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28/01/2026 - 09:00 UTCThe USDX is attempting a modest recovery during Wednesday’s Asian session, reclaiming the 96.00 level as bearish traders pause to reposition ahead of the Federal Reserve's high-stakes policy announcement. This bounce follows a significant period of volatility, during which the Greenback recorded a move of -1.33% lower on Tuesday, reaching its weakest point since early 2022. While the index is showing signs of life, market participants remain cautious, as the fundamental backdrop is still dominated by the same pressures that drove the recent multi-year lows.
The primary focus remains on the Federal Open Market Committee (FOMC) decision due later today, where interest rates are widely expected to remain steady at 3.50% to 3.75%. Investors will be meticulously analyzing Fed Chair Jerome Powell's press conference for signals regarding the 2026 rate path, particularly given current market bets for at least two additional cuts this year. The central bank's forward guidance will likely dictate whether the USDX can sustain its current rebound or if it is merely a temporary reprieve before another leg down.
However, any recovery in the USDX faces significant headwinds from renewed concerns regarding the Federal Reserve's long-term independence. Efforts to remove certain Fed Governors and President Donald Trump's stated intent to nominate a new Fed Chair have introduced a layer of political risk that has weighed heavily on the currency. On Tuesday, the President predicted that interest rates would decline following his new appointment, a sentiment that has fueled expectations of a more dovish policy shift and capped the dollar's ability to capitalize on its safe-haven status. Adding to the dollar’s struggles is the persistent uncertainty surrounding U.S. trade and geopolitical strategy. Threats of aggressive tariffs against major trading partners and the potential for a government shutdown by the January 30 funding deadline continue to drive capital toward alternative havens like gold and silver.
Most Asian equity markets advanced on Wednesday as a surge in AI-related shares and optimism surrounding U.S. megacap earnings outweighed broader caution ahead of the Federal Reserve’s interest rate decision. Regional sentiment was bolstered by record highs on Wall Street, with semiconductors and data-center stocks leading the rally as investors positioned for upcoming results from Microsoft, Meta, and Tesla. As of 07:25 AM GMT, the Hong Kong 50 surged 2.27% up, while the Japan 225 recovered from early currency-driven pressure to trade 1.36% higher. In Greater China, mainland indices also saw steady gains ahead of the critical January 30 PMI releases. As of 07:25 AM GMT, the China SSE recorded a move of 0.3% up and the China SZSE edged 0.09% up. Investors in the region are increasingly focused on signs of sustained AI revenue strength and capital expenditure trends, particularly as tech heavyweights in Hong Kong continue to outperform the broader market.
South Korea’s KOSPI was a significant standout, jumping as much as 1.73% as memory giants Samsung and SK Hynix rallied ahead of their finalized fourth-quarter reports. While the market remains sensitive to ongoing trade rhetoric, the focus has temporarily shifted toward the robust demand for high-performance computing components. Meanwhile, in Japan, although a firmer yen initially weighed on exporters, significant gains in tech-focused investors like SoftBank helped limit losses and eventually pushed the benchmark index into positive territory.
The global market focus remains firmly on the Federal Reserve's policy announcement later today, with interest rates widely expected to remain between 3.50% and 3.75%. Market participants are meticulously awaiting Chair Jerome Powell’s press conference for clues regarding the 2026 rate cut trajectory and the central bank's stance on its future leadership structure. This decision, alongside a heavy week of corporate results from firms like Boeing and General Motors, will likely define the next directional move for risk assets.
EUR/USD surged to a fresh five-year high above 1.2080 on Tuesday after comments from US President Donald Trump sparked broad US Dollar selling. Speaking in an interview with Fox News, Trump signaled little concern about the recent decline in the US Dollar, saying he did not believe the currency had fallen excessively. Markets interpreted the remarks as an implicit acceptance of Dollar weakness, prompting aggressive selling of the Greenback.
The Dollar’s decline was compounded by renewed trade tensions after the White House announced 25% tariffs on South Korean goods, citing Seoul’s failure to approve a trade agreement. US economic data added to the negative tone for the Dollar. Consumer Confidence deteriorated sharply in January, with the Conference Board index falling to 84.5 from an upwardly revised 94.2 in December, marking its weakest reading since 2014.
In contrast, the Euro found support from steady messaging by European Central Bank officials. Bundesbank President Joachim Nagel said there is no compelling argument to change interest rates in either direction, reinforcing the ECB’s cautious and stable policy stance. ECB Governing Council member Martin Kocher echoed the message, noting that policymakers must remain ready to act if necessary but see no immediate need for adjustment. The comments underscored policy continuity at the ECB as Euro momentum accelerates.
