MUFG’s Senior Currency Analyst Michael Wan notes that the US Dollar weakened, with USD/JPY dropping below 156 and expected further downside over time. The outlook is tied to potential Bank of Japan rate hikes and Japan’s fiscal sustainability focus. 🔗 Source 💡 DMK Insight The US Dollar’s recent weakness against the Yen is a signal for traders to reassess their positions. With USD/JPY dropping below 156, the market is reacting to speculation around potential rate hikes from the Bank of Japan. This could lead to further downside for the dollar if the BOJ tightens policy while the Fed maintains its current stance. Traders should keep an eye on economic indicators from Japan, particularly inflation data, as it could influence the timing of any rate changes. If the USD/JPY breaks below significant support levels, it could trigger a wave of selling, impacting not just the dollar but also related currencies like the Euro and Australian Dollar, which often move in tandem with USD trends. On the flip side, if the dollar shows signs of recovery, it could be a buying opportunity for those looking to capitalize on short-term fluctuations. Watch for key resistance levels around 158 and any shifts in sentiment from major market players, as these could dictate the next moves in this currency pair. 📮 Takeaway Monitor USD/JPY closely; a break below 156 could signal further downside, while resistance around 158 is crucial for potential recovery trades.

Austria Industrial Production (YoY) dipped from previous -0.3% to -3.3% in December 🔗 Source 💡 DMK Insight Austria’s industrial production dropping from -0.3% to -3.3% is a red flag for traders. This significant decline signals potential economic weakness, which could impact the Eurozone’s overall growth outlook. For traders, this might lead to bearish sentiment in related assets like the Euro or Austrian equities. If this trend continues, we could see a shift in monetary policy expectations, particularly from the European Central Bank. Keep an eye on the EUR/USD pair; a sustained move below key support levels could trigger further selling pressure. On the flip side, if the market overreacts, there could be a buying opportunity for contrarian traders looking for a rebound. Watch for any upcoming economic indicators or ECB statements that might provide clarity on the situation. 📮 Takeaway Monitor the EUR/USD pair closely; a break below key support could signal further downside as economic weakness unfolds.

The Danske Research Team highlights that EUR/GBP saw a reverse V‑shaped price action during the previous session. The move came as UK politics returned to focus, with pressure on Prime Minister Keir Starmer to resign after senior aides stepped down. 🔗 Source 💡 DMK Insight EUR/GBP’s reverse V-shaped action signals volatility ahead, and here’s why you should care: The recent political turmoil in the UK, particularly surrounding Prime Minister Keir Starmer, is creating ripples in the forex market. Traders should note that political instability often leads to increased volatility, which can present both risks and opportunities. The pressure on Starmer could lead to a shift in policy direction, impacting economic forecasts and currency strength. If EUR/GBP continues to react to these developments, watch for key support and resistance levels that could emerge as traders position themselves for potential swings. Additionally, keep an eye on correlated assets like GBP/USD, as movements in the pound will likely affect the euro as well. The market’s sentiment towards UK politics is crucial right now, and any significant news could trigger sharp moves. For those trading EUR/GBP, monitoring the daily chart for breakouts or reversals around recent highs and lows will be essential in navigating this uncertainty. 📮 Takeaway Watch EUR/GBP closely for volatility; key levels to monitor are recent highs and lows, especially in light of ongoing UK political developments.

Silver price (XAG/USD) depreciates after two days of gains, trading around $81.70 per troy ounce during the European hours on Tuesday. 🔗 Source 💡 DMK Insight Silver’s recent dip to around $81.70 raises questions about its near-term momentum. After two days of gains, this pullback could signal profit-taking or a broader market correction. Traders should consider that silver often reacts to shifts in the dollar and interest rates, so keep an eye on economic indicators like inflation data and Fed announcements. If silver breaks below key support levels, it could trigger further selling, while a rebound might depend on renewed demand from industrial sectors or safe-haven buying. Watch for volatility in correlated assets like gold, which may influence silver’s trajectory. The real story is whether this dip is a temporary setback or a sign of deeper bearish sentiment. For now, monitor the $80 support level closely; a sustained move below could lead to further declines, while a bounce back above $82 might reignite bullish sentiment. 📮 Takeaway Watch the $80 support level for silver; a break could signal deeper declines, while a rebound above $82 may restore bullish momentum.

UBS economist Paul Donovan expects US December retail sales to highlight resilient consumer spending, noting that the roughly 0.8% GDP cost of tariffs has been absorbed through lower savings rates. 🔗 Source 💡 DMK Insight Consumer spending is holding strong, and here’s why that matters for traders: Paul Donovan’s prediction about December retail sales suggests that despite rising tariffs, consumers are still willing to spend. This resilience could indicate a robust economic backdrop, which often supports asset prices across the board. For traders, this means keeping an eye on sectors like retail and consumer discretionary stocks, which might see upward momentum if sales figures come in strong. Additionally, the impact on GDP from tariffs being absorbed through lower savings rates could signal a shift in consumer behavior that might affect inflation expectations. If retail sales exceed expectations, we could see a bullish reaction in equities and a potential strengthening of the dollar against other currencies. However, it’s worth noting that if consumer spending is propped up by dwindling savings, it raises questions about sustainability. Traders should monitor the upcoming retail sales data closely, particularly any surprises that could shift market sentiment. Key levels to watch include the performance of the S&P 500 and the dollar index, as both could react sharply to this data release. 📮 Takeaway Watch for December retail sales data; strong results could boost equities and the dollar, while weak numbers might signal consumer strain.

