Dollar wrecked by Fed ‘rate check’
- USD crumbles on intervention fears
- Trump threatens 100% tariffs on Canada
- Gold/Silver surge to fresh all-time highs
- Bitcoin tumbles $87,500
- Risks rising around partial US government shutdown on Friday
The USDInd tumbled over 1% last Friday after the New York Federal Reserve conducted rate checks on the dollar/yen pair.
WHY:
Rate checks are usually seen as a strong warning of potential currency intervention.
This is when central bank officials call dealers and ask for buying and selling rates - something monetary authorities can use to signal their readiness to act.
THE BIGGER PICTURE:
The dollar’s sharp selloff has sparked significant moves across FX markets with major pairs experiencing technical breakouts.
HOW ABOUT THE USDJPY?
USDJPY tumbled over 300 pips last Friday and extended losses early on Monday.
Over the weekend, Japan’s PM Sanae Takaichi warned that necessary measures would be taken against speculative movements.
Traders have always been wary of intervention by Japanese authorities as the yen has approached 160 per dollar.
WHAT COULD MOVE USDInd THIS WEEK:
- US-Canada trade drama
Over the weekend, Trump threatened to slap a 100% tariff on Canadian goods if the country strikes a deal with China.
Note: Under the agreement reached between Carney and Chinese President Xi Jinping last week, China will lower levies on Canadian canola oil from 85% to 15% by March.
Trump’s trade drama may create dollar volatility, prompting investors to seek alternatives to US assets amid protectionism fears.
- Fed rate decision – Wednesday 28th January
The Fed is expected to leave interest rates unchanged in January but any clues on future policy moves may move the USDInd.
Traders are currently pricing a 32% chance that the Fed cuts rates by April 2026.
POTENTIAL SCENARIOS:
BULLISH – A solid breakout above 98.00 may open a path toward 99.00 and 100.00.
BEARISH – Weakness below 98.00 could see price test 96.50.
Gold/Silver hit fresh all-time highs…
Gold prices gapped above the milestone $5000 level on Sunday, powering towards $5100 amid overall uncertainty.
The precious metal is trading near $5090 as of writing – pushing 2026 gains to 20%.
Silver is also blasting higher, rising toward $110. The metal is already up 50% since the start of 2026, adding to the nearly 150% gains achieved in 2024.
Both gold and silver are firmly bullish, but a technical correction could be around the corner.
NOTE: Most gold crosses in the FXTM universe have touched all-time highs.
Performance this morning*
- XAUGBP: 1.7%
- XAUAUD: 1.8%
- XAUCNH: 2:0%
- XAUJPY: 1.4%