Looking ahead, markets are focused on the Federal Reserve’s policy decision on Wednesday. While rates are widely expected to remain unchanged, attention will center on Fed Chair Jerome Powell’s press conference, particularly any remarks addressing concerns over central bank independence. Meanwhile, speculation over potential coordinated action by Japanese and US authorities to support the Yen has also weighed on the Dollar, following recent exchange-rate checks by the Federal Reserve Bank of New York.
Gold prices surged to a fresh all-time high near $5,220 during Wednesday’s Asian session, extending their rally amid broad US Dollar weakness, heightened geopolitical tensions, and persistent economic uncertainty. The precious metal continues to attract strong safe-haven demand as investors position ahead of the Federal Reserve’s policy decision later in the day.
Gold prices climbed to record territory as the US Dollar slid following comments from US President Donald Trump, who downplayed concerns about the recent decline in the Greenback. Asked whether the Dollar had fallen too much, Trump said its value remained “great,” remarks that markets interpreted as tolerance for further Dollar weakness.
Safe-haven flows have also intensified amid escalating geopolitical and trade-related risks. Earlier this month, Trump issued a series of aggressive policy threats, including proposals to take control of Greenland, impose additional tariffs on European nations, pursue criminal action against Federal Reserve Chair Jerome Powell, and oversee an operation to seize Venezuela’s president. More recently, he warned of imposing 100% tariffs on Canadian goods should Ottawa move forward with a trade agreement with China, further unsettling markets.
Attention now turns to the Federal Reserve, which is widely expected to keep the federal funds rate unchanged within the 3.50%–3.75% range at its January meeting. The anticipated pause follows three consecutive rate cuts late last year. While the decision itself is largely priced in, investors will closely monitor Fed Chair Jerome Powell’s press conference for signals on the future policy path.
Oil prices edged higher during Asian trading on Wednesday, extending gains from the previous session as extreme cold weather disrupted crude production across the United States, tightening near-term supply conditions. A weaker US Dollar also supported prices, while geopolitical tensions in the Middle East remained in focus.
The latest rally has been driven primarily by a severe winter storm that swept across large parts of the US, disrupting oil output and logistics. Production outages were reported in several regions, while crude exports from the US Gulf Coast reportedly fell to zero as heavy snowfall and sub-zero temperatures halted operations.
The supply disruptions have prompted traders to position for sharp drawdowns in US crude inventories in the coming weeks, a development that would signal tighter supplies in the world’s largest oil-consuming nation.
Supporting this view, data from the American Petroleum Institute (API) released late Tuesday showed US crude inventories unexpectedly declined last week. Stockpiles fell by approximately 0.25 million barrels, defying expectations for a build of around 1.45 million barrels. The API figures often foreshadow similar trends in the official inventory data due later on Wednesday.
Oil prices also found support from broad-based weakness in the US Dollar. The Dollar Index slid to near a four-year low earlier in the week amid concerns over US economic uncertainty, shifting trade and geopolitical policies under President Donald Trump, and ahead of the Federal Reserve’s interest rate decision.
US equities closed mixed on Tuesday, with gains in technology stocks lifting the US 500 to a record close, while losses in blue-chip names dragged the US 30 lower. Investors remained cautious ahead of the Federal Reserve’s policy decision on Wednesday and the start of heavy-weight technology earnings later in the week.
UnitedHealth Group was a major drag on the US 30after the managed care provider slid alongside peers, following a much smaller-than-expected proposed increase in payments for next year’s Medicare Advantage plans. Boeing also weighed on the index despite returning to quarterly profitability, as investors remained cautious on the outlook for the planemaker.
Meanwhile, chip stocks extended their recent rally, underpinning gains in both the US 500 and the tech-heavy US Tech 100, as enthusiasm around artificial intelligence and strong demand outlooks continued to support the sector. Markets were largely in wait-and-see mode ahead of the Federal Reserve’s two-day policy meeting, which concludes on Wednesday.
Several major companies reported earnings on Tuesday. Boeing swung to a fourth-quarter profit, supported by the sale of its navigation software business and improved aircraft deliveries. American Airlines forecast 2026 profit above expectations on recovering corporate travel demand and stronger premium services. General Motors posted higher fourth-quarter core profit, driven by strong sales of crossover SUVs and pickup trucks. United Parcel Service projected higher 2026 revenue as it continues to shift toward higher-margin deliveries. In contrast, JetBlue reported wider-than-expected quarterly losses.
The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.
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