under pressure from soft Tokyo CPI, fiscal concerns and political uncertainty
A government report released earlier on Friday showed that Tokyo’s headline Consumer Price Index (CPI) fell to 1.5% in January from 2.0% previously, marking its lowest level since February 2022. Core inflation, which strips out fresh food prices, also softened to 2.0% from 2.3% in December, while a broader measure excluding both food and energy eased to 2.4% from 2.6% the month before.
The data signals easing demand-driven inflation pressures and diminishes the urgency for further monetary tightening by the Bank of Japan, following its December rate hike that lifted the policy rate to 0.75%, the highest level in three decades.
Meanwhile, concerns over Japan’s fiscal outlook persist as Prime Minister Sanae Takaichi has anchored her snap election campaign on expanded stimulus measures and pledged to suspend the consumption tax on food, raising questions about fiscal sustainability.
Adding another layer of complexity, reports of an unusual rate check by the New York Federal Reserve last Friday, following a similar move by Japan’s Ministry of Finance, have fueled speculation about potential coordinated U.S.-Japan intervention to curb yen weakness.
On the geopolitical front, U.S. President Donald Trump announced plans on Thursday to decertify all Canada-made aircraft and threatened to impose 50% tariffs unless U.S.-built Gulfstream jets receive certification in Canada. The move marks a fresh escalation in U.S.-Canada trade tensions.
These developments, alongside rising U.S.-Iran frictions and the prolonged Russia-Ukraine conflict, could help limit downside pressure on the safe-haven yen. The United States continues to deploy warships and fighter jets across the Middle East, while Secretary of War Pete Hegseth stated that Washington stands ready to act decisively under President Trump’s directives.
Russia has also reiterated its invitation for Ukrainian President Volodymyr Zelensky to travel to Moscow for peace talks, although prospects for a deal remain slim amid deep divisions between the two sides.
Meanwhile, the U.S. dollar received a modest boost amid speculation that Kevin Warsh may be appointed as the next Federal Reserve chair, lending additional support to the USD/JPY pair. President Trump is expected to announce his choice for Fed chair on Friday morning.
Looking ahead, traders will take further cues from the release of the U.S. Producer Price Index (PPI), which, alongside comments from Federal Reserve officials, is likely to influence dollar demand and provide direction for USD/JPY into the weekend.
USD/JPY bulls look for a sustained break above the 100-day SMA before adding new positions
The 100-day Simple Moving Average (SMA) continues to trend higher and is currently located near 153.98, with USD/JPY trading just below this level. This keeps near-term sentiment on the heavy side, despite the broader uptrend suggested by the rising trend filter. A sustained move back above this dynamic resistance would help steady the short-term outlook.
Momentum indicators show tentative signs of stabilization. The Moving Average Convergence Divergence (MACD) remains in negative territory, although its recent narrowing points to fading downside pressure. Meanwhile, the Relative Strength Index (RSI) stands at 37.81, below the neutral 50 mark but rebounding from oversold levels, indicating that bearish momentum is beginning to ease.
On the upside, the 38.2% Fibonacci retracement of the 159.13–152.07 decline, located at 154.77, is likely to act as initial resistance. A daily close above this level would enhance the recovery setup and open the door to further gains as momentum improves. Conversely, failure to break above this barrier would keep rebounds limited and reinforce a cautious near-term bias.
WTI prices slipped but were still on course for roughly 12% monthly gains, underpinned by elevated geopolitical risk premiums.
Iran warned of an unprecedented response following renewed threats from President Trump over nuclear negotiations.
Meanwhile, the Trump administration loosened some sanctions on Venezuela’s oil sector on Thursday to attract U.S. investment.
West Texas Intermediate (WTI) crude edged lower after three consecutive sessions of gains, trading near $64.00 a barrel during Asian hours on Friday. Still, the benchmark remained on track for about a 12% monthly increase, supported by a strengthening geopolitical risk premium.
Geopolitical tensions stayed elevated after Iran warned it would “defend itself and respond like never before” following renewed threats from U.S. President Donald Trump, who urged Tehran to engage in nuclear negotiations. Iranian officials cautioned that any provocation would be met with retaliation.
Tensions escalated further after the European Union designated Iran’s Islamic Revolutionary Guard Corps as a terrorist organization. Concerns were compounded by reports that the United States was bolstering its military presence near Iran, while Tehran announced live-fire military exercises in the strategically vital Strait of Hormuz, heightening worries over regional security.
Markets are closely watching the potential impact of these developments on shipping through the Strait of Hormuz, a critical chokepoint between Iran and the Arabian Peninsula that handles daily flows of crude oil and LNG. According to Dow Jones Newswires, Westpac Strategy Group warned that any regime change in Iran would likely be disorderly, unlike the U.S-backed removal of Venezuela’s Nicolas Maduro or targeted strikes such as those on Fordow.
Separately, the Trump administration eased certain sanctions on Venezuela’s oil sector on Thursday to attract U.S. investment following President Nicolas Maduro’s removal earlier this month. The U.S. Treasury authorized transactions involving Venezuela’s government and state-run PDVSA, allowing U.S. firms to produce, transport, sell, and refine Venezuelan crude.
Earlier this month, oil prices also drew support from supply disruptions in Kazakhstan, freeze-offs in the United States, and tighter U.S. restrictions on Russian oil purchases, helping underpin prices this year despite lingering expectations of global oversupply.
U.S. stock index futures slipped slightly on Thursday evening after Wall Street ended mostly lower, as weaker-than-expected results from Microsoft rekindled doubts over the returns on heavy AI spending, while investors absorbed a wave of other corporate earnings.
S&P 500 futures dipped 0.3% to 6,975.0 points, Nasdaq 100 futures declined 0.3% to 25,916.75 points, and Dow Jones futures also fell 0.3% to 49,049.0 points by 19:36 ET (00:36 GMT).
Wall Street dips as Microsoft’s slide weighs; Apple earnings take center stage
The S&P 500 and NASDAQ Composite closed Thursday’s regular session on a weak note, with technology stocks among the session’s biggest laggards.
Shares of Microsoft Corporation (NASDAQ:MSFT) plunged 10% after the company’s quarterly earnings highlighted slower cloud revenue growth and record AI-related spending, failing to reassure investors about near-term returns.
Microsoft’s selloff dragged down broader technology sentiment, with software peers including ServiceNow Inc (NYSE:NOW) and SAP (NYSE:SAP) also posting steep declines following disappointing earnings and outlooks.
Investors were also focused on Apple Inc.’s (NASDAQ:AAPL) earnings released after the close, which topped expectations as strong iPhone demand and a recovery in Greater China boosted both revenue and profit.
Apple reported roughly $143.8 billion in revenue and earnings per share well above consensus estimates, sending its shares up nearly 1% in after-hours trading.
SanDisk jumps on earnings beat; Trump backs spending agreement
Elsewhere on the earnings front, shares of SanDisk Corporation (NASDAQ:SNDK) jumped 16% in after-hours trading after the storage-chip maker posted a strong profit beat and lifted its outlook, driven by stronger-than-expected demand for data-center and AI-focused memory products.
By contrast, Visa (NYSE:V) shares edged lower despite surpassing first-quarter earnings and revenue forecasts, as investors focused on weaker-than-expected transaction volumes and ongoing caution surrounding broader consumer spending.
On the political side, President Donald Trump voiced support for a bipartisan spending agreement crafted by Senate Republicans and Democrats aimed at avoiding an imminent government shutdown, expressing his backing on Truth Social and calling for cooperation.
The deal would provide funding for most federal agencies while deferring divisive immigration issues for future negotiations.
Gold’s most recent move was sharp, chaotic, and relentless. With volatility running high and prices stretched, managing risk is just as critical as getting the direction right.
Gold shows capitulation-like price behavior
Volatility jumps to multi-year highs
Prices look stretched after a rapid upside surge
Position sizing and risk management become paramount
Gold shows meme-stock–like trading behavior
Gold behaved less like a classic safe haven and more like a meme stock on Thursday, surging nearly $100 within minutes during early Asian trading. Prices briefly spiked toward $5,600 before reversing just as quickly. The sheer speed and magnitude of the move felt like capitulation in real time, likely exacerbated by thin liquidity during the transition from North American to Asian market hours.
Although the price surge began around the same time, a CNN report later surfaced indicating that the U.S. was considering new military strikes against Iran. However, given that geopolitical tensions have been elevated for weeks rather than emerging suddenly, much of that risk was likely already priced in. In that sense, the headline appears more like a catalyst than the underlying cause of the move.
Some traders also cited comments from Fed Chair Jerome Powell after the January FOMC meeting, in which he downplayed any macroeconomic signal from gold’s record highs. Still, those remarks seem to have played only a minor role, coming several hours before the most volatile phase of the price action unfolded.
Volatility jumps sharply higher
While today’s spike has understandably drawn attention, it is not an isolated event, instead forming part of a broader and accelerating expansion in volatility across the gold market.
As illustrated above, the Gold Volatility Index (GVZ) has climbed to its highest level since the early days of the COVID-19 lockdowns in 2020, highlighting just how extreme price action in the traditional safe haven has become. GVZ measures implied volatility in gold options, offering insight into the magnitude of price swings the options market is anticipating. The surge suggests the market has entered a markedly different volatility regime, one in which unusually large moves are occurring with increasing frequency.
The broader volatility environment is also clearly visible on the daily chart. Gold is trading well above its upper Bollinger Band, highlighting the speed and magnitude of the recent acceleration relative to prior conditions. Daily trading ranges have expanded sharply, with the 14-day ATR elevated at 117.56—making $100-plus moves routine rather than exceptional. Meanwhile, the 14-day RSI sits deep in overbought territory at 91.15, reinforcing that while the broader uptrend remains intact, price action is increasingly stretched and unstable.
Risk management takes center stage
In short, this is an exceptionally high-volatility environment where price behavior is far from normal. Gold has surged rapidly, leaving prices highly extended and vulnerable to sharp moves in both directions, even as the broader uptrend remains in place. In such conditions, traditional technical signals often lose reliability, making risk management and position sizing especially critical—particularly with mean-reversion risks running high.
The S&P 500 ended the session largely unchanged ahead of a largely uneventful Federal Reserve meeting, which offered little new information beyond reaffirming that the U.S. economy remains in fairly solid condition. The tone of Chair Jay Powell’s press conference also suggested that, at least while he remains at the helm, there are likely to be few—if any—interest-rate cuts in the near term.
Earnings released after the close were mixed. Microsoft (NASDAQ: MSFT) fell roughly 6.5%, while Meta Platforms (NASDAQ: META) surged about 7.5%. From an options standpoint, both stocks had bearish setups heading into earnings, with elevated implied volatility and heavy call-delta positioning at higher strike levels. Following the results, implied volatility declined, causing higher-strike calls to lose value and prompting the unwinding of hedges.
For Meta, the key technical level was $700, which the stock managed to break through, at least initially. Revenue guidance significantly exceeded expectations, leading the market to overlook higher-than-expected capital expenditures for now. The key question will be whether Meta can hold above the $700 level once regular trading resumes.
For Microsoft, the key level was $500, which the stock failed to break despite reporting better-than-expected results. Investor sentiment was weighed down by weaker-than-expected growth in its Azure cloud business.
For Tesla (NASDAQ: TSLA), the setup ahead of earnings was more mixed, but $450 clearly stood out as the key level to break. So far, the stock has tested that threshold but has been unable to hold above it.
After-hours moves can be unpredictable, which is why it often makes sense to wait and see how price action develops during regular trading hours. How the CDS market trades tomorrow may be even more telling, potentially offering a clearer read on the true implications of the earnings reports.
For now, near-term rate expectations appear more closely tied to oil than to any other factor. Crude has broken out and moved above its 200-day moving average, a technical development that could set the stage for a rally toward $65 in the near term.
Whether looking at the 2-year or 10-year Treasury yield, the correlation with oil prices since late 2022 has been remarkably strong. As a result, if oil continues to move higher, it would likely put upward pressure on interest rates as well. In that sense, oil may have been the final missing link in the case for higher rates.
Federal Reserve Chair Jerome Powell offered few substantive remarks during his press conference on Wednesday, sidestepping multiple questions about the upcoming leadership transition as his term ends on May 15. He declined to comment on President Donald Trump’s potential nominee to succeed him, as well as on the president’s public criticism of his tenure.
Powell also avoided addressing questions related to the Department of Justice investigation involving him and the ongoing Supreme Court case concerning the possible removal of Fed Governor Lisa Cook. In response to these issues, he repeatedly indicated that he had nothing further to add.
“I have nothing on that for you.”
He repeated that response seven times in total. On four occasions, he simply said,
“I don’t have anything on that for you.”
After the FOMC voted to keep the federal funds rate in a range of 3.50%–3.75%, Powell provided no additional forward guidance beyond reiterating the Fed’s data-dependent, meeting-by-meeting approach. He did, however, acknowledge the underlying strength of the U.S. economy.
Powell noted that the unemployment rate has remained low at around 4.4% in recent months, even as job growth has slowed. He also said inflation is expected to ease as the effects of President Trump’s tariffs fade.
Overall, Powell characterized the risks of higher inflation and rising unemployment as balanced, signaling little urgency for policy action. This assessment increases the likelihood that the federal funds rate will remain unchanged at his final two meetings as FOMC chair.
