The pair is quietly one of the more notable movers in the major currencies space today, with USD/JPY up over 100 pips to 156.70 levels now. After the speculated ‘rate checks’ on 23 and 27 January, it has been a quick recovery as the yen fails to hold onto gains. As a reminder, Japan authorities stepped in with the pair nudging above the 159.00 level. That’s an indication that they don’t want to let it come close to nearing a test or break of the 160.00 threshold. The ‘rate checks’ then sent USD/JPY down close to testing the 152.00 level. So, we’re more than 450 pips higher from the lows in just about a span of one week.From the chart above, we can see that the pair has already more than halved the sharp drop since 23 January. And adding to that, the near-term bias has also shifted to being more bullish once again. That as we see a break back above both the 100 (red line) and 200-hour (blue line) moving averages.The quick recovery here speaks to the continued selling and poor sentiment surrounding the Japanese yen in general. The Takaichi trade remains in full force and it is hard to shake that off even with intervention threats it seems.The only question now is, when does Japan decide to draw a line and step in with actual intervention?As mentioned previously, prior episodes in which they conducted ‘rate checks’ was followed up by actual intervention eventually to really knock down market players and speculators. That was the case in April 2024 as well as September 2022.I argued last week that it should be as good a time as any for Japan to make that strike as it would be more effective in sending a message to markets. Now with ‘rate checks’ used up and we’re only down some 250 pips from the highs on 23 January, what’s the next step?It seems that Tokyo officials might be waiting on the snap election on 8 February more than anything else. They would want to gauge the market reaction to that and then using said evidence to determine if they really need to step in.But with Takaichi remaining favourite for a landslide victory, I’m not exactly sure what they would be hoping for.In any case, with every big figure that traders choose to push past above the 155.00 mark, I reckon that will already be causing Tokyo officials to feel chagrined in wanting to take action. So, just be wary of that as we start to test the limits of their patience. This article was written by Justin Low at investinglive.com. 🔗 Source 💡 DMK Insight USD/JPY’s surge to 156.70 is a critical signal for traders watching the yen’s resilience. The recent ‘rate checks’ suggest a volatile environment where the Bank of Japan’s policies are under scrutiny. With the yen unable to maintain its recent gains, traders should consider the implications for their positions. A sustained move above 156.70 could indicate further weakness in the yen, potentially triggering stop-loss orders and inviting more selling pressure. Conversely, if the pair retraces, it might provide a buying opportunity for those looking to capitalize on a rebound. Keep an eye on the 157.00 resistance level; a break above could lead to a stronger bullish trend. Additionally, monitor economic indicators from Japan and the U.S. that could influence this pair’s trajectory. The flip side is that if the yen strengthens unexpectedly, it could catch many off guard, especially if market sentiment shifts due to geopolitical events or economic data releases. Traders should be prepared for potential volatility as the market digests these developments. 📮 Takeaway Watch for USD/JPY’s behavior around 156.70; a break above 157.00 could signal further yen weakness, while a retracement may offer buying opportunities.

