Tickmill Expert Blog - Forex Traders Blog

USDJPY Breaking Out Ahead of CPI

James Harte — Tue, 13 Jan 2026 09:37:00 +0000

Yen Hits 1.5 Year LowsUSDJPY has broken out to its highest levels since H1 2024 today as USD strength and JPY weakness continue to develop as key FX themes in January. USD has been on a steady grind higher this month, expect for some downside action yesterday in response to news that the US government is investigating Fed chairman Jerome Powell over alleged excessive spending on Fed renovation costs last year. More broadly, USD has risen this month as a result of weakened Fed easing expectations. On the back of a fresh fall in the unemployment rate (and a rise in wages), traders now see a less than 5% chance of a cut this month and a less than 30% chance of a cut in March.US CPI On WatchLooking ahead today, focus will be on the latest US inflation data. Wall Street is looking for annualised CPI to remain unchanged at 2.7% for December with a small rise in monthly core CPI. If seen, this data should keep near-term easing prospects muted, keeping USD supported. Any upside surprise would clearly have a stronger upward impact on the pair while a downside surprise might revive March easing expectations causing some unwinding of late USDJPY longs.BOJ ExpectationsJPY has weakened recently amidst chatter that the BOJ will likely hold off from a follow-up rate-hike this month, disappointing JPY bulls. Additionally, news this week that the country might face a snap election is causing furtehr uncertainty among investors, leading to JPY outflows as trader await concrete news. If an election is called, this could lead to further JPY losses near-term.Technical ViewsUSDJPYThe rally in USDJPY has seen the pair breaking out above the bull channel highs and the 158.12 level. With momentum studies bullish, focus is now on a test of the 160.23 level next. Should we see any correction back below 158.12, 154.74 will be the next support to monitor.

Institutional Insights: JPMorgan Trading CPI 13/1/25

Patrick Munnelly — Tue, 13 Jan 2026 11:22:00 +0000

CPI forecast (Feroli / JPM Economics)The baseline call is for a firm CPI print, driven by technical “catch-up” effects after a period of disrupted data collection.Headline CPI (MoM): +0.38%Core CPI (MoM): +0.41%Implied YoY: 2.7% headline, 2.8% coreWhy they expect a “pop” in this printGovernment shutdown distortions: BLS reportedly held prior-month prices constant (effectively “flat-lined” some components), which can mechanically boost the next update when prices “reset.”Holiday sales oversampling: Data collection resumed later, potentially over capturing sale prices in the prior month (especially for goods), which would have artificially depressed goods inflation—setting up a bounce-back.Scenario map: Core MoM vs. 1‑day SPX move (Trading desk view)They focus on core MoM buckets and assign probabilities + typical 1‑day SPX reaction ranges.5.0% prob: Core MoM > 0.45% → SPX −1.25% to −2.5%32.5% prob: Core MoM 0.40%–0.45% → SPX +0.25% to −0.75%40.0% prob: Core MoM 0.35%–0.40% → SPX +0.25% to +0.75%20.0% prob: Core MoM 0.30%–0.35% → SPX +1.0% to +1.5%2.5% prob: Core MoM < 0.30% → SPX +1.25% to +1.75%Options market “expected move”Options expiring Tuesday price about a ~0.6% move (as of Fri Jan 9 close).Desk takeaway (positioning + asymmetry)Their framing is: fundamentals lean hawkish, but equity tape outcomes are skewed bullish.Setup: markets are “bulled up,” and they see hawkish print risk > dovish print risk.But SPX reaction distribution isn’t symmetric (they explicitly argue the market’s upside/downside behavior isn’t balanced).Since Oct 1, 2025: 5× +1% up days vs 7× −1% down days (used as context for skew/behavior).What components they highlight (mechanics under the hood)This section is basically “why the seasonal/collection quirks matter.”VehiclesNew vehicles: tracked industry data suggests ~+0.6% in December.Used vehicles: wholesale declines imply ~−1.0% SA.Broad goods & services impacted by bimonthly samplingMany prices may not have been properly refreshed since August due to bimonthly collection schedules + shutdown disruption → potential upward catch-up (they cite medical care as an example).Shelter (OER & rent) has its own lag/rotation issueBecause shelter is collected on a rotating 6‑month panel, treating October as “unchanged” likely biased down measured OER/rent.They expect December shelter prints to better reflect underlying trend, potentially ~2× November’s shelter pace.The “bias down” from the skipped update may persist until the relevant panel refreshes (they mention next April).Business surveys (ISM/PMIs) suggest:Input prices still risingEarlier reluctance to raise selling prices (protect market share), but with recent GDP strength, more firms may be passing costs through.Tariff pass-through context (JPM PB estimate): ~45% vs ~70% in “Trump 1.0”.Macro risk: another inflation peak is seen as a higher-probability equity risk in 1H26.Policy implication: CPI + Friday’s NFP could push Fed cuts further out; Feroli’s view: Fed takes no action in FY26.