Officials in the Trump administration broadly share our “Roaring 2020s” outlook, which assumes stronger-than-expected productivity growth will lift real GDP while easing inflation pressures as unit labor cost growth falls toward zero. They argue that this expectation supports additional cuts to the federal funds rate—a view echoed by two dissenting members of the FOMC, who expressed similar reasoning at the latest meeting.
We take a different view. Cutting the federal funds rate further from current levels would heighten the risk of financial instability, particularly by fueling a melt-up in equity markets. A similar dynamic is already evident in precious metals. Additional rate cuts would also put further downward pressure on the dollar, potentially reigniting inflationary pressures.
Bond markets appear to share this skepticism. When the Fed reduced the federal funds rate by 100 basis points in late 2024, the 10-year Treasury yield rose by a similar amount. Even after another 75-basis-point cut late last year, the yield held around 4.00% and has since climbed to 4.26%. We continue to expect the 10-year yield to trade largely between 4.25% and 4.75% this year—levels that were typical in the period before the Global Financial Crisis.
The U.S. dollar showed a limited reaction to the latest Federal Reserve meeting, with EUR/USD pushing toward the 1.20000 level. While the Fed’s messaging pointed to a low likelihood of a key rate cut in March—given that economic growth is now characterized as “solid”—market attention during the press conference shifted toward political issues.
This focus, according to Commerzbank analysts Volkmar Baur and Michael Pfister, suggests a growing change in how investors perceive the Federal Reserve’s independence.
Fed meeting weighs on US dollar
Overall, the market appeared to place greater emphasis on the Fed’s slightly hawkish tone and policy tweaks. Expectations for additional rate cuts were trimmed marginally, but the adjustment was too small to have a meaningful impact on the currency.
“The perception that political considerations are gradually influencing the Fed—or at least that markets believe this to be the case—was also reflected in Christopher Waller’s vote in favor of another cut to the key policy rate.
Ultimately, even if the Fed remains capable of conducting an independent monetary policy, this perception alone could become problematic. If markets lose confidence in that independence, the U.S. dollar is likely to come under pressure.”
Bitcoin gave up part of its earlier gains on Wednesday after the Federal Reserve left interest rates unchanged, as widely anticipated, slipping back below the $90,000 level after briefly reclaiming it for the first time since last Friday.
The world’s largest cryptocurrency was last trading 1.3% higher at $89,564.1 as of 14:29 ET (19:29 GMT).
Bitcoin climbs back above $90,000 as dollar rebounds
Bitcoin’s advance this week was underpinned by broad weakness in the U.S. dollar, after President Donald Trump sought to ease concerns over the currency’s recent decline.
The Dollar Index snapped a four-day losing streak, while gold extended its sharp rally to fresh record highs above $5,300 per ounce, further strengthening demand for alternative stores of value.
After several sessions of rangebound trading, bitcoin set its sights once again on the key psychological $90,000 level and reached that mark on Wednesday.
“Bitcoin needs to decisively break back above $90,000 and then hold that level on any pullback to attract new buying interest,” said David Morrison, senior market analyst at Trade Nation. “If that happens, $100,000 would become the next bullish target. But it’s still early, and bitcoin needs to create more distance from key support levels.”
He added that, for now, a move below $85,000 remains a clear possibility. Meanwhile, the Federal Reserve concluded its two-day policy meeting on Wednesday by keeping interest rates unchanged, in line with expectations.
Investors are paying close attention to the Fed’s accompanying statement and comments from Chair Jerome Powell for clues on the timing of potential rate cuts, especially as inflation appears to be cooling while economic growth remains solid.
Lower interest rates generally favor non-yielding assets like bitcoin, as they reduce the opportunity cost of holding them.
Adding to the uncertainty, markets are also closely monitoring developments around President Trump’s expected nomination of a new Federal Reserve chair. Investors are evaluating how increased political influence could alter the central bank’s policy approach and its tolerance for inflation.
Tether increases gold exposure, targets up to 15% portfolio allocation
Tether plans to dedicate a significant share of its investment portfolio to physical gold, expanding on bullion reserves that already underpin some of its products, CEO Paolo Ardoino told Reuters.
The stablecoin issuer currently holds roughly 130 metric tons of physical gold, having added 27 tons in the fourth quarter alone. Ardoino said the company has recently been buying about two tons per week.
“For our own portfolio, it makes sense to allocate around 10% to bitcoin and about 10% to 15% to gold,” Ardoino said, while declining to disclose the total size of Tether’s investment portfolio or the precise portion currently held in bullion.
“It’s difficult to choose which one I prefer,” he added. “It’s almost like having two children and deciding which one is more beautiful.”
Tether will maintain direct ownership of the gold, which is stored in Switzerland, and has not set a fixed target for future purchases. Buying decisions will be reviewed on a quarterly basis. Ardoino noted that the company began accumulating gold in 2020 during the COVID-19 pandemic and has steadily increased exposure as geopolitical risks have risen.
“The world isn’t in a good place right now. Gold is hitting record highs day after day. Why? Because people are afraid,” he said.
Gold prices have surged over the past year, rising 64% in 2025 and continuing their rally into 2026, with gains of 22% so far this year. The metal hit a record high of $5,311 per troy ounce on Wednesday, supported by weakening confidence in the U.S. dollar and concerns about the independence of the Federal Reserve.
Crypto prices today: altcoins post modest gains
Most major altcoins also moved higher on Wednesday, following gains in bitcoin.
Ethereum, the world’s second-largest cryptocurrency, rose 1% to $3,008.75, while third-ranked XRP added 0.4% to trade at $1.91.
Gold prices jumped to a record near $5,600 per ounce on Thursday, extending recent gains after reports that U.S. President Donald Trump was weighing a new strike on Iran. Silver also climbed to a record above $119 per ounce, supported by strong safe-haven demand.
Metal prices continued to climb with little sign of easing, driven by escalating global geopolitical tensions that boosted demand for physical assets and traditional safe havens. Additional support came from a weaker U.S. dollar and uncertainty surrounding U.S. policy, while copper prices also reached a new all-time high on Thursday.
Spot gold jumped more than 2% to a record $5,595.41 per ounce, and April gold futures peaked at $5,625.89 per ounce. Although prices later retreated from these highs, gold was still trading comfortably above $5,500 per ounce by 00:45 ET (05:45 GMT).
Spot silver also rose sharply, gaining over 1% to a record $119.4280 per ounce.
“Gold is no longer viewed solely as a hedge against crises or inflation,” OCBC analysts noted. “It is increasingly seen as a neutral, dependable store of value that also offers diversification across a broad range of macroeconomic environments.”
They added that this shift in perception helps explain why recent pullbacks have been limited and well-supported. OCBC has recently raised its 2026 gold price forecast to $5,600 per ounce.
Trump considering major strike on Iran
Former President Donald Trump is reportedly weighing a “major new strike” against Iran after talks over Tehran’s nuclear program and missile development broke down, CNN reported Wednesday night.
The report follows Trump’s decision to deploy multiple U.S. naval vessels to the Middle East, alongside earlier threats of military action that he framed as backing nationwide protests in Iran.
Earlier on Wednesday, Trump posted on social media urging Iran to reach a “fair and equitable” agreement with Washington and to abandon its nuclear ambitions. He also warned that any future U.S. strike would be significantly more severe than the mid-2025 attack, when American forces targeted Iran’s key nuclear facilities.
According to CNN, Trump is now considering airstrikes aimed at Iranian political leaders and security officials accused of killing protesters, as well as additional attacks on nuclear sites.
Any further U.S. military action could sharply escalate tensions in the Middle East, with Iran having pledged strong retaliation against such moves.
U.S.-centric geopolitical risks have continued to support gold and other safe-haven assets, particularly after Washington launched a military incursion in Venezuela earlier this month. Trump’s demands related to Greenland also added to these tensions, though his rhetoric on that issue has eased in recent weeks.
Meanwhile, gold prices showed little reaction to the U.S. Federal Reserve’s widely expected decision to keep interest rates unchanged, as the central bank also offered an optimistic assessment of the U.S. economic outlook.
However, Chair Jerome Powell refrained from responding to questions regarding the Federal Reserve’s independence amid an ongoing Department of Justice investigation.
Platinum gains ground as copper reaches a record high
Strength in gold prices spilled over into the wider metals complex, supported by a weaker dollar and growing investor demand for safe-haven, physical assets viewed as neutral stores of value.
Spot platinum climbed 2.6% to $2,775.73 per ounce, staying near recent highs. The precious metal remained close to record levels reached earlier this month, after largely moving in step with gold through late 2025.
Copper also joined the broader metals rally, with benchmark futures on the London Metal Exchange surging more than 6% to a record $14,123.95 per tonne.
Prices were further lifted by reports pointing to additional policy support for China’s struggling property sector. As the world’s largest copper importer, China’s real estate industry represents a significant share of global copper demand.
Economic behavior refers to the way individuals, households, businesses, or organizations make decisions and take actions related to the production, distribution, exchange, and consumption of economic resources such as money, time, labor, and natural resources.
Simply put, it is how people choose when resources are limited but needs are unlimited.
Key characteristics of economic behavior
1. Based on choice
Because resources are scarce, people must choose one option over another.
2. Benefit-oriented
Decisions usually aim to maximize benefits (profit, satisfaction) and minimize costs.
3. Influenced by many factors
Income and prices
Information and expectations
Psychology, habits, and culture
Government policies and the social environment
4. Not always perfectly rational
Behavioral economics shows that people often make decisions influenced by emotions, cognitive biases, or personal beliefs.
Examples of economic behavior
Consumers compare prices and quality before buying tea
Businesses expand production when demand increases
Investors choose gold as a safe-haven asset during market volatility
People save more when they fear an economic downturn
Types of economic behavior
Consumption behavior
Consumption behavior refers to how individuals or households decide what goods and services to buy, how much to buy, and when to buy in order to satisfy their needs and wants.
Narrative control functions by offering ready-made answers to every doubt or challenge. At its core, the prevailing narrative claims that the Federal Reserve and the central government possess sufficient tools to quickly counter any decline in GDP—otherwise known as a recession—and steer the economy back toward growth.
Implicit in this view is the assumption that recessions are inherently harmful, while uninterrupted expansion is inherently desirable. Few question the fact that this framework departs from true free-market capitalism. Instead, central banking and government intervention are justified as mechanisms to smooth out capitalism’s rough edges through a form of state capitalism—one that can create or borrow as much money as needed to neutralize economic disruptions, including recessions.
What this narrative leaves out is the role recessions play as a natural and necessary part of market dynamics. Instead, it reduces economic cycles to a simplistic binary: contraction is bad, expansion is good. Yet markets are ultimately driven by human behavior—particularly fear and greed—which express themselves through borrowing and speculation. During periods of confidence, when growth appears limitless, participants take on increasing levels of debt and channel capital into progressively riskier investments in pursuit of higher returns.
As borrowed funds flow into speculative assets, prices rise, boosting the value of collateral and enabling even more borrowing to finance further speculation. Debt, asset prices, collateral and risk-taking thus reinforce one another, creating the illusion of an endlessly self-sustaining expansion in which everyone appears to grow wealthier.
However, this layering of debt and paper wealth carries within it two forces that eventually unwind the process: interest and risk. Every loan carries an obligation to pay interest, which compensates lenders for the risks they assume. As overall debt grows—and as investments become more speculative—debt servicing costs increase accordingly, especially for higher-risk borrowers.
While central banks can attempt to suppress interest rates even as risk rises, their influence is inherently limited. They control only a portion of total outstanding debt and therefore cannot dominate the market entirely.
Their role in prolonging debt expansion and speculation relies less on absorbing most new debt and more on signaling. By projecting the message that the Federal Reserve will step in to backstop losses, recapitalize lenders, and cap interest rates below market-clearing levels, policymakers encourage continued borrowing and risk-taking. This reinforces the belief that debt and speculation can keep expanding indefinitely.
Yet signaling alone cannot solve the underlying problem. It does not increase the income required to service growing debt burdens, nor does it ensure speculative investments will deliver returns. These limitations expose the fundamental weakness of the central banking “perpetual motion” model. For most borrowers—both private and public—income does not automatically rise alongside debt. Instead, income depends on market conditions, technological change, government policy, and the broader cycle of credit expansion or contraction.
At the level of the overall economy, what ultimately matters is total factor productivity and how its gains are distributed among workers, businesses, asset owners, and the state, which extracts revenue from each through taxation. This distribution is not fixed; it shifts with changing social, political, and financial forces.
Over the past five decades, the benefits of productivity growth have increasingly accrued to capital—corporations and asset owners—rather than to workers. As a consequence, households and small businesses are left servicing debt with a diminishing share of overall economic income. This imbalance makes additional borrowing progressively more hazardous for both borrowers and lenders alike.
As a growing share of economic output accrues to corporations and asset owners, their collateral values, income streams, and perceived creditworthiness strengthen. This allows them to borrow larger sums at lower interest rates than wage earners and small businesses. Greater access to cheap credit enables further asset accumulation, which in turn generates additional income—creating a self-reinforcing cycle.
This dynamic sits at the heart of widening wealth and income inequality. Those at the top grow richer not simply because they earn more, but because they can finance income-producing assets at costs far below those faced by workers. Unlike wages, income derived from assets tends to rise alongside asset values, which can be leveraged as collateral to support even more borrowing.