The Euro (EUR) is trading higher for the second consecutive day against the British Pound (GBP) on Tuesday. 🔗 Source 💡 DMK Insight The Euro’s recent strength against the British Pound signals a potential shift in market sentiment. This uptick, occurring over two consecutive days, could indicate a growing confidence in the Eurozone economy relative to the UK. Traders should keep an eye on economic indicators from both regions, particularly any upcoming data releases that could affect interest rate expectations. If the Euro continues to gain traction, it might challenge key resistance levels, prompting a reevaluation of long or short positions in GBP/EUR pairs. Conversely, if the Pound rebounds, it could create a buying opportunity for those looking to capitalize on potential reversals. Watch for any comments from central bank officials that might influence the currency dynamics, especially regarding inflation and monetary policy shifts in either region. 📮 Takeaway Monitor the GBP/EUR pair closely; a sustained Euro rally could challenge resistance levels, while a Pound rebound may present buying opportunities.

HSBC notes how Prime Minister Sanae Takaichi’s supermajority reshapes Japan’s policy backdrop and implications for the Japanese Yen and USD/JPY. 🔗 Source

Gold (XAU/USD) recovers a major part of intraday losses to levels below the $5,000 psychological mark, though it lacks strong follow-through buying through the first half of the European session on Tuesday. 🔗 Source 💡 DMK Insight Gold’s bounce from below $5,000 is a signal, but traders need to be cautious. While the recovery is notable, the lack of strong buying pressure suggests that momentum might be fleeting. This could indicate that traders are still hesitant, possibly due to broader economic concerns or uncertainty in the markets. If gold can’t hold above this psychological level, we might see a retest of lower support levels, which could trigger further selling. Keep an eye on the $4,950 mark as a potential pivot point; a break below could lead to increased volatility. Additionally, the correlation with ADA at $0.26 could mean that if gold falters, we might see a ripple effect in crypto markets as risk appetite shifts. Here’s the thing: while gold’s recovery is encouraging, the absence of robust buying could mean traders should be ready to pivot quickly. Watch for any news or economic indicators that might impact market sentiment, especially in the coming days. 📮 Takeaway Monitor gold’s performance around the $4,950 level; a break below could signal increased volatility and impact related markets like ADA.

ING’s Chris Turner notes the Dollar has struggled, with FX options skew showing strong demand for Dollar puts across tenors. He highlights upcoming US data, including ADP jobs, NFIB sentiment and December retail sales, as key drivers. 🔗 Source 💡 DMK Insight The Dollar’s recent struggles signal a potential shift in market sentiment, and here’s why that matters: With FX options skew indicating strong demand for Dollar puts, traders are clearly positioning for further weakness. This could be a reaction to upcoming US economic data, like ADP jobs and December retail sales, which might not meet expectations. If these indicators disappoint, we could see the Dollar face even more downward pressure, impacting correlated assets like commodities and emerging market currencies. Watch for key levels in the Dollar Index; a break below recent support could trigger a cascade of selling. But here’s the flip side: if the data surprises positively, we could see a sharp reversal, leading to a short squeeze in Dollar shorts. Keep an eye on the 100 level in the Dollar Index as a critical pivot point. If we see a bounce off this level, it could signal a buying opportunity for Dollar bulls. In the short term, volatility is likely to spike as traders react to the data, so stay nimble and watch those economic releases closely. 📮 Takeaway Monitor the Dollar Index around the 100 level; a break below could lead to increased selling pressure, while a positive data surprise might trigger a reversal.

Silver (XAG/USD) struggles to capitalize on its recent goodish recovery move from the $64.00 mark, or its lowest level since December 17, touched last week, and edges lower on Tuesday. 🔗 Source 💡 DMK Insight Silver’s recent dip below $64.00 is a red flag for bulls looking for a rebound. The inability to maintain momentum after hitting a low not seen since December suggests underlying weakness. Traders should be cautious; if silver can’t reclaim that $64.00 level soon, we might see further selling pressure. This could trigger stop-loss orders and push prices down even more, potentially testing lower support levels. Keep an eye on correlated assets like gold, which often moves in tandem with silver. If gold starts to falter, silver could follow suit, amplifying the bearish sentiment. On the flip side, if silver manages to break back above $64.00, it could attract buyers looking for a bargain, but that’s a big if right now. Watch for volume spikes around this level to gauge market sentiment. Immediate action is crucial—monitor the next few trading sessions closely for signs of a reversal or further decline. 📮 Takeaway Traders should watch the $64.00 level closely; a failure to reclaim it could lead to further declines in silver prices.