FUNDAMENTAL OVERVIEWGold has been in recovery mode in this first half of the week after experiencing one of the worst drawdowns in decades. The fundamentals are still against rising prices, so we either get stuck in a wide range below the January’s high or will see another flush lower in the next weeks or months. In fact, on Monday we got a strong US ISM Manufacturing PMI with the new orders index jumping to the highest level since 2022. The data didn’t trigger another selloff as the Fed is mostly focused on the labour market and inflation, but the risks for further downside remain. Today, we have the US ADP and the US ISM Services PMI on the agenda. If we get surprisingly strong data, we will likely see a hawkish repricing in interest rates expectations which could weigh on gold. If the data comes out soft, on the other hand, the recovery could extend into new highs as we await the NFP report next. GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAMEOn the daily chart, we can see that gold recovered more than half of the losses as the dip-buyers continue to pile in to target new record highs. There’s not much we can glean from this timeframe, so we need to zoom in to see some more details. GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAMEOn the 4 hour chart, we can see that we have a resistance zone around the 5100 level. This is where we can expect the sellers to step in with a defined risk above the resistance to position for a drop back into the lows. The buyers, on the other hand, will look for a break higher to increase the bullish bets into new all-time highs.GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAMEOn the 1 hour chart, we can see that we have a minor upward trendline defining the bullish momentum. The buyers will likely continue to lean on the trendline with a defined risk below it to keep pushing into new highs, while the sellers will look for a break lower to increase the bearish bets into new lows. The red lines define the average daily range for today. UPCOMING CATALYSTSToday we have the US ADP and the US ISM Services PMI. Tomorrow, we get the US Jobless Claims figures. On Friday, we conclude the week with the University of Michigan Consumer Sentiment data. This article was written by Giuseppe Dellamotta at investinglive.com. 🔗 Source 💡 DMK Insight Gold’s recent recovery is a classic case of a dead cat bounce, and here’s why that matters: After suffering a significant drawdown, the metal’s bounce could be misleading. With fundamentals still pointing towards bearish pressure, traders need to be cautious. If gold fails to break above recent resistance levels, particularly those near January’s highs, we might see another leg down. The market’s sentiment is fragile, and any negative economic data could trigger a sell-off. Keep an eye on key technical indicators like the 50-day moving average, which could act as a pivotal point. If gold dips below this level, it could signal a stronger downtrend, impacting related assets like silver and mining stocks. On the flip side, a sustained rally above resistance could attract momentum traders, but that seems unlikely given the current economic backdrop. Watch for upcoming economic reports that could shift sentiment, especially around inflation and interest rates. A break below recent lows could open the door for a more aggressive bearish stance. 📮 Takeaway Traders should monitor gold’s resistance near January highs; a failure to break could lead to another significant drop.

China’s central bank said it will inject 800 billion yuan via a three-month outright reverse repo, using a tool introduced in late 2024 to keep banking system liquidity ample without changing benchmark interest rates.Summary:PBOC announced a large three-month liquidity injectionOperation uses outright reverse repos introduced in late 2024Move aims to keep banking system liquidity ampleTool complements existing short-term liquidity operationsPolicy stance remains supportive but controlledChina’s central bank has stepped in to reinforce liquidity conditions, announcing a sizeable medium-term cash injection aimed at keeping funding conditions stable as the economy moves deeper into 2026. The People’s Bank of China said it will conduct an 800 billion yuan outright reverse repo operation on February 4, signalling a continued preference for proactive but measured liquidity management.The operation will be conducted via interest-rate bidding with a fixed total amount, with successful bids allocated across multiple price levels. The transaction carries a tenor of three months, or 91 days, providing funding support beyond the very short-term horizon typically associated with daily open market operations.The use of outright reverse repos reflects the PBOC’s evolving policy toolkit. Introduced in October 2024, outright reverse repos are designed as a monthly liquidity management instrument with maturities of up to one year. Unlike traditional short-term reverse repos, these operations allow the central bank to inject liquidity in a more durable and predictable way, helping smooth funding conditions across quarters rather than days.— In an outright reverse repo, the central bank buys securities from banks with an agreement to sell them back at a later date. For banks, this effectively provides cash funding for the duration of the operation. Because the maturity is longer than standard repos, it helps anchor expectations around liquidity availability and reduces the need for frequent short-term interventions. By using interest-rate bidding, the PBOC also retains flexibility to gauge market demand and signal its policy stance without formally changing benchmark rates.The operation adds to a growing set of policy tools, which already includes temporary repos, temporary reverse repos, and outright purchases and sales of government bonds. Together, these instruments give policymakers greater precision in calibrating liquidity without resorting to broad-based easing measures such as reserve requirement cuts.Overall, the move underscores the central bank’s intention to maintain ample liquidity while preserving policy flexibility. It suggests support for growth and financial stability remains in place, even as authorities continue to avoid sending an overt signal of aggressive monetary easing. This article was written by Eamonn Sheridan at investinglive.com. 🔗 Source 💡 DMK Insight China’s central bank just dropped 800 billion yuan into the market, and here’s why that matters: This liquidity injection via outright reverse repos is a clear signal that the People’s Bank of China (PBOC) is committed to maintaining ample liquidity in the banking system. For traders, this could mean a short-term boost in risk appetite, especially in equities and commodities, as banks have more cash to lend. Keep an eye on how this affects the yuan and related forex pairs—if liquidity flows increase, we might see a weaker dollar against the yuan in the coming weeks. But there’s a flip side: while this move aims to stabilize the banking sector, it could also indicate underlying economic concerns that the PBOC is trying to address. If traders perceive this as a sign of economic weakness, it might lead to volatility in Chinese stocks and commodities. Watch for key technical levels in the Shanghai Composite Index and the yuan’s performance against the dollar. If the index breaks below recent support levels, it could signal deeper issues ahead. Overall, monitor how this liquidity injection plays out over the next few weeks, especially in relation to upcoming economic data releases from China. 📮 Takeaway Watch for the yuan’s reaction to the 800 billion yuan injection; a weaker yuan could impact forex pairs and commodities in the coming weeks.