At a deeper structural level, the system becomes unstable once economic growth fails to raise household incomes enough to support higher debt servicing. The entire framework of expanding credit, collateral, and speculation then comes under strain. Asset-driven income ultimately depends on one or more of three forces: continued credit expansion, increased risk-taking in financial markets, or sustained consumer spending. These forces are tightly linked, as any slowdown in borrowing, investing, or spending eventually undermines the ability to service debt and brings the credit cycle to a halt.
Because debt inherently carries default risk, an economic model reliant on ever-expanding borrowing also amplifies systemic vulnerability—particularly when household incomes stagnate while debt levels and interest obligations continue to rise.
With the share of output flowing to wages declining for decades, households have increasingly relied on borrowing to sustain consumption. Before the 2000s, student debt was relatively limited; today it totals trillions of dollars. Auto loans and credit card balances have also surged, alongside less visible forms of leverage such as installment-based financing and other shadow-banking channels that are often underreported.
Speculative investments carry intrinsic risk, as there is no guarantee they will generate returns. When such speculation is financed through borrowing, failure does not only harm the investor—it also inflicts losses on the lender, as both sides are exposed when the bet collapses.
Taken together, stagnant income growth, rising reliance on debt to sustain consumption, and increasingly risky, debt-backed speculation have produced an economy dependent on credit-driven asset bubbles. Growth now hinges on the continual expansion of debt to support spending and fuel speculative activity that inflates asset prices, thereby boosting collateral values and enabling even more borrowing.
When income growth can no longer keep pace with rising debt obligations, defaults begin to ripple through the system. Households fall behind on rent, auto loans, student debt, credit cards, and mortgages, triggering a collapse in consumer spending. The resulting strain spreads to lenders and employers, who respond by tightening credit, cutting back borrowing, and laying off workers—further eroding income across the economy.
Speculative investments that appeared viable during the expansion unravel as credit conditions tighten. Lenders withdraw from riskier loans, household demand dries up, and asset prices fall as investors rush to sell risk assets in order to raise cash and reduce leverage. Collateral values deteriorate rapidly, amplifying losses.
Economies dependent on credit-fueled asset bubbles function as tightly interconnected systems. Any decline in income or asset prices, any increase in interest rates, any reduction in available credit, or any erosion of collateral feeds back into the broader structure. These shocks reinforce one another, creating a downward spiral marked by defaults, layoffs, and falling valuations.
In an economy already saturated with debt, policy stimulus no longer produces real growth; instead, it fuels inflation, which constrains central banks’ ability to respond. Once markets lose confidence in the belief that policymakers will always step in to backstop losses, both speculation and the borrowing that sustained it begin to dry up. As the flow of new, credit-funded investment slows, asset prices enter a self-reinforcing decline.
In a credit-asset-bubble-dependent system, this inevitable unwinding is often perceived not as a structural outcome, but as a sudden and unforeseen crisis.
In an economic system that permits recessions to purge unsustainable debt and excess speculation, the bursting of credit-driven asset bubbles is seen as a natural and unavoidable process rather than an aberration.
Few recognize two critical realities: first, the last true recession that meaningfully purged excess debt, leverage, and speculation occurred in 1980–82—more than four decades ago; second, the shock absorbers that enabled recovery back then no longer exist. In 1980, total debt stood at roughly 150% of GDP. Today, it is closer to three times GDP. This makes debt-driven expansion unworkable: borrowers are already struggling to service existing obligations, let alone take on more.
Nor can the Federal Reserve rescue the system simply by cutting rates to zero. The Fed holds only a small fraction of the roughly $106 trillion in outstanding debt; its primary influence is psychological, signaling that risk is low. In reality, risk continues to rise as debt burdens, interest costs, leverage, and speculation compound.
A repeat of the 2008-style bailout is equally implausible. Then, the system was stabilized by recapitalizing the financial sector—the engine of new credit creation. Today, however, the economy is saturated with debt, incomes have stagnated, and borrowers lack the capacity to sustain additional leverage. Meanwhile, housing and financial asset bubbles have expanded to historically fragile extremes.
This is why a recession that finally cleanses excess debt and speculation would leave behind an economy unable to rebound. The current system depends entirely on debt, leverage, and speculative excess not just for growth, but for basic stability. Once that structure collapses—as all bubbles eventually do—the confidence, signaling, and perceived wealth that sustained it will vanish as well.
Proposals to “save” the system by shifting fiat money into gold or cryptocurrencies offer no escape. The debt itself—and the income required to service it—would also be carried over, leaving the underlying dynamics unchanged. The collapse of credit-driven asset bubbles, and the economic activity built upon them, would still unfold.
For this reason, the next recession is likely to trigger a full-scale breakdown of a credit-asset-bubble-dependent economy. While policymakers may attempt to reflate another bubble as a solution, such an approach will no longer be sustainable. A durable recovery would instead require restructuring the economy around real productivity gains that are broadly shared, rather than concentrated among asset holders.
This transition will be slow and painful. Those who benefited most from the bubble economy will resist losing both extraordinary returns and their disproportionate share of gains. Yet neither can be preserved. The adjustment will demand time, sacrifice, and large, long-term investment in genuinely productive assets.
Ultimately, the systemic risks embedded in a credit-asset-bubble economy cannot be eliminated—only disguised or shifted elsewhere. These temporary fixes allow the bubble to grow larger, but the cost is borne by society at large when the system’s internal dynamics inevitably bring it crashing down.
EUR/USD extended Monday’s positive momentum, pushing closer to the key 1.2000 level and reaching highs not seen since June 2021. The latest advance reflects continued selling pressure on the U.S. dollar, supported by a constructive risk backdrop and renewed investor focus on potential tariff-related risks stemming from the White House.
Macro & Fundamental Overview
EUR/USD’s bullish momentum remains firmly intact, closely mirroring persistent selling pressure on the U.S. dollar, which continues to be weighed down by concerns over trade policy, questions surrounding the Federal Reserve’s independence, and renewed shutdown risks.
The pair extended its advance for a fourth straight session on Tuesday, edging closer to the pivotal 1.2000 level for the first time since June 2021.
The latest leg higher reflects a further deterioration in the dollar’s outlook amid revived trade tensions and geopolitical uncertainty, all ahead of the Federal Reserve’s interest rate decision due on Wednesday.
Meanwhile, sentiment surrounding U.S.–European Union trade relations has improved after President Donald Trump softened his rhetoric last week regarding potential tariffs tied to the Greenland dispute. Markets have interpreted this shift positively, boosting risk appetite and lending support to the euro alongside other risk-sensitive currencies.
By contrast, the U.S. dollar continues to underperform. The Dollar Index (DXY) remains under heavy pressure, extending its decline toward the 96.00 area — levels last seen in late February 2022.
The FED: Rates on hold, politics in focus
The Federal Reserve delivered its widely anticipated December rate cut, but the key signal came from its messaging rather than the policy action itself. A divided vote and Chair Jerome Powell’s measured language suggested that additional easing is far from assured.
The Fed begins its two-day policy meeting today, with markets largely expecting rates to remain unchanged when the decision is released on Wednesday.
However, monetary policy may not be the primary focus this time. Market attention has increasingly turned to questions surrounding the Fed’s independence after reports earlier this month of a Justice Department investigation involving Chair Powell.
Compounding the uncertainty, President Trump has indicated that an announcement on his nominee for the next Fed Chair could be imminent, keeping scrutiny on the central bank well beyond the outcome of this week’s meeting.
ECB urges patience, not complacency
The European Central Bank left interest rates unchanged at its December 18 meeting, adopting a more measured and patient tone that has pushed expectations for near-term rate cuts further into the future. Modest upward revisions to growth and inflation projections helped underpin this approach.
Minutes from the meeting, released last week, showed policymakers saw little immediate need to adjust policy. With inflation hovering near target, the ECB has room to remain patient, while still retaining flexibility should risks materialize.
Governing Council members emphasized that patience does not equate to complacency. Monetary policy is viewed as appropriately calibrated for now, but not on autopilot. Markets appear to have absorbed this message, currently pricing in just over 4 basis points of easing over the coming year.
Positioning remains constructive, but confidence has softened
Speculative positioning remains tilted toward the euro, although bullish conviction appears to be easing.
CFTC data for the week ended January 20 show non-commercial net long positions declining to a seven-week low of around 111.7K contracts. At the same time, institutional participants also reduced short positions, which now stand near 155.6K contracts.
Meanwhile, open interest slipped to approximately 881K contracts, breaking a three-week streak of increases and suggesting that market participation may be thinning alongside fading confidence.
Key Events Ahead
Near term: The FOMC meeting is set to keep attention firmly on the U.S. dollar, while flash inflation data from Germany and preliminary GDP readings for the euro area will dominate the regional data calendar later in the week.
Risk: A more hawkish-than-expected outcome from the Fed could quickly tilt momentum back in favor of the dollar. In addition, a clear break below the 200-day simple moving average would increase the risk of a deeper medium-term correction.
EUR/USD Technical Outlook
EUR/USD continues to exhibit a firm bullish bias, trading at levels last seen in mid-2021 while gradually shifting focus toward the key 1.2000 psychological handle.
On the downside, initial support is located at the 2026 low of 1.1576 (January 19), reinforced by the closely watched 200-day simple moving average. A more pronounced correction could open the door to the November 2025 trough at 1.1468, followed by the August base at 1.1391.
Momentum indicators remain broadly supportive of further gains, although elevated conditions may challenge the immediate upside. The Relative Strength Index is hovering near 75, pointing to overbought territory, while an Average Directional Index reading above 26 confirms the presence of a well-established trend.
Bottom Line
For the time being, EUR/USD continues to be influenced primarily by U.S.-centric developments rather than euro area dynamics.
Absent clearer signals from the Federal Reserve on the extent of potential policy easing, or a more compelling cyclical recovery in the eurozone, any additional upside is likely to unfold in a steady, incremental manner rather than marking the beginning of a decisive breakout.
Gold prices climbed toward a fresh record near $5,220 during Asian trading on Wednesday, extending gains on a weaker U.S. dollar, persistent geopolitical tensions and ongoing economic uncertainty. Investors are now awaiting the Federal Reserve’s interest rate decision later in the day for further direction.
Fundamental Analysis Overview
Expectations of further policy easing by the U.S. Federal Reserve, persistent selling pressure on the U.S. dollar, continued central bank purchases, and record inflows into exchange-traded funds have provided strong support for gold prices.
Although U.S. President Donald Trump stepped back from a tariff threat after saying a framework agreement had been reached on a future Greenland deal with NATO, the brief episode raised concerns about the reliability of global alliances. These doubts, combined with the prolonged Russia–Ukraine conflict, continue to fuel safe-haven demand for gold. Russia launched another large-scale drone and missile assault on Ukraine during the second day of U.S.-mediated peace talks in Abu Dhabi over the weekend, which concluded without an agreement. While trilateral discussions are set to resume on February 1, expectations for a breakthrough in the nearly four-year conflict remain low, keeping geopolitical risks elevated.
Further weighing on market sentiment, Trump warned on Saturday that the U.S. could impose a 100% tariff on Canada should it proceed with a trade agreement with China. The possibility of renewed tensions over Greenland and other unpredictable policy moves from the Trump administration has undermined confidence in the U.S. dollar. As a result, the Dollar Index (DXY) has fallen to its lowest level since September 2025, pressured further by market expectations that the Fed could cut rates twice more in 2025. This environment continues to favor non-yielding assets such as gold, particularly as attention turns to the two-day FOMC meeting that began on Tuesday.
The Federal Reserve is set to announce its policy decision on Wednesday and is widely expected to keep interest rates unchanged. As such, investor focus will center on the accompanying statement and Fed Chair Jerome Powell’s press conference for signals on the future policy path. Any guidance on the timing and pace of potential rate cuts will be critical in shaping near-term dollar movements and determining gold’s next directional move. In the shorter term, U.S. Durable Goods Orders data due later Monday could generate trading opportunities during the North American session.
On the demand side, the People’s Bank of China extended its gold-buying streak for a fourteenth consecutive month in December. Other emerging market central banks, including those of Poland, India, and Brazil, were also active buyers in late 2025 and early 2026. Meanwhile, global investment demand through gold ETFs rose 25% in 2025, with total holdings increasing to 4,025.4 tonnes from 3,224.2 tonnes a year earlier. Assets under management climbed to $558.9 billion, reinforcing gold’s bullish case and supporting expectations for a continuation of the well-established uptrend amid a favorable fundamental backdrop.
XAU/USD Technical Outlook
The rising channel originating from $4,464.07 continues to support the broader uptrend, with upside currently constrained near $5,101.21. The MACD remains in positive territory, although the histogram is starting to narrow, indicating fading momentum even as the MACD line stays above the signal line. Meanwhile, the RSI is elevated around 78, signaling overbought conditions that may limit near-term gains and favor consolidation near the upper boundary of the channel.
Should prices fail to break decisively above the channel top, a corrective move toward support at $4,934.92 could develop. Further contraction in the MACD histogram would strengthen the case for a pullback, while a downturn in the RSI from overbought levels would point to mean reversion within the channel. On the other hand, if bullish momentum persists and MACD remains supportive, the prevailing uptrend would stay intact, maintaining the upside bias defined by the ascending channel.
Oil prices climbed in Asian trading on Wednesday, extending the previous session’s gains after severe cold weather disrupted U.S. production, signaling tighter supply conditions.