Daily Market Outlook, January 13, 2026

Patrick Munnelly — Tue, 13 Jan 2026 09:59:00 +0000

Daily Market Outlook, January 13, 2026 Patrick Munnelly, Partner: Market Strategy, Tickmill GroupMunnelly’s Macro Minute…The rally in markets carried over to Asia, where attractive valuations and promising growth prospects drew investors’ attention away from U.S. markets. The MSCI All Country World Index, a key barometer of global equity performance, climbed 0.1% to hit a record high as Asian stocks reached new peaks. Futures for European equities hinted at further gains, though U.S. markets were expected to open on a quieter note following the S&P 500’s record close on Monday. While markets embraced a bullish sentiment, U.S. Treasury prices dipped, pushing the benchmark 10-year yield up by over 1 basis point to 4.19%. Meanwhile, gold and silver rebounded from earlier losses after Citigroup shared an optimistic outlook for both metals. Brent crude oil surged to its highest level since November, driven by comments from former President Trump about potential sanctions on nations dealing with Iran. Japan saw the most action, with its stock market rallying and government bond yields climbing as speculation grew that Prime Minister Takaichi might call for a snap election. The Japanese Yen tumbled to its weakest level against the U.S. Dollar since July 2024. Stocks in defence and nuclear sectors soared, fuelling what analysts have dubbed the “Takaichi trade”, which combined market gains, falling bond prices, and a softening currency. Asian investors were particularly focused on developments in Japan, where concerns about a potential election raised expectations of increased fiscal spending and accelerated inflation. This left the Yen trailing behind its Group-of-10 peers, adding to the day’s dynamic market narrative.Domestically, the British Retail Consortium reported a 1.0% y/y rise in UK retail sales for December on a like-for-like basis, below the 1.3% consensus and slower than November's 1.2%. Total sales growth also eased to 1.2% y/y. Despite muted figures, the 'Golden Quarter' (Black Friday to Christmas) showed improvement from 2024, with Q4 2025 retail sales up 1.4% 3m/y versus 0.4% in 2024. However, real-term growth was minimal, as shop prices rose 0.7% y/y in Q4 2025, implying retail volumes grew just ~0.6% 3m/y, weaker than pre-Covid years when falling prices boosted real growth. Retail underperformed GDP in 2025, and the holiday season didn’t change that trend. In early 2026, gilts have outperformed with 10yr yields ~10bps lower, unlike marginally higher US Treasury yields. The 10yr UST-gilt yield spread has moved in line with policy rate expectations (1y1y OIS spread). However, over a longer view, the 10yr spread remains higher than pre-2023 levels due to a higher term premium linked to UK fiscal sustainability concerns. With reduced gilt supply post-Budget, some investors see potential for further narrowing of the cross-market spread.Euro STOXX 50 futures are showing a rise of approximately 0.3%, building on Monday's 0.3% gain that propelled the index to a fresh all-time high. So far this year, the index has climbed around 4%. Shares of Orsted are likely to see an upward move after a U.S. federal judge gave the green light for the company to restart work on its Rhode