Earlier:Yuan seen rising in 2026, but China signals resistance to rapid gainsThe People’s Bank of China is due to set the daily USD/CNY reference rate at around 0115 GMT (2115 US Eastern time), a fixing that remains one of the most closely watched signals in Asian foreign exchange markets. China operates a managed floating exchange rate system, under which the renminbi (yuan) is allowed to trade within a prescribed band around a central reference rate, or midpoint, set each trading day by the PBOC. The current trading band permits the currency to move plus or minus 2% from the official midpoint during onshore trading hours. Each morning, the PBOC determines the midpoint based on a range of inputs. These include the previous day’s closing price, movements in major currencies, particularly the US dollar, broader international FX conditions, and domestic economic considerations such as capital flows, growth momentum and financial stability objectives. The midpoint is not a purely mechanical calculation, allowing policymakers discretion to guide market expectations. Once the midpoint is announced, onshore USD/CNY is free to trade within the allowable band. If market pressures push the yuan toward either edge of that range, the central bank may step in to smooth volatility. Intervention can take the form of direct buying or selling of yuan, adjustments to liquidity conditions, or guidance through state-owned banks. As a result, the daily fixing is often interpreted as a policy signal rather than just a technical reference point. A stronger-than-expected CNY midpoint is typically read as a sign the PBOC is leaning against depreciation pressure, while a weaker fixing for the CNY can indicate tolerance for a softer currency, often in response to dollar strength or domestic economic headwinds.In periods of heightened global volatility, such as shifts in US rate expectations, trade tensions or capital flow pressures, the fixing takes on added significance. For investors, it provides insight into Beijing’s currency priorities, balancing competitiveness, capital stability and financial market confidence. This article was written by Eamonn Sheridan at investinglive.com. 🔗 Source 💡 DMK Insight The PBOC’s upcoming USD/CNY reference rate setting is crucial for traders watching the yuan’s trajectory. With expectations for the yuan to rise in 2026, the central bank’s resistance to rapid gains could create volatility in the forex market. Traders should monitor the reference rate closely, as any unexpected adjustments could trigger significant market reactions. If the PBOC signals a stronger yuan, it might affect not just USD/CNY but also related pairs like AUD/CNY and EUR/CNY. Look for key levels around the recent trading ranges; a break above or below could set the tone for the next few weeks. Keep an eye on broader economic indicators from China, as they could influence the PBOC’s stance and, consequently, the yuan’s performance. 📮 Takeaway Watch the PBOC’s USD/CNY reference rate closely; unexpected moves could lead to volatility in the yuan and related currency pairs.