Crude was also supported by a weaker dollar, which slid to near a four-year low this week, while markets continued to monitor heightened tensions between the United States and Iran following comments from President Donald Trump that a second armada was heading to the Middle East.
Brent futures for March edged up 0.1% to $67.66 a barrel, hovering near a four-month high, while U.S. West Texas Intermediate futures rose 0.2% to $62.53 a barrel by 20:49 ET (01:49 GMT).
Oil prices jump as U.S. snowstorm disrupts supply
Oil’s advance this week was largely fueled by a powerful winter storm sweeping across the United States, which disrupted crude output in several producing regions.
Exports from the U.S. Gulf Coast were also brought to a standstill, as heavy snowfall and sub-zero temperatures blanketed large parts of the country. According to Reuters estimates, roughly 2 million barrels per day of production were affected over the weekend.
These supply interruptions have prompted traders to brace for sharp drawdowns in U.S. crude inventories in the weeks ahead, signaling tighter supply conditions in the world’s largest oil-consuming market.
API data points to declining U.S. inventories
Figures from the American Petroleum Institute released late Tuesday showed an unexpected decline in U.S. crude inventories last week. Stockpiles fell by roughly 250,000 barrels, according to the API, defying expectations for a 1.45 million-barrel build.
The API report often foreshadows a similar trend in the official inventory data, which is scheduled for release later on Wednesday.
Oil gains on softer dollar ahead of Fed rate call
A weaker dollar also lent support to oil prices, as declines in the greenback tend to boost demand for commodities priced in the U.S. currency.
The dollar index fell to near a four-year low on Tuesday, weighed down by investor concerns over U.S. economic uncertainty, the impending Federal Reserve interest rate decision, and intermittent trade and geopolitical policy moves under President Donald Trump.
The Fed is broadly expected to keep interest rates unchanged at the end of its meeting later in the day, with markets focused on signals from Chair Jerome Powell regarding the policy outlook for the year ahead.
Gold prices climbed to a record above $5,200 an ounce on Wednesday, supported by robust safe-haven demand and persistent weakness in the U.S. dollar. Other precious metals also stayed firm, with silver and platinum trading near recent record highs.
Spot gold edged lower to $5,179.41 an ounce by 19:55 ET (00:55 GMT) after briefly touching a record peak of $5,202.06. Meanwhile, April gold futures jumped 1.8% to $5,215.46 an ounce.
Safe-haven demand remained strong after U.S. President Donald Trump said a second armada was heading toward Iran, while expressing hope that Tehran would agree to a deal with Washington.
Gold’s rally this year has been largely driven by uncertainty surrounding U.S. policy, with heightened geopolitical tensions fueled by developments in Venezuela and a dispute over Greenland.
A weaker dollar also provided support to gold and broader metals markets, as investor concerns grew over elevated fiscal spending and the Federal Reserve’s independence under the Trump administration. Policy uncertainty pushed the dollar to multi-year lows earlier this week.
Trump said on Tuesday that he was close to naming a successor to Fed Chair Jerome Powell, adding that interest rates would decline under new leadership. Ongoing friction between the White House and the Federal Reserve has further underpinned gold prices, as markets remain wary of political pressure on the central bank.
Elsewhere in metals markets, spot silver gained 1.2% to $113.4325 an ounce, while spot platinum climbed 0.6% to $2,669.61. Both were trading near record levels.
U.S. stock index futures were largely unchanged late Tuesday as investors remained cautious ahead of the Federal Reserve’s interest rate decision and a busy earnings schedule featuring major technology leaders.
S&P 500 futures edged up 0.1% to 7,017.50, while Nasdaq 100 futures rose 0.3% to 26,155.75 by 20:10 ET (00:10 GMT). Dow Jones futures were flat at 49,154.0.
S&P 500 closes at a record as Dow edges lower on Medicare concerns
During Tuesday’s regular session, the S&P 500 climbed 0.4% to a record closing high, extending its advance as investors rotated back into growth stocks and responded positively to broadly solid earnings results. Gains in technology shares led the move, pushing the benchmark to a fresh peak.
The Nasdaq Composite jumped 0.9%, driven by strength in megacap stocks.
Meanwhile, the Dow Jones Industrial Average fell 0.8%, weighed down by steep declines in healthcare and insurance shares. Major health insurers came under pressure after the U.S. government released a Medicare Advantage payment plan that the market perceived as less favorable than anticipated.
Markets focus on Fed decision and megacap earnings
Investor focus has shifted squarely to the Federal Reserve, which kicked off its two-day policy meeting on Tuesday. The central bank is widely expected to leave interest rates unchanged when it delivers its decision on Wednesday, with markets pricing in a pause as policymakers assess easing but still-elevated inflation alongside signs of steady economic growth and a resilient labor market.
Close attention will be paid to Fed Chair Jerome Powell’s remarks for indications on how long rates may remain at current levels and when eventual cuts could begin.
“The key will be any dissent and the Fed’s communication, particularly around questions of central bank independence,” ING analysts said, adding that the decision will also be overshadowed by President Trump’s upcoming nomination of a new Fed chair.
Corporate earnings are another major catalyst this week, with four members of the so-called “Magnificent Seven” technology group set to report. Tesla, Meta Platforms and Microsoft are scheduled to post results on Wednesday, followed by Apple on Thursday.
Given their heavy weighting in major equity indexes, guidance from these companies on artificial intelligence investment, cloud demand and consumer trends is expected to play a key role in shaping near-term market direction.
President Donald Trump once again surprised markets by announcing an increase in tariffs on South Korea to 25% from 15%, citing Seoul’s failure to implement a trade agreement reached last July. The move targets sectors such as autos, lumber, and pharmaceuticals, yet South Korean equities ended up surging 2% to fresh record highs. The KOSPI initially slid more than 1%, but the dip quickly attracted buyers seeking exposure to Asia’s strongest-performing equity market of 2025.
With South Korea’s industry minister set to travel to Washington, investors appear to be betting on a negotiated climbdown, reviving the popular “TACO” trade—Trump Always Chickens Out. Few are surprised that Seoul has been reluctant to commit massive U.S. investments while the risk of abrupt tariff threats remains a defining feature of the administration.
Tariff uncertainty also boosted demand for precious metals, pushing gold and silver back toward record levels. Gold rose 1% to $5,063 an ounce, while silver jumped 5% to $109 an ounce.
Asian equities were broadly firmer, supported by optimism that blockbuster earnings from the U.S. “Magnificent Seven,” beginning with Meta, Microsoft and Tesla later this week, will help sustain the global equity rally into 2026. MSCI’s Asia-Pacific index excluding Japan climbed 1% to a new high, while Japan’s Nikkei added 0.7%, even as the yen hovered near a two-month peak—normally a headwind for exporters.
European equities are poised for a firmer open, with EURO STOXX 50 futures up 0.3%. U.S. futures are also higher, as Nasdaq futures climb nearly 0.6% and S&P 500 futures rise 0.3%. The global economic calendar remains relatively quiet ahead of Wednesday’s Federal Reserve policy decision, at which interest rates are widely expected to be left unchanged. Nevertheless, the meeting is likely to be dominated by the Justice Department’s investigation into Fed Chair Jerome Powell, adding extra scrutiny to his post-meeting press conference. Any indication that Powell may choose to remain on the Fed’s board after his term ends in May—a move permitted under Fed rules—could provoke an unpredictable reaction from President Trump.
A crucial Federal Reserve interest rate decision is set to dominate attention this week, especially after news of a criminal investigation into Chair Jerome Powell heightened concerns about the central bank’s independence. At the same time, several major technology firms are scheduled to release quarterly earnings, with investors watching closely for evidence that heavy investments in artificial intelligence are beginning to pay off. Adding to market uncertainty, President Donald Trump has issued a renewed tariff threat against Canada, keeping geopolitical risks firmly in focus.
Fed decision ahead
This week’s agenda is expected to be led by the Federal Reserve’s interest rate decision on Wednesday, following a two-day policy meeting focused on setting borrowing costs as the U.S. economy remains broadly resilient. While employment—previously a key driver of rate cuts in 2025—appears stable amid subdued hiring and limited layoffs, inflation has held steady but remains above the Fed’s 2% target. Some analysts caution that economic growth is becoming increasingly “K-shaped,” with stronger performance among higher-income households and corporations, while lower-income earners face rising living costs. Against this backdrop, the Fed is widely expected to leave rates unchanged at 3.5%–3.75%, with CME FedWatch indicating that the next rate cut is unlikely before June.
Attention shifts to who could replace Powell
January’s Federal Reserve meeting takes place amid repeated calls from President Trump for swift and aggressive rate cuts to stimulate economic growth, alongside his criticism of officials for resisting such moves. Long-standing concerns over the Fed’s political independence intensified earlier this month after the Justice Department launched a criminal investigation into Chair Jerome Powell. In an unusual public response, Powell condemned the probe, characterizing it as an attempt to pressure monetary policy in line with the White House’s preferences.
Appointed during Trump’s first term, Powell now has only a few months remaining as Fed chair, and markets are closely watching whether tensions with the administration could influence his decision to remain on the Fed’s rate-setting board after his term ends. Adding to the uncertainty is the question of who will succeed him. Prediction markets currently favor BlackRock executive Rick Rieder as the leading contender, overtaking former Fed Governor Kevin Warsh, while Trump has suggested he has narrowed his choice to a single candidate.
Major tech earnings in the spotlight
The earnings calendar this week will be dominated by results from major technology companies, including Meta Platforms, Microsoft, and Apple. Driven partly by excitement over advanced artificial intelligence applications, these firms have led equity markets in recent years. Their push to secure leadership in the AI race has prompted a sharp rise in capital spending, particularly on data centers and the semiconductors required to support AI workloads. While investors have largely been willing to overlook these heavy investments, expectations for meaningful revenue returns are now rising, with analysts describing 2026 as a “prove-it” year for big tech. This wave of earnings may provide the first clues as to whether those expectations are being fulfilled.
ASML to report
In Europe, attention will turn to ASML, the world’s leading supplier of chipmaking equipment, which is due to report earnings on Wednesday. The Dutch group’s market capitalization crossed the $500 billion mark earlier this month after key customer TSMC announced larger-than-expected capital spending plans to meet surging demand for AI chips. This milestone has cemented ASML’s position as Europe’s most valuable company, with analysts watching closely to see whether the AI boom can further accelerate its growth. However, ASML has so far issued a cautious outlook for the year ahead, with sales projected at best to remain flat, prompting concerns that the pace of new fab construction may be trailing the rapid expansion in AI-driven demand.
New tariff threat from Trump rattles markets
After seemingly backing away from earlier claims that he would impose punitive tariffs on several European countries unless the United States was permitted to buy Greenland, President Trump issued a fresh trade warning over the weekend, saying he would levy a 100% tariff on Canadian imports if Ottawa were to strike a trade agreement with China. In social media posts, Trump cautioned that Prime Minister Mark Carney—who recently visited China for trade discussions and spoke in Davos about the need for smaller economies to push back against coercion by global powers—could put Canada at risk by pursuing closer ties with Beijing.
Trump warned that China would severely damage Canada’s economy and society, stating that all Canadian goods entering the U.S. would face a 100% duty should such a deal be reached. Carney responded that Canada has no plans to seek a free trade agreement with China, stressing that Ottawa remains committed to its obligations under the USMCA and would consult both the U.S. and Mexico before pursuing any new trade arrangements. Analysts at Vital Knowledge noted that while the likelihood of the tariff threat being enacted appears low, Trump’s repeated and abrupt warnings are gradually weighing on investor sentiment.
OCBC has raised its end-2026 gold price target to $5,600 per ounce from $4,800, citing recent sharp gains and enduring structural demand rather than a shift in its core market view. Gold has climbed about 17% so far in 2026 and has stayed elevated despite periodic pullbacks.
The bank said prices are now supported less by isolated event risks and more by a prolonged environment of uncertainty that is driving diversification into non-sovereign assets. OCBC highlighted a persistent pricing premium that cannot be fully accounted for by traditional factors such as yields, the US dollar, ETF flows, volatility, or policy uncertainty. This premium reflects a geopolitical and uncertainty component increasingly embedded in gold prices, fueled by ongoing geopolitical tensions, policy unpredictability, and concerns over confidence in the dollar. OCBC added that the broader uptrend remains intact, underpinned by structural geopolitical risks, accommodative monetary conditions, and continued support from official sector and ETF demand.
Did you know that a form of technical analysis shares structural patterns with hurricanes, nautilus shells, sunflowers, music, and even human proportions? These phenomena—along with countless others—adhere to ratios derived from a numerical sequence: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89… Known as the Fibonacci sequence, these numbers generate ratios that are widely used as a technical framework for analyzing and managing financial markets.
Before it sounds like we’re turning to biology—or worse, mysticism—to forecast stock prices, let’s explain how this concept is applied in a practical, market-driven way.
Fibonacci Patterns Are Everywhere
As shown in the diagram, drawing quarter-circle arcs across adjacent squares whose side lengths follow the Fibonacci sequence (1, 1, 2, 3, 5, 8, 13, 21, and so on) creates an expanding spiral that closely resembles the shape of a nautilus shell.
Each number in the sequence is the sum of the two numbers before it. Importantly, the ratios between consecutive Fibonacci numbers converge toward the golden ratio, 1.618, often referred to as Phi. Its inverse—obtained by dividing the smaller number by the larger—approaches 0.618, a relationship that underpins many Fibonacci-based applications in both nature and financial markets.