Island offshore wind project. Meanwhile, UBS is expected to grab attention as reports from the Financial Times suggest CEO Sergio Ermotti plans to step down in April 2027. Looking ahead, all eyes will be on December's U.S. Consumer Price Index (CPI) figures as economic data begins to stabilise following the government shutdown late last year. Economists surveyed by Reuters anticipate a 0.3% rise in the CPI for December. On an annual basis, the CPI is projected to have increased by 2.7%, mirroring November's growth rate.Overnight HeadlinesTrump Imposes 25% Tariff On Countries Doing Business With IranECB’s Villeroy Backs Powell, Calls 2026 Rate Hikes ‘Fanciful’Fed’s Williams Says Current Rate Level Supports Jobs, InflationJapan Warns Of Yen Intervention As ‘Takaichi Trade’ ReturnsCiti To Cut 1,000 Jobs Amid Cost-Trimming DriveBlackRock To Lay Off 1% Of Staff As Restructuring DeepensMeta To Slash 10–15% Of Reality Labs WorkforceBullish Oil Options Surge As Iran Risk EscalatesUK Retail Sales Growth Slowed Ahead Of ChristmasJob Losses In European Car Parts Sector Top 100,000 In Two YearsEU–China Agree To Resolve Dispute Over EV ImportsNovo Nordisk Sees Oral GLP-1 Pills Capturing One-Third Of MarketMicrosoft Warns China Is Gaining Ground In AI Outside The WestFX Options Expiries For 10am New York Cut (1BLN+ represents larger expiries, more magnetic when trading within daily ATR)EUR/USD: 1.1625 (510M), 1.1640-50 (630M), 1.1700-05 (1.2BLN), 1.1725 (401M)USD/CHF: 0.7915 (712M), 0.7970 (251M)GBP/USD: 1.3400 (505M), 1.3500 (251M)AUD/USD: 0.6675-80 (700M), 0.6690 (431M), 0.6700 (1BLN), 0.6710 (448M)NZD/USD: 0.5800 (517M), 0.5830 (373M)USD/CAD: 1.3925 (900M)USD/JPY: 157.00 (421M), 157.50 (504M), 158.25 (300M), 158.50 (622M)CFTC Positions as of January 9th: Speculators have reduced their net short position in CBOT US 5-year Treasury futures by 90,044 contracts, bringing it down to 2,312,753.The net short position in CBOT US 10-year Treasury futures has been decreased by 24,106 contracts, resulting in a total of 915,552.Speculators have cut their net short position in CBOT US 2-year Treasury futures by 52,953 contracts, now totaling 1,346,654.There has been a reduction of 9,392 contracts in CBOT US UltraBond Treasury futures, resulting in a net short position of 245,747.Speculators switched their position in CBOT US Treasury bonds to a net short of 6,832 contracts, compared to 14,222 net long contracts the previous week.The net short position in Bitcoin stands at 734 contracts.The Swiss franc reflects a net short position of 40,266 contracts.The British pound has a net short position of 30,538 contracts.The Euro has a net long position of 162,812 contracts.The Japanese yen holds a net long position of 8,815 contracts.Technical & Trade ViewsSP500Daily VWAP BullishWeekly VWAP BullishAbove 6890 Target 7040Below 6860 Target 6820EURUSD Daily VWAP BullishWeekly VWAP BearishAbove 1.1710 Target 1.1780Below 1.1685 Target 1.1580GBPUSD Daily VWAP BullishWeekly VWAP BearishAbove 1.3490 Target 1.36Below 1.3390 Target 1.3290USDJPY Daily VWAP BullishWeekly VWAP BullishAbove 157.40 Target 160Below 157 Target 155XAUUSDDaily VWAP BullishWeekly VWAP BullishAbove 4500 Target 4687Below 4460 Target 4380BTCUSD Daily VWAP BullishWeekly VWAP BullishAbove 91.8k Target 98.17kBelow 91.2k Target 88.7k

