Forex follows new leaders

The US dollar effectively ignored the January FOMC meeting. Jerome Powell spoke more than usual about inflation, saying that victory over it has not yet been achieved. Investors could consider his rhetoric to be moderately hawkish. However, they were more puzzled by the fact that Christopher Waller voted for a rate cut. His chances of becoming the new Fed chair have increased. The probability of monetary expansion in June fell from 65% to 61%. However, EURUSD bulls managed to regain the initiative.

Markets continue to speculate about the White House's interest in weakening the greenback. Treasury Secretary Scott Bessent tried to reassure investors by stating that the US always adheres to a strong dollar policy. However, the Treasury Secretary had previously said that there was no connection between the policy and the price of the US currency.

According to Donald Trump, the fall in the USD index increases the competitiveness of US companies. But today's high-tech exports are less susceptible to this form of competition. For consumers, price is one factor among many. They pay attention to safety, reliability and other characteristics. Even if foreigners buy more American goods thanks to the weak dollar, problems will arise with securities.

In 2025, the euro strengthened by 14% against the greenback, leading to a decline in non-resident profits. Now they will think twice before buying fundamentally overvalued American stocks. One option will be to increase hedging volumes, which will continue to drag down the USD index.

Scott Bessent's statement that the US did not intervene in Forex to sell the dollar against the Japanese yen allowed USDJPY to bottom out. The Australian dollar, on the contrary, surged to three-year highs amid accelerating inflation and a decline in unemployment to 4.1%. The chances of the Reserve Bank raising its key rate in February have risen to 60%. This makes the Aussie one of the leaders on Forex.

Taking advantage of growing geopolitical tensions in the Middle East, gold came close to $5,600 for the first time in history. Donald Trump is threatening Iran with military strikes, South Korea with 25% tariffs, and Canada with 100% tariffs. According to Deutsche Bank, the precious metal could jump to $6,000 per ounce in 2026.