Below are several examples of natural and human-made phenomena that reflect the Fibonacci sequence and the golden ratio:
Spiral Galaxies: The arms of some galaxies expand outward in patterns that closely resemble a Fibonacci spiral.
Sunflowers: The arrangement of seeds often forms intersecting spirals—commonly 34 in one direction and 55 in the other, or sometimes 55 and 89—consistent with Fibonacci numbers.
Cauliflower: The spiraling florets frequently appear in counts such as five, eight, or thirteen per cluster, reflecting Fibonacci-based growth patterns.
Piano Keys: A standard octave contains 13 keys—8 white and 5 black—with the black keys grouped in sets of two and three.
The Mona Lisa: As noted by Math Central, the painting contains multiple golden rectangles. When a rectangle is drawn around the subject’s face, its proportions closely align with the golden ratio. Dividing this rectangle at eye level creates another golden rectangle, and similar proportions can be observed from her neck to the top of her hands.
It is widely believed that the Fibonacci sequence and the golden ratio underpin aspects of the brain’s structure and cognitive processes.
According to Professor Adrian Bejan of Duke University, as cited in The Atlantic:
“This represents the most efficient flow of visual information from the eye to the brain, which is why it so often appears in human-made designs that seem to be intentionally structured around the golden ratio.”
Market Prices and Fibonacci Relationships
Human brains are naturally inclined to search for, recognize, and react to patterns. As a result, we subconsciously gravitate toward Fibonacci relationships and the golden ratio. This tendency helps explain why many works of art, music, and poetry incorporate Fibonacci structures. It also sheds light on why Fibonacci-based tools can be effective for market technicians in identifying support and resistance levels, as well as projecting potential breakout targets.
Retracements/Support
Fibonacci sequences—particularly the golden ratio—are commonly used by technicians to identify potential support and resistance levels within a defined price range.
In the example shown, the selected range starts from the early April 2025 lows and extends to the highs formed in October and December. Once this range is established, Fibonacci retracement levels are applied to identify likely areas of support. The percentages referenced represent the portion of the total price range where Fibonacci-based support is expected to emerge.
78.6% – Derived from the square root of the golden ratio (61.8%). While not part of the Fibonacci sequence itself, this level is widely used in Fibonacci analysis.
61.8% – The golden ratio, calculated from the relationship between 55 and 34 (34 ÷ 55).
50% – Not a true Fibonacci retracement, but the midpoint of a range is a key psychological level and is commonly included in Fibonacci studies.
38.2% – A two-step retracement from 55 to 21 (21 ÷ 55), often viewed as a secondary support or resistance level.
23.6% – A three-step retracement from 55 to 13 (13 ÷ 55), typically representing shallow pullbacks within strong trends.
In the example above, the S&P 500 (SPY) is expected to find initial support near 640.34, which represents the first Fibonacci retracement level. The next key support area lies around 609.99, aligning with the 61.8% golden ratio retracement.
The Fibonacci chart referenced above was generated using SimpleVisor’s charting platform.
Fibonacci Extension/Profit Targets
Fibonacci analysis can also be used to project potential resistance levels once prices move to new highs. The main limitation of this approach is that it requires estimating where the trend is likely to peak, making it less reliable than the prior resistance analysis discussed earlier.
As illustrated in the chart, the same Fibonacci ratios are applied by extending the bullish trend from the recent high toward the 800 level.
Summary
You should never depend on a single form of technical analysis. The most effective insights come from combining multiple patterns and indicators. No method is infallible, but when several approaches point to the same conclusion, the probability of a favorable outcome increases.
Although skeptics argue that Fibonacci analysis is simply pattern recognition, its widespread use across financial markets highlights its lasting value as a tool that sits at the intersection of mathematics, investor psychology, and market behavior.
The year ahead offers a clear divide between bullish and bearish outcomes for investors. Will 2026 deliver another period of above-average returns, or mark a turning point toward disappointment? Optimists contend that the foundations for a sustained rally remain intact. A robust technology cycle, heavy corporate investment, and supportive policy settings all suggest further upside. Pessimists, however, warn that key growth drivers are losing momentum, market leadership has become uncomfortably narrow, and underlying economic stress is increasingly evident.
After a strong 2025, investors are entering a shifting market environment. Liquidity is still plentiful, but concerns over stretched valuations, labor-market pressure, and consumer resilience are mounting. Much hinges on how long optimism can outweigh economic realities, and whether expected gains from artificial intelligence and capital spending arrive quickly enough to counteract the drag from debt burdens, interest costs, and widening inequality.
Sentiment remains broadly constructive, though far from unanimous. Equity strategists are split, while bond markets reflect expectations of rate cuts alongside rising recession risk. Fiscal stimulus may postpone a downturn, but it also exacerbates longer-term imbalances. For investors, the central challenge is maintaining objectivity. Both the bullish and bearish narratives are credible, and timing will be decisive. In fact, 2026 could validate elements of both cases, making adaptability the most valuable strategy.
Below, we examine the bullish and bearish scenarios for 2026 in detail, assessing the macroeconomic and market forces behind each view. By translating these dynamics into practical portfolio considerations, investors can prepare for either outcome. Ultimately, success in 2026 will hinge less on forecasting accuracy and more on disciplined risk management.
The Bullish Case
The bullish thesis rests on several core pillars: a fresh surge in technology-led investment, accommodative fiscal policy, improving liquidity conditions, and the ongoing strength of both corporate balance sheets and consumer activity. Together, these forces have propelled markets higher, and proponents argue they will continue to support gains through 2026.
Central to the bull case is the rise of a potentially transformative technology cycle driven by artificial intelligence and large-scale infrastructure upgrades. Unlike earlier tech booms fueled primarily by optimism, this cycle is already translating into substantial capital spending. The so-called “Magnificent Seven” have collectively pledged over $600 billion toward data centers, semiconductor capacity, and AI-related services. This investment is rippling across software, energy, and industrial supply chains. Should the anticipated productivity improvements materialize, corporate earnings could accelerate, providing fundamental support for elevated valuations.
Fiscal policy is also positioned to support growth. Under a Trump-led administration, proposed tax cuts and direct transfers are expected to bolster both corporate activity and consumer spending. While $2,000 stimulus checks may not appear dramatic on their own, they can meaningfully lift short-term consumption and provide relief to small businesses. When paired with income tax reductions, these initiatives create a favorable backdrop for GDP growth and market sentiment. As recent history shows, following the 2022 market correction and widespread recession concerns, ongoing fiscal support has continued to play a stabilizing role in economic expansion.
The monetary environment is also turning more supportive for bulls. Quantitative tightening concluded in December 2025, and the Federal Reserve has since shifted toward what many describe as “QE Lite,” combining rate cuts with monthly purchases of roughly $40 billion in short-term Treasuries. Officially framed as “reserve management,” the objective is to maintain ample liquidity within the financial system. As interest rates decline, credit conditions are likely to loosen, providing a favorable backdrop for risk assets. Rising liquidity has historically supported higher equity valuations, with technology and growth stocks typically benefiting the most from this dynamic.
Corporate actions further reinforce the bullish narrative. Share buyback authorizations are projected to reach a new record of more than $1.2 trillion in 2026. Although often framed as a “capital return strategy”—a characterization that misses the point—buybacks have shown a strong correlation with equity market performance. Notably, since 2000, corporate repurchases have accounted for nearly all net equity demand, underscoring their outsized influence on stock prices.
Importantly, the notion that buybacks signal management’s confidence in future earnings is misleading. In practice, repurchases are frequently used as a form of financial engineering to boost per-share results and beat Wall Street expectations. This dynamic is likely to intensify in 2026, further supporting reported earnings growth and reinforcing the bullish case.
Finally, deregulation tied to the so-called “Big Beautiful Bill” is expected to relax capital requirements for banks, enabling them to hold a greater amount of collateral. While this should support the Treasury market, it also expands overall lending capacity. Much of that capacity is likely to flow into leverage for hedge funds and Wall Street trading desks, as looser regulatory constraints encourage greater risk-taking.
The bullish thesis ultimately rests on a reinforcing feedback loop: innovation spurs capital investment, rising investment lifts earnings, policy measures inject liquidity, and investors respond by increasing risk exposure. As long as each link in this chain remains intact, the upward trend can persist.
The Bearish Case
The bearish case starts with a key observation: many of the forces that powered the 2025 rally are now fading or already fully reflected in prices. Elevated valuations, softening economic data, and rising speculative excesses suggest that current market momentum may be masking deeper structural vulnerabilities. With that in mind, it is worth examining several of these risks more closely.
One of the most visible concerns is market concentration. In 2025, the bulk of equity gains came from just 10 companies on a market-capitalization-weighted basis, a dynamic amplified by the continued shift into passive ETF investing.
Passive investing has evolved from a niche approach into the dominant force shaping equity markets. Index funds and ETFs now represent more than half of U.S. equity ownership. Because these vehicles allocate capital according to market capitalization rather than valuation, fundamentals, or business quality, the largest companies attract a disproportionate share of inflows. This has created a powerful feedback loop in which rising prices draw in more capital, and those inflows, in turn, push prices even higher.
This narrow leadership is inherently fragile. Should investor flows into ETFs reverse, a disproportionate share of selling—roughly 40%—would be concentrated in the same 10 stocks. History shows that when market performance depends on a small handful of names, volatility tends to increase and drawdowns can be sharp.
Valuations present another clear risk. Price-to-earnings multiples on the S&P 500 remain near cycle peaks, leaving little room for error. Growth assumptions are ambitious, and even modest earnings disappointments could trigger a meaningful repricing. While enthusiasm around AI has driven a surge in investment, much of this spending is circular—companies are investing in AI largely to produce and sell AI-related products. That dynamic may prove self-limiting over time, particularly if end demand weakens or costs begin to outstrip returns.
A significant portion of the current investment cycle is also being financed with debt, as companies borrow to fund capital spending, repurchase shares, and sustain dividend payouts. If interest rates remain high or credit conditions deteriorate, rising debt-servicing costs could quickly erode earnings gains.
The broader economic risk is that the reallocation of capital toward technology and automation could sideline large segments of the workforce. While the buildout of data centers may employ thousands during construction, only a fraction of those jobs—perhaps a few hundred—remain once operations begin. Over time, this dynamic could weigh on employment growth, increase the risk of demand destruction, and may already be showing early warning signs.
This dynamic underpins the concept of a “K-shaped economy.” While high-income households and asset owners continue to prosper, lower-income consumers are facing increasing strain. Consumption patterns are diverging as financially pressured households cut back, leaving the top 20% of earners responsible for nearly half of total consumer spending. Signs of stress are already emerging, with rising auto loan and credit card delinquencies, stagnant real wages for many workers, and persistently high costs for housing and essential goods.
At the same time, risks within the credit system—particularly in private markets—are growing. Private credit has expanded rapidly in recent years, yet limited transparency makes it difficult to fully assess systemic vulnerabilities. Regulators have begun to pay closer attention, and default rates in middle-market lending are climbing. Should these stresses intensify, the fallout could extend across banks, hedge funds, and pension portfolios.
The bearish argument is not one of an imminent crash, but of growing fragility. Beneath the headline gains, the market appears increasingly exposed to earnings disappointments, tighter credit conditions, and weakening consumer demand.
The key takeaway is that 2026 may validate elements of both the bullish and bearish narratives. Preparation, rather than prediction, will be essential.
Navigating Whatever Comes Our Way
Investors should treat 2026 as a year in which both the bullish and bearish narratives may ultimately be validated. In the first half, bullish momentum is likely to persist, supported by strong sentiment, ample liquidity, and continued growth in corporate investment. Optimism around AI, fiscal support, and a potential pause in monetary tightening could propel equity indexes higher.
By the second half, however, underlying vulnerabilities may begin to surface. Elevated valuations increase sensitivity to earnings disappointments, while widening economic inequality could weigh on the outlook for consumer demand and corporate revenues. Should these pressures intensify, market sentiment could shift rapidly.
Navigating such a divided year will require a tactical approach—participating in early upside while avoiding excessive exposure to risks that may materialize later in the year.
Early 2026: Participate in Momentum, but Manage Exposure
Overweight sectors poised to benefit from capital spending and ample liquidity, including technology, industrials, and energy.
Prioritize high-quality growth companies with durable earnings and strong cash-flow generation, rather than momentum-driven narratives.
Implement trailing stop-loss strategies to protect gains if market sentiment shifts.
Use periods of volatility to add selectively, while scaling back position sizes as valuations become more stretched.
Avoid excessive concentration in AI-related stocks, even during strong rallies, as crowding increases dispersion and downside risk.
Mid-to-Late 2026: Emphasize Defense and Cash-Flow Stability
Gradually rotate toward defensive, value-oriented sectors such as healthcare, consumer staples, and utilities.
Increase exposure to dividend-paying companies with strong balance sheets and resilient cash flows.
Raise cash allocations or shift into short-duration Treasuries to preserve flexibility.
Allocate selectively to high-quality credit while reducing exposure to private credit and high-yield debt.
Monitor consumer credit conditions, labor-market trends, and bank earnings for early signs of financial stress.
Throughout the Year: Maintain Discipline and Objectivity
Adhere to valuation discipline regardless of shifts in market narratives.
Keep portfolios well diversified to withstand both volatility and sector rotation.
Let data—not headlines—drive allocation decisions.
Rebalance regularly, particularly if strong first-half performance leads to excessive concentration in certain sectors.