SP500 LDN TRADING UPDATE 13/1/26

Patrick Munnelly — Tue, 13 Jan 2026 08:36:00 +0000

SP500 LDN TRADING UPDATE 13/1/26WEEKLY & DAILY LEVELS***QUOTING ES1! FOR CASH US500 EQUIVALENT LEVELS, SUBTRACT POINT DIFFERENCE***WEEKLY BULL BEAR ZONE 6925/35WEEKLY RANGE RES 7090 SUP 6920JAN OPEX STRADDLE 6661/7008MAR QOPEX STRADDLE 6466/7203DEC 2026 OPEX STRADDLE 5889/7779WEEKLY VWAP BULLISH 6935MONTHLY VWAP BULLISH 6861WEEKLY STRUCTURE – ONE TIME FRAMING HIGHER - 6932MONTHLY STRUCTURE – ONE TIME FRAMING HIGHER - 6775The SPX aggregate gamma flip zone is around the 6880 level. There is a sharp increase in upside gamma starting at 6970 and above. Conversely, below 6770, the downside gamma becomes very steep.DAILY STRUCTURE – ONE TIME FAMING HIGHER - 6968DAILY VWAP BULLISH - 6984DAILY BULL BEAR ZONE 6995/85DAILY RANGE RES 7073 SUP 69502 SIGMA RES 7128 SUP 6896VIX BULL BEAR ZONE 17.7PUT/CALL RATIO 1.23 TRADES & TARGETS PRIMARY PLAY - LONG ON REJECT/RECLAIM DAILY BULL BEAR ZONE TARGET DAILY RANGE RESLONG ON REJECT/RECLAIM DAILY RANGE SUP TARGET DAILY BULL BEAR ZONESHORT ON REJECT/RECLAIM DAILY RANGE RES TARGET 7025 (ATH)(I FADE TESTS OF 2 SIGMA LEVELS ESPECIALLY INTO THE FINAL HOUR OF THE NY CASH SESSION AS 90% OF THE TIME WHEN TESTED THE MARKET WILL CLOSE ABOVE OR BELOW THESE LEVELS)GOLDMAN SACHS TRADING DESK VIEW - “CHOPPY (CONT’D)”S&P rose 16bps, closing at 6,977, with a Market on Close (MOC) imbalance of $1.45bn to SELL. NDX gained 8bps to 25,788, R2K increased 44bps to 2,636, and the Dow climbed 17bps to 49,590. A total of 17.24 billion shares traded across all U.S. equity exchanges, compared to the year-to-date daily average of 16.96 billion shares. VIX surged 435bps to 15.12, WTI Crude added 69bps to $59.53, the U.S. 10YR yield rose 2bps to 4.19%, gold jumped 184bps to 4,593, DXY dipped 22bps to 98.91, and Bitcoin advanced 82bps to $91,372.HEADLINE AFTER THE BELL: Trump Announces 25% Tariff on Trade with Iran @realDonaldTrump: “Effective immediately, any country doing business with the Islamic Republic of Iran will pay a 25% tariff on all business conducted with the United States of America. This order is final and conclusive. Thank you for your attention to this matter!”Market Recap: The session started off busy, with the Consumer Finance sector sharply lower (GSFINCON -540bps, a 2.7 sigma move) following President Trump's announcement of a one-year 10% interest rate cap on credit card loans. Credit card exposure breakdown: BFH, SYF, AXP (95%-100%), COF (~60-65%), C (~25%), JPM (high teens), BAC (high single digits), WFC/USB (high single digits), and other regional banks (low single digits). Early trading saw short supply, but flows stabilized later in the session. The market is now focused on the next developments, with January 21 flagged as a key risk date.Tomorrow marks the start of Financials’ earnings season, with JPM and BK reporting in the morning, followed by BAC, C, and WFC on Wednesday. Consensus estimates S&P 500 EPS growth of 7% year-over-year for Q4 2025, though we project 12% growth, reaching $305, driven by 7% sales growth and 70bps margin expansion.Consumer Discretionary stocks rebounded despite lackluster updates from ICR and some rotation back into defensive names. Positioning remains light, preventing significant downside for the sector, while the upcoming tariff deadline on Wednesday may also be discouraging short selling. Housing and other defensive sectors outperformed (e.g., consumables, broadlines, discounters, auto parts, grocers, staples), while softlines (impacted by ICR updates) and credit card-exposed names (hotels, airlines, department stores) underperformed.Trading Desk Activity: Our floor activity was moderate, rated a 5 out of 10. The floor ended the session +97bps to buy versus a 30-day average of -55bps. Outside of the key news areas, flows were relatively calm. Long-only funds were slight net sellers (mainly in macro products), while hedge funds were net buyers (~$1.5bn), driven by covering in financials and macro, offset by supply in communication services.Economic Data Preview: CPI data is due tomorrow. We forecast a 0.35% increase in December core CPI (vs. +0.3% consensus), corresponding to a year-over-year rate of 2.78% (vs. +2.7% consensus). Headline CPI is expected to rise 0.37% (vs. +0.3% consensus), reflecting higher food (+0.55%) and energy (+0.2%) prices. Our projections align with a 0.30% increase in December core PCE. GS Economics now anticipates two 25bp Fed rate cuts in June and September (previously March and June), bringing rates to 3-3.25%.Derivatives Market: Flows were steady ahead of tomorrow's CPI and Wednesday's PPI and potential IEEPA ruling. Volatility eased as markets bounced off the lows and futures turned positive. Despite Powell's negative overnight commentary, there was little appetite for hedging. Dealer gamma remains significantly long at current levels, with exposure shortening on a ~1% market move up or down. The straddle for tomorrow priced at ~45bps, extending to ~98bps by the week's end. (h/t Shayna Peart)