Rose 2.0% m/m in Januaryprior -2.1%In NZD terms the index rose 1.3% m/mstronger NZD offsetting higher commodity prices overseasEarlier:New Zealand jobs report shows firmer hiring but unemployment edges to a 10 year high This article was written by Eamonn Sheridan at investinglive.com. 🔗 Source 💡 DMK Insight New Zealand’s jobs report shows a mixed bag—unemployment hits a decade high while hiring firms up. This divergence is crucial for traders as it signals potential volatility in the NZD. A 2.0% m/m rise in the index, despite a stronger NZD, suggests that while local economic conditions are improving, external pressures from rising commodity prices could weigh on growth. Traders should keep an eye on the NZD/USD pair, especially if it approaches key support or resistance levels. If the unemployment rate continues to rise, it could lead to a bearish sentiment in the NZD, especially against stronger currencies like the USD. Here’s the thing: while the jobs market shows resilience, the rising unemployment rate could prompt the Reserve Bank of New Zealand to reconsider its monetary policy stance. Watch for any comments from the RBNZ in the coming weeks, as they could provide insight into future interest rate decisions and impact the NZD’s trajectory. 📮 Takeaway Monitor the NZD/USD pair closely; a break below key support levels could signal further weakness in the NZD amid rising unemployment.

Japan’s services-led recovery gained pace in January, though confidence remains cautious despite easing cost pressures.SummaryJapan’s services sector growth accelerated to an 11-month high in JanuaryNew orders and export demand strengthened alongside rising backlogsEmployment continued to expand as firms responded to higher workloadsInput cost inflation eased to its softest pace in nearly two yearsBusiness confidence remained positive but softened amid global concernsJapan’s services sector regained momentum at the start of 2026, with business activity expanding at its fastest pace in almost a year, according to the latest PMI data. The improvement was driven by firmer demand conditions, rising new orders and a continued expansion in employment, signalling a more durable recovery in the private sector.The Services Business Activity Index climbed to 53.7 in January from 51.6 in December, marking the strongest reading since February last year and extending the sector’s growth run to ten consecutive months. The acceleration reflected a quicker rise in new business, which recorded its best performance in four months. Firms cited successful marketing efforts, new client wins and improving foreign demand as key drivers of the uptick in activity.Growth was not uniform across sub-sectors. Finance and insurance firms continued to lead the expansion, while information and communication services lagged behind, posting the weakest growth. Even so, the overall picture pointed to broadening resilience across the services economy.Stronger inflows of new work led to a further build-up in outstanding business, with backlogs rising at the fastest pace since September. To manage these higher workloads, companies continued to add staff. Although the pace of hiring eased slightly from December, employment growth remained solid, underlining ongoing capacity expansion across the sector.Cost pressures showed signs of easing. Input prices rose at their slowest rate in nearly two years, providing some relief to margins. However, firms increased selling prices at a faster pace, pushing output price inflation to a seven-month high as service providers attempted to pass on higher costs where possible.At the broader economy level, momentum also strengthened. The Composite PMI Output Index rose to 53.1 from 51.1, marking the fastest expansion in total private sector output since May 2023. The improvement was driven not only by stronger services activity but also by the first increase in manufacturing output since mid-2025. New orders across the private sector grew at their fastest pace since May 2024, while export business expanded for the first time in nearly a year.Despite stronger current conditions, business sentiment softened. While firms remain broadly optimistic about the year ahead, confidence slipped to its lowest level since July, weighed down by concerns around global growth, weaker tourism trends, demographic challenges and persistent labour shortages. This article was written by Eamonn Sheridan at investinglive.com. 🔗 Source 💡 DMK Insight Japan’s services sector is showing signs of life, but traders should tread carefully. The acceleration to an 11-month high in January is encouraging, especially with new orders and export demand on the rise. However, the cautious confidence among businesses suggests that while growth is happening, it may not be sustainable without stronger consumer sentiment. The easing of input cost inflation is a positive sign, but it’s worth noting that this could lead to complacency among traders. If firms start to overextend based on current demand, they might face challenges if the economic backdrop shifts unexpectedly. Traders should keep an eye on the employment figures and backlogs as indicators of whether this growth can maintain momentum. Key levels to watch would be the previous highs in service sector indices, as a break above could signal further bullish sentiment. Conversely, any signs of a slowdown in new orders could trigger a reevaluation of positions. With the current market volatility, staying alert to these shifts will be crucial for making informed trading decisions. 📮 Takeaway Watch for service sector indices breaking previous highs; a slowdown in new orders could signal a shift in market sentiment.