In 2026, tactical flexibility, risk awareness, and discipline are likely to matter more than adopting a purely bullish or bearish stance. It is a year in which both camps could be partially wrong. Markets rarely move in straight lines, but a sound investment process should remain consistent throughout.
The year ahead is likely to test investors with heightened volatility, as both the bullish and bearish arguments carry real weight. A new technology cycle may generate genuine economic momentum, yet it also introduces risks tied to elevated valuations, debt-fueled growth, and widening inequality. With markets effectively pricing in near-perfection, history suggests outcomes often fall short of expectations.
Whether 2026 delivers further gains or a sharp correction, performance will hinge on effective risk management. Avoid anchoring to any single narrative. Let data guide decisions, respect your signals, and remain willing to adjust as conditions evolve.
Ultimately, the objective is not to chase short-term returns, but to endure—and compound—across full market cycles.
Gold has climbed beyond $5,100, underpinned by a softer US dollar and strong, persistent structural demand. Solid technical momentum and ongoing global policy uncertainty continue to favor hard assets such as gold and silver. While the focus on potential FX intervention raises the risk of near-term profit-taking, the broader rally still shows little sign of losing steam.
Gold surged to a fresh record of $5,100 an ounce, while silver extended its rally with another 5% jump to around $110. The latest advance has been fueled by persistent US dollar weakness, signs of yen intervention, and broader unease over fiat currencies—long a structural pillar of gold’s appeal. Ongoing global policy uncertainty is also channeling capital into hard assets.
With such an extensive list of supportive factors, even the most bullish investors may question how long the rally can continue without at least a pause, especially given how stretched valuations have become. The temptation for profit-taking at these levels is clear. Yet prices continue to refuse to roll over, and that resilience is becoming the key narrative. Despite a fading geopolitical risk premium and last week’s tariff U-turn by Trump—which, in theory, should have dampened safe-haven demand—gold barely reacted and instead pushed even higher, underscoring the strength of the current trend.
US dollar remains under pressure amid easing rate expectations and declining investor confidence.
At first glance, the explanation seems simple: the US dollar has weakened, giving gold a natural boost. A softer greenback makes gold more affordable for non-US buyers, and that effect is clearly visible. However, this move goes beyond a straightforward FX translation. Gold prices have also been rising in euro and sterling terms, pointing to broader, more structural demand rather than just currency-driven gains.
That said, dollar weakness is still playing an important role. The greenback has slid amid recent geopolitical fractures, and suspected Japanese intervention in USD/JPY has added further pressure. Markets are increasingly convinced that Japanese authorities stepped in when USD/JPY pushed beyond 159. What really caught investors’ attention were reports that the Federal Reserve was “rate-checking” banks in New York around the London close. The idea that this may have been more than unilateral action by Tokyo—potentially involving coordination with Washington—is significant, as joint Japan–US intervention would send a far stronger signal than Japan acting alone.
Bullish momentum remains firmly intact, with strong follow-through buying and little sign of exhaustion despite overextended conditions.
Momentum is clearly carrying much of the move. The uptrend remains firmly intact, with trend-following behavior dominating as traders continue to buy dips rather than sell into strength. As long as that pattern persists, it is difficult to make a convincing case against further near-term gains.
From a psychological standpoint, the $5,000 threshold has now been decisively cleared. It may have seemed ambitious only a few sessions ago—much like $4,000 did not long before—but strong technical momentum, a weakening US dollar narrative, and rising anxiety in global bond markets have made these once-distant milestones appear increasingly attainable.
That said, macro fundamentals still deserve attention. Real yields, growth expectations, and inflation dynamics have not vanished, and eventually they will reassert influence. When they do, gold may find it harder to sustain these elevated levels without a renewed or deeper systemic risk backdrop.
Key Levels to Monitor
For now, the bias remains to the upside. The next resistance target is near $5,182, corresponding to the 261.8% Fibonacci extension of the major October downswing, with the $5,200 psychological level just above. On the downside, multiple support zones are in focus, starting with $5,000. Other round-number levels such as $4,900 and $4,800 may also provide support, while more significant longer-term support is seen around $4,500–$4,550.
As long as the dollar stays weak, central banks continue to be net buyers of gold, and governments openly signal a willingness to intervene in FX markets, it is difficult to identify a catalyst that would meaningfully reverse gold’s advance at this stage, aside from bouts of profit-taking.
The Japanese yen finds it hard to build on recent strong gains as worries over Japan’s fiscal position persist. However, a relatively hawkish Bank of Japan stance and concerns about potential currency intervention could continue to support the yen. Meanwhile, the US dollar remains near a four-month low on expectations of Fed rate cuts, helping to limit upside in USD/JPY.
The Japanese yen comes under modest selling pressure during Tuesday’s Asian session, pulling back further from its strongest level against the US dollar since November 2025, reached a day earlier. Sentiment toward the yen remains fragile as investors worry about Japan’s fiscal outlook, driven by Prime Minister Sanae Takaichi’s expansive spending proposals and tax cut plans. A broadly upbeat mood in equity markets, along with domestic political uncertainty ahead of the snap election scheduled for February 8, is also weighing on the safe-haven currency.
However, downside pressure on the yen may be limited by expectations that Japanese authorities could intervene to prevent excessive weakness, especially given the Bank of Japan’s relatively hawkish stance. Meanwhile, the US dollar stays near a four-month low as markets price in two additional Federal Reserve rate cuts this year. The ongoing “Sell America” theme further dampens demand for the greenback, which should help restrain USD/JPY movements as investors turn their attention to the key two-day FOMC meeting beginning later today.
Japanese yen bears remain cautious as intervention speculation offsets political uncertainty.
Japan’s already stretched public finances have come under sharper scrutiny following Prime Minister Sanae Takaichi’s campaign pledge to suspend the sales tax on food items ahead of the snap lower house election on February 8. Concerns over the country’s fiscal outlook have been a major driver behind the recent jump in long-dated Japanese government bond yields, which raises debt servicing costs and, in turn, limits the Japanese yen’s upside.
Data released earlier on Tuesday showed a slowdown in wholesale inflation, with the Producer Price Index rising 2.4% year-on-year in December, down from 2.7% in November. Additional figures indicated that the Corporate Service Price Index increased 2.6% YoY, slightly lower than the previous reading. Overall, the data offered little to challenge the Bank of Japan’s tightening trajectory and had a limited impact on the yen.
The BoJ recently raised its economic and inflation forecasts while keeping short-term rates unchanged at the conclusion of its two-day meeting last Friday, signaling its readiness to continue gradually lifting still-low borrowing costs. This stance contrasts sharply with expectations for a more dovish US Federal Reserve, leaving the US dollar under pressure near a four-month low and lending support to the yen amid fears of possible official intervention.
Reinforcing this view, Prime Minister Takaichi said on Sunday that authorities are prepared to take action against speculative and highly abnormal market moves, following rate checks by Japan’s Ministry of Finance and the New York Fed on Friday. Still, traders appear reluctant to take aggressive positions ahead of the two-day FOMC meeting beginning today, which is expected to be a key driver for the US dollar and the USD/JPY pair in the near term.
USD/JPY needs to establish a sustained break below the 100-day SMA to strengthen the case for further downside.
The USD/JPY pair showed signs of resilience below its 100-day Simple Moving Average (SMA) on Monday, although it continues to trade beneath the 154.75–154.80 horizontal support zone. The MACD histogram has moved further into negative territory, with the MACD line below the signal line, reflecting bearish momentum that remains below zero. Meanwhile, the RSI stands near 32, close to oversold territory, suggesting that the downside move may be becoming stretched.
A daily close below the 100-day SMA at 153.81, which currently provides near-term support, would give bears greater control. In contrast, sustained trading above this level would keep the broader bias supported by the rising SMA. Signs of stabilization would include a flattening MACD histogram and a move back toward the zero line, while an RSI rebound toward 50 would improve the overall tone. On the other hand, a dip below 30 on the RSI would increase the risk of deeper losses.
Oil prices edged lower in Asian trading on Tuesday as markets focused on rising US-Iran tensions, while also monitoring potential supply disruptions caused by extreme winter weather in the United States.
Crude had gained in recent sessions on fears that tensions with Iran could disrupt supply, while a severe snowstorm in the US was estimated to have shut in up to 2 million barrels of oil production over the weekend.
However, expectations of tighter supply were tempered after Kazakhstan signaled it would resume production at the Tengiz oil field, its largest producing asset.
Brent crude futures for March slipped 0.6% to $65.22 a barrel, while West Texas Intermediate futures fell 0.5% to $60.33 a barrel by 21:20 ET (02:20 GMT).
Iran tensions, US weather disruptions in focus
A US aircraft carrier and several destroyers were seen arriving in the Middle East over the weekend. President Donald Trump said last week that an “armada” was headed toward Iran, though he expressed hope it would not be used.
The deployment followed Trump’s warnings to Iran over the killing of protesters during recent nationwide demonstrations, although unrest has eased in recent weeks and his rhetoric toward Tehran has softened.
Meanwhile, a severe snowstorm in the US caused widespread disruptions, halting oil production and straining the power grid, with markets closely watching whether prolonged outages could further tighten crude supplies.
Kazakhstan signals plans to resume production at the Tengiz oil field.
Kazakhstan said on Monday it will resume output at the Tengiz oil field after a fire and power outage halted production. However, Reuters reported that initial volumes are expected to be limited, as the country has yet to lift a force majeure on CPC Blend exports.
Kazakhstan is the world’s 12th-largest oil producer and a member of OPEC and its allies. The group is expected to keep production levels unchanged at its February 1 meeting, after steadily increasing output through 2025 before announcing a pause late last year to curb prolonged weakness in oil prices.
Bitcoin hovered near one-month lows on Monday, extending last week’s sharp losses as investors stayed cautious ahead of the Federal Reserve’s policy meeting and amid heavy liquidations in leveraged crypto markets.
The world’s largest cryptocurrency was last down 0.7% at $88,081 as of 09:36 ET (14:36 GMT).
Bitcoin has fallen more than 6% over the past week, pressured by a broader risk-off mood driven by uncertainty over global monetary policy, volatility in US Treasury yields, and sharp swings in foreign exchange markets.
Crypto markets remain under pressure as heavy liquidations and Federal Reserve caution weigh on sentiment.
Last week’s selloff was intensified by forced liquidations in derivatives markets, where highly leveraged positions were rapidly unwound. Market data shows more than $1 billion in leveraged crypto positions were liquidated, with long Bitcoin trades making up most of the losses, amplifying the downward price move.
Bitcoin had surged earlier this year on hopes of easier US monetary policy and steady inflows into spot ETFs, but sentiment has since turned cautious as investors reassess the interest-rate outlook and cut risk exposure amid volatility in currency and bond markets.
Focus now shifts to the Federal Reserve’s two-day policy meeting ending Wednesday. While rates are expected to remain unchanged, markets will watch Chair Jerome Powell’s comments closely for signals on the timing and extent of potential rate cuts later this year.
Investors are also watching signals on liquidity conditions and the Fed’s balance sheet, both key drivers for crypto markets.
Adding to the uncertainty, traders are awaiting US President Donald Trump’s expected announcement of his nominee for the next Federal Reserve chair, an appointment that could shape future monetary policy, especially if the new leadership is viewed as more dovish or closely aligned with the administration’s economic agenda.
Strategy increases its Bitcoin holdings with a $264 million purchase.
Strategy said it bought 2,932 more Bitcoins for about $264 million between Jan. 20 and Jan. 25, paying an average price of $90,061 per coin, according to a regulatory filing released Monday.
The purchase raises the company’s total Bitcoin holdings to 712,647 tokens, valued at roughly $62.5 billion.
Led by Michael Saylor, the firm has accumulated its Bitcoin position at an average cost of $76,037 per coin, bringing total investment to about $54.2 billion, including related expenses.
Crypto price today: Altcoins remain weak
Most altcoins stayed under pressure on Monday, extending losses amid cautious sentiment. Ethereum slipped 0.4% to $2,916.08, while XRP rose 1.5% to $1.91. Solana fell 1.8%, with Cardano and Polygon largely flat. Among meme tokens, Dogecoin edged up 0.3%, while $TRUMP declined 1%.
AUD/USD hovers near its 16-month high of 0.6940, supported by rising Australian three-year bond yields at 4.27%, while a weaker US Dollar amid political uncertainty and shutdown risks adds to the upside.
AUD/USD is holding near its 16-month high of 0.6940 set in the prior session, trading around 0.6920 during Tuesday’s Asian hours, as markets await Australia’s December CPI data on Wednesday for fresh cues on the RBA’s policy outlook.
The Australian Dollar is underpinned by higher government bond yields, with the policy-sensitive three-year yield climbing to 4.27%, its highest since November 2023, supported by confidence in Australia’s strong credit rating and the RBA’s relatively hawkish stance.
Australia’s strong PMI and employment data have strengthened expectations of tighter RBA policy. While inflation has eased from its 2022 peak, recent figures point to renewed upward pressure, with headline CPI slowing to 3.4% YoY in November but still above the RBA’s 2–3% target range.
AUD/USD may find further support as the US Dollar weakens on rising political uncertainty, with the risk of a partial US government shutdown ahead of the January 30 funding deadline after Senate Democratic leader Chuck Schumer vowed to oppose a key funding bill.