Crude Pushing Higher On US/Iran Risks

James Harte — Tue, 13 Jan 2026 10:22:00 +0000

US Sanctions IranOil prices are continuing to push higher on Tuesday with the crude futures market now up almost 4% on the week. The rally comes amidst increased supply disruption fears linked to risks of a US/Iran conflict as tensions continue to rise. Yesterday, President Trump announced a 25% tariff to be imposed on any countries doing business with Iran. These sanctions are seen as the first step in the US response to the situation there with risks of a military attack still elevated. Near-term, these sanctions are expected to drive higher crude prices via market tightening and could to a strain on trading relations with countries such as China who are big buyers of Iranian crude.Further Response RisksNear-term, risks appear skewed to the upside for crude as sanctions take effect. Additionally, US pressure on Iran is unlikely to be walked back and if state violence against protesters continues, the threat of military action will grow stronger. Against this backdrop, crude prices are expected to push higher with news of any further US sanctions/actions against Iran likely to see amplified buying.Tanker AttacksCrude prices are also spiking today on the back of news that two oil tankers near the Black Sea loading terminal. Bloomberg is running a story from an unnamed source, claiming the information is not widely known at the time of reporting. This once again underscores the threat to supply from rising geopolitical tensions. With risks of further news elevated near-term, crude expectations remain tilted upwards for now.Technical ViewsCrudeBearish divergence on momentum studies into the recent lows, followed by the bullish channel break, suggest that crude could be carving out a bottom here. Price is fast approaching a test of the 61.39 level which, if broken, will turn focus to 64.42 next as the higher bull target.

NQ! Nasdaq USTECH Daily Trade Setup

Patrick Munnelly — Tue, 13 Jan 2026 14:09:00 +0000

NQ! Nasdaq USTECH Daily Trade SetupIn this update, we review the recent price action in the E-mini Nasdaq futures contract and identify the next high-probability trading opportunity and price objectives to target. To review today's video analysis, click here!...