Market caution is also heightened by uncertainty around the Federal Reserve, after President Donald Trump said he would soon name a successor to Fed Chair Jerome Powell, raising speculation over a more dovish policy stance. Attention now turns to Wednesday’s Fed decision.
The US Dollar Index stays under pressure near 97.00 in Tuesday’s Asian session as concerns over Fed independence grow ahead of expectations that rates will remain unchanged at Wednesday’s meeting.
The US Dollar Index (DXY) weakened toward 97.00 in Asian trading on Tuesday, with investors awaiting the US ADP Employment Change and Consumer Confidence data later in the day.
Concerns over the Federal Reserve’s independence have pushed the DXY to its lowest level since September 18, 2025, after President Donald Trump said he would soon name a successor to Fed Chair Jerome when his term ends in May. According to Reuters, betting markets see BlackRock executive Rick Rieder as the leading candidate.
Tim Duy, chief US economist at SGH Macro Advisors, noted that the actions of the next Fed chair cannot be separated from broader economic conditions or their influence on other FOMC members.
Adding to the USD’s downside risks are fears of a US government shutdown, with Senate Democratic leader Chuck Schumer pledging to block a funding bill that includes Homeland Security appropriations. Lawmakers face a January 30 deadline to avoid a partial shutdown.
Meanwhile, the Fed is widely expected to keep rates unchanged at Wednesday’s meeting after three straight cuts late in 2025. Markets will focus on the press conference for signals on the economic outlook and future rate path, with any hawkish tone potentially limiting near-term USD losses.
U.S. stock index futures showed minimal movement on Monday night, with Dow futures edging lower after a policy proposal from the Trump administration, as investors stayed cautious ahead of an important Federal Reserve decision and major tech earnings.
S&P 500 futures hovered near flat at 9,982.0, while Nasdaq 100 futures rose 0.2% to 25,898.2 by 19:54 ET (00:54 GMT). Meanwhile, Dow Jones futures slipped 0.3% to 49,409.0.
Wall Street ended higher, with the Dow up 0.6%, the S&P 500 gaining 0.5%, and the Nasdaq rising 0.4%.
The Trump administration proposed flat-rate payments for Medicare Advantage.
Dow futures edged lower after major health insurers slumped in late trading, following a Trump administration proposal to keep Medicare Advantage payment rates nearly flat, below market expectations. Shares of UnitedHealth, Humana, and CVS fell sharply on concerns that weaker reimbursement growth would squeeze margins amid rising medical costs. Separately, President Trump announced a hike in tariffs on South Korean imports to 25%, citing Seoul’s failure to ratify a trade deal.
Investors await the Fed decision and key megacap earnings.
Markets are in wait-and-see mode ahead of the Fed meeting, with rates expected to stay unchanged and focus on signals about future cuts. Attention is also on earnings from the “Magnificent Seven,” with results from Microsoft, Meta, Tesla, and Apple likely to shape sentiment, especially around AI investment, demand trends, and margins.
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Wednesday brings the FOMC meeting and Chair Powell’s press conference, and it wouldn’t be surprising if President Trump chose that moment—ideally around 2:30 p.m. ET—to announce his pick for the next Fed chair. Such timing would dominate headlines, catch financial media off guard, and inject maximum uncertainty into markets.
That said, the Fed is not expected to cut rates at this meeting, which should keep the event relatively uneventful. In the bigger picture, what the Fed does between now and May may prove less important, particularly if a new chair is appointed and moves quickly toward easing.
Markets appear to be dialing back expectations for aggressive rate cuts. Current pricing suggests the fed funds rate settles near 3.25% by December, with little additional easing beyond that. To meaningfully shift those expectations, the nominee would likely need to be notably dovish—something markets already anticipate, given the widespread assumption that Trump will select a policy-leaning accommodator.
As a result, the risk of a breakout in the 2-year Treasury yield appears increasingly credible, with initial resistance near 3.62%. Beyond that, a move back toward the 4% level cannot be ruled out. From a technical perspective, the setup supports this view: the 2-year yield has formed multiple bottoms in recent months, and the RSI has begun to turn higher, signaling building upside momentum.
The direction of the 2-year yield may ultimately be more closely linked to oil prices. With inflation still hovering near 3% and crude having fallen to around $60 from highs in the $120s, the message is clear: a rebound in oil prices could quickly reignite inflation pressures. That dynamic likely explains why the price action in oil and the 2-year yield charts has begun to look strikingly similar.
The Bank of Japan once again chose to kick the can down the road, leaving rates unchanged and, in my view, offering little in the way of a clear policy roadmap. The yen’s strength on Friday appeared to be driven solely by reports of a possible “rate check” by the New York Fed on behalf of the U.S. Treasury—widely interpreted as a warning signal that currency intervention could be imminent. Perhaps the strategy is to keep markets stable until after the snap election in February. It’s hard to say, but it should be telling to see how markets react once Japan reopens on Monday.
The Korean won also strengthened notably against the U.S. dollar on Friday. In recent weeks, there has been growing chatter that the KRW had become excessively weak, so it’s likely the currency took the developments around the yen as a warning signal and moved to reprice accordingly.
The Korean won likely matters more than many investors realize, given the sizable exposure South Korean investors have built up in U.S. equities. That dynamic is probably one of the reasons the KRW has weakened so significantly in the first place—buying U.S. stocks requires selling won for dollars.
If the KRW begins to strengthen from here, it could start to put pressure on that trade. For investors who are unhedged on the currency side, a stronger won increases the risk of FX-related losses on their U.S. equity holdings, potentially prompting position adjustments.
Of course, this week also brings major earnings reports from Microsoft, Apple, Tesla, and Meta. From what I can see, all four stocks are currently sitting in positive gamma with positive delta positioning. Implied volatility typically builds into earnings because of the event risk, which sets up a familiar dynamic: unless a company delivers truly blowout results, the reaction can easily turn into a sell-the-news move. Once earnings are released, implied volatility collapses and hedges are unwound as delta decays, potentially putting pressure on the shares.
Gold’s record-setting bull market has resumed its charge—but under a new set of drivers. Aggressive buying from China has increasingly taken over from gold’s traditional engines of demand, namely U.S.-based gold ETFs and futures traders. With American participation fading, gold’s ability to hold lofty levels now rests heavily on sustained Chinese demand. This shift has helped gold remain elevated, postponing the corrective phase typically required to rebalance overheated markets.
Between late July and mid-October 2025, gold surged an extraordinary 32.9% in just 2.7 months. During that stretch, the metal logged 24 record closes—roughly three-sevenths of all trading days—while its strongest gains were spread relatively evenly across the calendar. At the time, U.S. investors were aggressively piling into gold, providing powerful upside momentum.
That enthusiasm was clearly reflected in holdings of the world’s largest gold ETFs—SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and SPDR Gold MiniShares (GLDM). According to the World Gold Council’s Q3’25 data, these three vehicles together accounted for more than three-sevenths of all gold held by global ETFs. During the rally, their combined bullion holdings jumped 10.9%, or 169.4 metric tons, helping propel gold to around $4,350 by mid-October and pushing technical conditions to extreme levels.
At its peak, gold was trading 33% above its 200-day moving average—ranking among the most overbought readings since 1981. The bull market had delivered gains of 139.1% over 24.5 months without a single correction exceeding 10%, making it the largest cyclical gold bull ever in U.S. dollar terms since the gold standard was abandoned in 1971. Historically, such excesses have almost always been followed by sharp pullbacks.
A correction initially appeared to be unfolding, with gold dropping 9.5% into early November—its steepest decline of the cycle and close to formal correction territory. Then the pattern abruptly changed.
Since mid-October, gold has climbed another 10.9% over roughly three months, yet this time without meaningful participation from U.S. investors. ETF holdings at GLD, IAU, and GLDM rose just 2.2% (37.8 tons), less than one-quarter of the prior buildup—and all of that increase occurred only in the past month. Those holdings didn’t even recover their mid-October peak until mid-December, shortly before gold began printing fresh record highs.
Gold’s ability to avoid a deeper correction despite some of the most extreme overbought conditions in decades raised questions. Normally, such excesses demand a reset in sentiment and positioning. Since U.S. investors were not driving the rebound, another source of demand had to be absorbing supply.
Clues emerged in the timing of gold’s strongest advances. Since mid-October, nearly all of gold’s gains have occurred on Mondays—a striking anomaly given that Mondays have historically been gold’s weakest trading day. Major upside moves were logged on November 10, November 24, December 22, January 5, January 12, and again this week following a Monday market holiday. Collectively, these few sessions accounted for the vast majority of gold’s rally since October.
Closer inspection revealed that most of these gains occurred overnight during Asian trading hours—well before European or U.S. markets opened. In other words, Chinese traders were responsible for driving price action when the rest of the world was largely inactive. These sessions effectively became “China Mondays,” periods when Chinese market flows dominated global pricing due to minimal competing liquidity.
Because China is uniquely active during the late Sunday-to-early Monday window, its influence on gold prices during that time is disproportionate. On other weekdays, extended trading hours in Western markets dilute that impact. The clustering of gains during these windows strongly suggests that China has become the primary marginal buyer supporting gold at record levels.
Until U.S. investors re-engage meaningfully, gold’s resilience at these heights will depend largely on whether Chinese demand remains strong enough to keep the rally alive.
China’s influence on Sunday-night trading is further magnified by the weekend effect. Weekends represent the longest stretch when traders are unable to react to new, market-moving developments. As a result, many participants square positions and shut down algorithmic trading systems ahead of the weekend. Meanwhile, algorithms that remain active into early Monday often have a backlog of news to process, which can intensify price moves during thin overnight liquidity. This dynamic can significantly amplify China-driven buying in gold.
Before delving further into China’s growing dominance in the gold market, it’s useful to look at how dramatically conditions shifted around gold’s mid-October peak. In the months leading up to that high, heavy share buying in GLD, IAU, and GLDM was the primary force behind gold’s explosive rally. Since then, demand from U.S. equity investors has been largely muted. Even so, gold has managed to surge back into extreme overbought territory—an outcome that underscores how unusual and China-dependent this phase of the rally has become.
China’s dominance during Sunday-night trading is reinforced by the structure of weekends themselves. Weekends are the longest periods when traders cannot respond to new, market-moving information. As a result, many participants flatten positions and shut down algorithmic systems before markets reopen. Meanwhile, algorithms that remain active into early Monday often need to process a backlog of news, which can magnify price movements in thin overnight liquidity. This dynamic amplifies China-driven gold buying when global participation is minimal.
Before exploring China’s growing grip on gold prices further, it helps to contrast the months before and after gold’s mid-October peak. In the run-up to that high, aggressive share buying in GLD, IAU, and GLDM was the dominant force behind gold’s explosive advance. Since then, U.S. stock investor demand has been largely muted—yet gold has still surged back into extreme overbought territory, underscoring how unusual and externally driven this rally has become.
While American equity investors were slow to chase this China-led surge until recently, U.S. gold-futures speculators jumped in aggressively. Futures positioning is reported weekly, and in late November—just after gold’s second “China Monday” surge—total speculative long positions stood at 307,000 contracts. Over the following seven weeks, that figure ballooned. By the January 13 Commitments of Traders report, total spec longs had risen to 362,400 contracts—an increase equivalent to roughly 172 metric tons of gold. That dwarfed the roughly 52-ton increase in GLD, IAU, and GLDM holdings over the same period, meaning futures traders significantly amplified China-driven momentum.
However, futures-driven buying power is limited and quickly exhausted. Gold futures allow extreme leverage—often 20x to 25x—which dramatically restricts the pool of participants willing to assume such risk. Assessing speculative positioning within its historical range provides insight into whether traders are more likely to add exposure or begin selling.
As of mid-January, speculative long positions were already 58% into their bull-market range, while shorts were just 6% in. The most bullish setup occurs when longs are near the bottom of their range and shorts are near the top, leaving ample room for buying. The current configuration is far closer to the opposite—suggesting diminishing upside fuel from U.S. speculators.
That leaves gold’s ability to continue defying a necessary corrective phase largely dependent on China. Unfortunately, reliable, consistent data on Chinese gold markets is scarce, especially in English. Even if such data were available, it would require extensive historical analysis to establish meaningful relationships with price behavior.
Still, anecdotal evidence is abundant. Major financial publications regularly report frenzied gold buying in China. Silver’s recent parabolic surge—largely driven by Chinese demand—appears to have spilled over into gold, fueling enthusiasm both domestically and globally. Without transparent data, Western analysts are left guessing how long this demand can persist.
Cultural factors may offer some clues. In Western markets, gold had long been dismissed as outdated, resulting in minimal portfolio allocations for years. In contrast, gold has always held deep cultural significance in China. Chinese investors therefore began this cycle with far greater enthusiasm, potentially making them more willing to buy aggressively and stay invested longer.
Capital controls also play a role. Chinese investors have limited avenues to diversify wealth outside the domestic financial system, while gold and silver offer a rare escape from policy risk. Additionally, Chinese culture places a stronger emphasis on wealth accumulation and status—traits that can fuel speculative behavior.
These dynamics make China uniquely susceptible to a speculative gold mania. Evidence increasingly suggests one is underway, reinforced by the repeated “China Monday” surges. Yet Chinese markets remain opaque. Financial transparency is limited, economic data series have been quietly discontinued when trends turn unfavorable, and even official gold reserve figures from the People’s Bank of China are widely viewed with skepticism.