FX Options Insights 13/1/26

Patrick Munnelly — Tue, 13 Jan 2026 16:23:00 +0000

The foreign exchange market is currently navigating a sea of potential geopolitical and U.S. domestic risks, yet options and their volatility risk premiums remain surprisingly calm. Traders had anticipated that Tuesday's U.S. CPI data might shake things up, but it turned out to be a non-event. The U.S. dollar (USD), while off its recent recovery highs, is under some pressure due to the investigation involving Federal Reserve Chair Jerome Powell. However, unless an indictment emerges, the greenback isn’t expected to lose much ground from this.Meanwhile, USD/JPY is stealing the spotlight as speculation about snap elections in Japan, possibly in early or mid-February, pushes the yen (JPY) toward its weakest levels since the 2024 intervention. This has sparked concerns about a potential repeat of intervention measures. Demand for JPY call options—used to hedge against intervention risks—is keeping the downside strike premiums elevated compared to the upside, even as spot prices show some firmness. These dynamics have also kept implied volatility supported, with one-month volatility bouncing back to 8.4 from Friday’s lows of 7.4 after the U.S. jobs report.On the EUR/USD front, both historic and implied volatilities are at rock-bottom levels compared to other USD/G10 currency pairs, reflecting the pair's subdued and range-bound behavior. Traders employing short volatility strategies, such as range binaries, continue to see solid returns in this low-volatility environment.As for AUD/USD, implied volatility has eased further, with spot prices hovering near the 0.6700 mark. One-month implied volatility has now dipped to 7.5, following a rebound from multi-year lows of 6.5 to a recent high of 8.2 post-holidays. Upside barriers tied to AUD calls/USD puts are keeping hopes alive for Aussie dollar bulls at a relatively low cost.

Is Bullish Pressure Building in Bitcoin?

James Harte — Tue, 13 Jan 2026 10:54:00 +0000

Where Next for Bitcoin?Bitcoin prices remain firmly range-bound for now following the recent failure at the $94,500 level. Price had spiked higher at the start of last week before reversing as USD rose in response to weaker Fed easing expectations but are now pushing higher again this week. Ultimately, the futures market is in a holding pattern here and until we see a break of either the $94,500 level or the $80,185 level lower, there is little to get excited about. Toda’s US CPI data will be a key driver to watch with risks that BTC sells off if we get a USD spike on any hot inflation data. Similarly, we could instead see BTC spiking higher in CPI undershoots forecasts, reviving near-term Fed easing prospects.Fed Investigation ImpactOne very interesting factor to monitor near term is the news that the US government is investigating the Fed over claims of excessive spending on Fed renovations work last year. With the threat of chairman Powell facing indictment, many are claiming the move is simply a sinister attack by Trump on the Fed’s independence over Powell’s refusal to cut rate sin line with Trump’s demands. As such, the integrity of the US system is being called into question with many referring to Bitcoin’s initial philosophical driver of being a way of escaping government and central bank manipulation. If the situation escalates and there is any sense of Powell facing charges, BTC could stand to gain ground firmly as USD comes under pressure amidst a ‘sell-USA’ trade emerging.Technical ViewsBTCFor now, BTC remains within a consolidation pattern at the foot of the Q4 decline we saw. Underpinned by $81,185 and capped by $94,500, the market is still very much in wait and see mode though it does feel like upside pressure is building. If we break higher, the $100k mark will be the big test for bulls near-term, with a break needed to turn focus back to a fresh upside run.

FTSE 100 FINISH LINE 13/1/26

Patrick Munnelly — Tue, 13 Jan 2026 17:36:00 +0000

FTSE 100 FINISH LINE 13/1/26 The UK's FTSE 100 remained relatively flat on Tuesday morning as investors processed a range of corporate updates. However, U.S. investors reacted poorly to slightly cooler US inflation data, reversing risk sentiment and dragging the UK benchmark index slightly lower. The pound is at a pivotal juncture, with market participants keenly observing forthcoming economic indicators from both the UK and the US, especially after the pound retreated from its trend highs near 1.35 following recent releases. Cable experienced a pullback even though the U.S. core inflation was lower than expected and real weekly earnings continued their downward trend. After the CPI report, the pound initially climbed towards the upper end of its recent range, just above 1.35, before stabilising back near its levels prior to the data release at 1.3460.Energy stocks provided some support, advancing on supply concerns tied to Iran and Venezuela. Heading into the close, the FTSE 100 had slipped 0.25%, retreating from a record close in the previous session, while the domestically focused mid-cap index also edged lower. The FTSE 350 Oil & Gas index climbed 1%, with BP and Shell both gaining approximately 1%. Oil prices rose amid fears of reduced exports from Iran and Venezuela. Other sectors such as media, beverages, and real estate saw gains as investors shifted toward income-generating and rate-sensitive stocks ahead of the inflation data release. In contrast, the precious metals and mining index dropped 1.5%, erasing some of the 6% gain it had posted in the previous session. Shares of Raspberry Pi fell 6% after the single-board computer manufacturer cited ongoing volatility in the supply and pricing of memory as a challenge for its 2026 outlook. Whitbread led individual gains on the FTSE 100, rising 4.8%, after the hotel operator announced a smaller-than-expected impact from business rate hikes outlined in the UK's autumn budget. Meanwhile, British pest control firm Rentokil Initial declined 1.6% to 465.8p, making it one of the FTSE 100's biggest losers, as the index overall dipped slightly by 0.01%.In leadership developments, Rentokil revealed that Mike Duffy, currently with OnTrac, will replace Andy Ransom as CEO following Ransom's retirement in March. Analysts at Jefferies welcomed the announcement, noting Duffy's extensive experience managing multi-site U.S. operations and his proven ability to drive profitable growth in private equity-owned businesses. Despite today's decline, Rentokil recorded an 11.3% gain in 2025, though this trails the FTSE 100's robust 20.2% rise over the same period.TECHNICAL & TRADE VIEW - FTSE100Daily VWAP Bullish Weekly VWAP BullishAbove 10050 Target 10250Below 9930 Target 9800

Powell Investigation Sparks USD Sell-Off

James Harte — Mon, 12 Jan 2026 09:31:00 +0000

USD Sold HeavilyThe US Dollar is coming under heavy selling pressure at the start of the week with the DXY down 0.5% through the European open on Monday. The move comes in response to news that the US government has subpoenaed the Fed and is threatening an indictment of Powell over renovation costs for work on Federal buildings as discussed by Powell at the semi-annual senate banking committee last summer. Powell has called the move an attack on the fed’s independence and markets look to be agreeing so far with USD down sharply across the board today. Trump has long been a vocal critic of Powell mainly for ignoring the president’s call stop cut rates sooner and at a quicker pace. While public insults and threats have been common over Trump’s terms in office, this investigation marks a more sinister turn and has clearly spooked investors. Looking ahead, incoming news flow on the issue will remain key to driving USD this week.US CPI DueAway from that story, traders will this week be focusing on incoming US inflation data due tomorrow. Annualised CPI is expected to remain unchanged at 2.7% while monthly data is forecast to show a slight rise in core CPI. If confirmed at these levels, the data should keep near-term Fed easing prospects muted.Easing Expectations Fall Post-NFPOn Friday, the latest US labour market report showed a drop in the NFP to 50k from 64k prior (itself revised lower to 56k), wages higher to 0.3% from 0.1% prior and the unemployment rate lower to 4.4% from 4.6% prior. Despite the miss on the headline reading, easing expectations fell back after the data with an unchanged decision priced around 95% for this month and a cut in March priced at less than 30% from around 40% prior. While this narrative remains in place USD has room to push higher through Q1 depending on how this Powell investigation story plays out. For now, near-term risks are pointed lower.Technical ViewsDXYThe failure at 99.15 now risks forming an interim head & shoulders pattern, suggesting room for a heavier downturn. If price breaks below 98.24, focus will be on a deeper push towards 96.63, with a retest of the broken bear channel coming in ahead of that level.