For example, China reported identical gold reserves for more than six years before suddenly announcing a 57% jump in a single month—an implausible scenario. Many analysts believe China has accumulated far more gold than officially disclosed for years. If official reserve data lacks credibility, confidence in broader market transparency is equally questionable.
That uncertainty is unsettling. History shows that speculative manias eventually end in sharp, symmetrical collapses once buying power is exhausted. Whether China’s gold frenzy lasts months—or reverses abruptly—is unknowable.
What is clear is that gold’s recent breakout has been almost entirely driven during Chinese trading hours. Since December 19, gold has climbed roughly $487, yet nearly all of those gains occurred on just four “China Mondays.” This concentration of upside is highly abnormal and inherently risky.
Chinese markets have repeatedly demonstrated how quickly sentiment can flip once fear takes hold. Any government action—such as curbing speculative activity—could trigger rapid selling. Without strong participation from U.S. investors or futures traders to absorb that supply, gold could fall sharply.
In short, Chinese trading has seized control of the gold market. After peaking at extreme overbought levels in mid-October, gold required a corrective reset. That process was prematurely halted by surging Chinese demand. With U.S. participation limited and futures buying power fading, gold’s current position is precarious. If Chinese enthusiasm wanes or policy shifts intervene, a forced and potentially violent rebalancing could follow.
This week’s spotlight will be on the Fed’s FOMC meeting, Chair Powell’s press conference, major Big Tech earnings, and the looming U.S. government shutdown deadline. Apple is set to report earnings after Thursday’s close, with expectations rising for a beat-and-raise quarter. Meanwhile, Starbucks looks like a sell, as profit growth continues to slow and a weaker outlook is anticipated.
The stock market finished Friday on a mixed note, as both the S&P 500 and Nasdaq Composite recorded their second consecutive weekly declines.
The Dow Jones Industrial Average slipped 0.5% for the week, while the S&P 500 edged down about 0.4%. The tech-heavy Nasdaq fell by less than 0.1%, and the small-cap Russell 2000 lost 0.3%.
Looking ahead, the coming week is set to be a blockbuster, packed with potential market catalysts. Investors will be watching a crucial Federal Reserve policy meeting alongside a wave of earnings from major technology companies.
The Fed is widely expected to hold interest rates steady on Wednesday, though markets could see volatility as Chair Jerome Powell addresses the media in his post-meeting press conference.
Other key economic releases on the calendar include durable goods orders on Monday and The Conference Board’s Consumer Confidence Index for January on Tuesday. Friday will also bring the release of the December producer price index.
At the same time, earnings season ramps up sharply, with four members of the “Magnificent Seven” set to report this week. Microsoft (NASDAQ:MSFT), Tesla (NASDAQ:TSLA), and Meta Platforms (NASDAQ:META) are scheduled to announce results Wednesday evening, followed by Apple (NASDAQ:AAPL) after the close on Thursday.
These mega-cap names will be joined by a long list of other major companies, including IBM (NYSE:IBM), ASML (NASDAQ:ASML), SanDisk, Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), Visa (NYSE:V), Mastercard (NYSE:MA), American Express (NYSE:AXP), SoFi Technologies (NASDAQ:SOFI), UnitedHealth Group (NYSE:UNH), Boeing (NYSE:BA), UPS (NYSE:UPS), Caterpillar (NYSE:CAT), General Motors (NYSE:GM), Verizon (NYSE:VZ), AT&T (NYSE:T), Starbucks (NASDAQ:SBUX), American Airlines (NASDAQ:AAL), RTX (NYSE:RTX), and Lockheed Martin (NYSE:LMT).
Adding to the uncertainty, Congress faces a Friday deadline to fund the government once again, with the risk of a prolonged shutdown looming.
No matter how markets ultimately move, I outline below one stock that could attract strong buying interest and another that may face renewed downside pressure. Keep in mind, this outlook is strictly for the week ahead, from Monday, January 26 through Friday, January 30.
Stock to Buy: Apple
Apple is scheduled to report earnings after the market closes on Thursday, with conditions lining up for a possible upside surprise. Wall Street is increasingly calling for a beat-and-raise quarter, as consensus forecasts point to double-digit revenue growth fueled by steady iPhone demand and continued expansion in services.
Options markets are pricing in a post-earnings move of roughly plus or minus 4%. Meanwhile, earnings expectations have turned more optimistic, with profit estimates revised higher 21 times in recent weeks versus just three downward revisions, according to InvestingPro data—underscoring the growing bullish sentiment surrounding Apple’s results.
Apple is expected to post adjusted earnings of $2.67 per share, representing an 11.2% increase from a year ago, while revenue is projected to climb 10.6% year over year to $137.5 billion. Analysts are looking to the iPhone and Services segments to lead the charge, pointing to double-digit growth and a strong pipeline of upcoming products, including a foldable iPhone and an AI-enhanced Siri.
With sentiment leaning bullish, the market appears positioned for a positive surprise. Price targets reaching as high as $350—implying roughly 41% upside—suggest that even a modest earnings beat could be enough to trigger a rebound in the stock.
So far in 2026, Apple shares have struggled, falling roughly 9% year to date to finish Friday at $248.04. The decline has mirrored broader volatility across the tech sector, alongside investor concerns that Apple’s AI strategy may be lagging rivals such as Alphabet.
That said, the recent pullback is shaping up as a potential buying opportunity. The stock is trading in deeply oversold territory, and while daily technical indicators still signal a “Strong Sell,” key support sits near $247.53 (pivot S1). A decisive move above resistance at $248.87 could open the door to a rebound toward $260 or higher, particularly if earnings guidance exceeds expectations.
Trade Setup:
Entry: $248 (pre-earnings)
Target: $265 (gain ~7%)
Stop-Loss: $240 (risk ~3%)
Stock to Sell: Starbucks
Starbucks is set to report earnings Wednesday morning, but unlike Apple, it heads into the week on much shakier footing. The coffee chain is grappling with slowing same-store sales in core markets, intensifying competition, changing consumer spending habits, and persistent cost pressures from labor and commodities.
Options markets are pricing in a post-earnings move of about plus or minus 6.4%, highlighting elevated downside risk. Sentiment has also turned notably bearish, with 17 of the 19 analysts tracked by InvestingPro cutting their EPS forecasts over the past three months ahead of the report.
Wall Street is bracing for a difficult quarter, with earnings per share projected to fall 15.9% year over year to $0.59, even as revenue is expected to edge up 2.5% to $9.62 billion.
Starbucks is also contending with intensifying competition from value-focused fast-food chains such as McDonald’s and Dunkin’, alongside pressure from local coffee shops. At the same time, its China growth narrative—once a major upside driver—has increasingly become a source of investor concern.
Looking ahead, expectations are building that CEO Brian Niccol may caution about continued near-term weakness, citing softer customer traffic, higher operating costs, and lingering uncertainty around the company’s turnaround efforts.
So far in 2026, Starbucks has been one of the stronger performers, climbing roughly 16% year to date and closing Friday at $97.62. However, the technical setup suggests the stock may be overextended heading into earnings.
Key pivot support lies near $96.25, with resistance around $97.84. A downside break below support could open the door to a pullback toward the $90 level if earnings or guidance disappoint.
Germany’s IFO Institute is set to release its January Business Survey on Monday at 09:00 GMT.
The headline IFO Business Climate Index is forecast to edge up to 88.1 in January, from 87.6 in December. In the previous release, the Current Assessment Index stood at 85.6, while the Expectations Index came in at 89.7.
How might the German IFO Survey influence the EUR/USD exchange rate?
EUR/USD could trade sideways if the German IFO Business Survey meets expectations, as heightened safe-haven demand continues to cap upside momentum despite the pair opening with a gap higher. Meanwhile, the Euro may hold relatively steady after Eurozone PMI figures signaled weakness in the services sector in January, reinforcing expectations that the European Central Bank (ECB) will keep interest rates unchanged. Earlier data from Germany was more constructive, with the Services PMI exceeding forecasts and remaining in expansionary territory, while the Manufacturing PMI showed improvement but stayed below the 50 threshold.
The pair comes under pressure as the US Dollar regains intraday strength, supported by rising risk aversion linked to trade and geopolitical concerns. US President Donald Trump warned of potential 100% tariffs on Canadian imports should Ottawa pursue a trade agreement with China. Canadian Prime Minister Mark Carney clarified that Canada has no intention of negotiating a free trade deal with Beijing. Trump also noted that a US aircraft carrier strike group is en route to the Middle East amid escalating tensions with Iran.
From a technical perspective, EUR/USD pulls back after opening at four-month highs and is trading near 1.1860 at the time of writing. Despite the dip, the broader bullish structure remains intact, with the 14-day Relative Strength Index (RSI) hovering around 69.00, indicating strong—though stretched—momentum. The pair could attempt a retest of the four-month peak at 1.1897, close to the key psychological resistance at 1.1900. On the downside, immediate support is seen at the nine-day Exponential Moving Average (EMA) near 1.1739.
Asian equities traded mixed on Monday as investors positioned ahead of a pivotal Federal Reserve policy meeting later this week and awaited major technology earnings, while Japanese shares fell sharply as the yen strengthened.
U.S. stock indexes ended last week lower, and futures linked to Wall Street declined further during Asian trading on Monday.
Nikkei tumbles as yen surges
Japan’s Nikkei 225 fell nearly 2%, deepening losses in exporter stocks as the yen strengthened sharply against the U.S. dollar amid speculation that Japanese and U.S. officials could intervene in currency markets to support the battered currency.
A firmer yen typically weighs on Japanese exporters’ overseas earnings, reinforcing risk-off sentiment in Tokyo. Meanwhile, gold surged to record highs as safe-haven demand intensified, underscoring investor caution ahead of major global policy decisions.
Elsewhere in Asia, South Korea’s KOSPI slipped nearly 1% after touching an intraday record of 5,023.76 points, while China’s Shanghai Composite was little changed.
Australia’s S&P/ASX 200 added 0.1%, while Singapore’s Straits Times Index fell 0.4%.
Indian markets were closed for a public holiday.
Fed meeting and packed tech earnings slate in focus
Traders are firmly focused on this week’s Federal Reserve meeting, where officials are broadly expected to keep interest rates unchanged, with markets closely watching for any adjustment in forward guidance on future policy moves as inflation pressures persist. Remarks from Fed Chair Jerome Powell and other policymakers later in the week are likely to influence sentiment across global risk assets.
Investor attention is also fixed on a packed earnings calendar, featuring quarterly results from most of the so-called “Magnificent Seven” technology heavyweights, including Microsoft Corp (NASDAQ:MSFT), Meta Platforms Inc (NASDAQ:META), Tesla Inc (NASDAQ:TSLA) and Apple Inc (NASDAQ:AAPL), whose results often set the tone for wider markets.
In Asia, major technology names such as Samsung Electronics (KS:005930) and SK Hynix Inc (KS:000660) are also scheduled to report earnings.
Caution around AI-related stocks remains, with technology shares underperforming in some sessions amid growing concerns over elevated valuations and rising costs.
Overall, market participants remain guarded ahead of key policy and earnings catalysts, weighing optimism over artificial-intelligence-driven long-term growth against near-term macroeconomic and currency risks.
Gold vaulted above the psychological $5,000-per-ounce threshold on Monday, building on last week’s explosive rally as investors flocked to the traditional safe haven amid escalating geopolitical risks.
Spot gold climbed 1.1% to a fresh all-time high of $5,035.83 per ounce by 18:52 ET (00:52 GMT), while U.S. gold futures also advanced 1.1% to a record $5,074.71 per ounce.
The precious metal surged more than 8% last week, repeatedly setting new highs, and is now up nearly 17% year-to-date.
The broader precious metals complex also strengthened. Silver jumped over 2% to a record $106.56 per ounce, while platinum edged higher to a new peak of $2,798.46 per ounce.
Gold has climbed sharply since the beginning of the year, supported by geopolitical tensions, expectations of looser U.S. monetary policy later in 2026, and continued buying from central banks and investors hedging against market volatility.
A key catalyst behind gold’s sharp rally this month has been mounting friction between the United States and its NATO partners over Greenland, a dispute that has rattled global markets.
President Trump’s comments on U.S. strategic ambitions in the Arctic have further strained transatlantic ties, fueling fears of wider diplomatic and economic repercussions.
Adding to those geopolitical pressures, Trump escalated trade tensions with Canada over the weekend, warning of a 100% tariff on Canadian imports should Ottawa move forward with a trade agreement with China.
Trump said on his social media platform that Canada could serve as a “drop-off port” for Chinese goods entering the United States, warning that Beijing would “eat Canada alive” if the agreement proceeds.
Fed rate decision in focus
Gold has also found support from expectations around U.S. monetary policy. The Federal Reserve is set to wrap up its policy meeting on Wednesday, with markets broadly expecting officials to leave interest rates unchanged.
Although a hold decision is largely priced in, investors will closely examine the Fed’s statement and remarks from Chair Jerome Powell for signals on the timing and pace of potential rate cuts later this year.
Gold typically benefits from lower interest rates, which reduce the opportunity cost of holding non-yielding assets.
“Both the data and Chair Powell’s strong defence of central bank independence suggest there is little chance of a Fed rate cut on January 28,” ING analysts said in a note.
“Attention will instead turn to President Trump’s forthcoming nomination for the next Fed chair, upcoming economic data, and whether that nominee can steer the committee toward additional rate cuts,” they added.
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