Here are some notable trades for January’s second week.
- Buying the USD/JPY currency pair once the closing price surpasses 158 yen. This was set for the upcoming Monday, but there’s already a 0.04% loss for the week.
- Long position on the S&P 500 Index, which resulted in a 0.23% loss by week’s end.
- Long silver after it closed above $81.25. This trade, initiated on Monday, saw a 5.82% gain by the week’s close.
- Long gold after its closing price exceeded $4,533.21. Set on Monday, this trade culminated in a slightly disappointing 0.03% loss.
- Long Copper (CPER) once it closed above $37.27, a position taken on Wednesday which resulted in a 4.16% loss by week’s end.
In total, these trades brought in a return of 1.36% (averaging 0.27% per asset).
Now, looking at the key economic data from last week that stirred some surprises in the market:
- Final US GDP figures came in at 4.4% annually, slightly above the anticipated 4.3%. Despite a robust January, the data didn’t trigger significant market shifts.
- The Bank of Japan had a meeting on Friday, confirming the policy interest rate remains at 0.75%. The yen continued to decline, but by late Friday, Japanese officials warned major banks of potential intervention to stabilize the yen, causing a sharp uptick just before the week closed.
- The UK CPI was expected to tick up to 3.3% but instead rose to 3.4%.
- New Zealand’s CPI was anticipated to drop from 1.0% to 0.5%, yet it crept up to 0.6%.
Interestingly, these economic indicators had a minimal impact, overshadowed by ongoing geopolitical tensions, especially following the US’s controversial actions towards Venezuela.
The US military buildup around Iran continues, with reports suggesting a significant civilian death toll amidst the unrest. While President Trump has indicated support for protesters, the situation is clouded by mixed responses from neighboring nations, and recent reports of military aid from China to Iran add to the unpredictability.
Trump’s contentious remarks about acquiring Greenland and strained relations with the European Union also paint a complex diplomatic landscape.
This backdrop has fueled a remarkable surge in gold and silver prices, with silver hitting a record above $103 and gold nearing $5,000. The volatility in these precious metals has been quite pronounced—silver notably doubled in a matter of weeks.
The US dollar has been rattled, showing signs of decline unrelated to Federal Reserve movements.
Trump’s weekend threats of imposing new tariffs on Canada could further destabilize both the US and Canadian dollars.
Looking ahead, here are the key data points to watch next week:
- US Federal Reserve Policy Council meeting
- US PPI data
- Canadian Banking Policy Conference
- Australian CPI
- Canada’s GDP
- US unemployment insurance claims
While the number of data releases is limited, the early clues could significantly influence the forex market, so it might be a week to pay attention to. Note that Monday is a public holiday in Australia.
For January 2026, I had forecasted an increase in the USD/JPY currency pair.
Two weeks ago, I refrained from predictions due to muted cross currency movements, but given last week’s volatility, here are my revised weekly predictions:
- Short NZD/JPY
- Short AUD/JPY
- Short NZD/CAD
The Australian and New Zealand dollars stood out as the strongest currencies last week, while the US dollar lagged. Overall, we’ve seen a spike in directional volatility, a significant increase compared to earlier months.
This elevated volatility is likely to persist into the next week.
When looking at the US dollar index, it posted a notably large bearish candlestick that pointed downwards—this being the most significant decline since April 2025. The implications suggest a longer-term bearish trend, particularly since current prices are below earlier levels.
Interestingly, some unexpectedly strong economic data from the US contributed to a slight lift in the dollar, although the expectation of two rate cuts remains widespread.
I’m currently inclined towards a weak bullish stance on the USD.
The AUD/USD pair saw impressive performance, reaching new highs with notable volatility, closing near its peak, which is encouraging.
This bullish trend has been ongoing for about nine months, supported by the belief that Australia’s central bank might increase interest rates soon.
While caution is advised regarding potential overextension, I anticipate good opportunities for long trades on any retracement.
The EUR/USD currency pair has been relatively stable, stuck in a sideways movement. However, last week saw a notable surge in the dollar, marking a steep decline in the dollar’s value recently.
Prices finished at the upper end of the range, indicating potential bullish momentum. Yet, a critical resistance point at $1.1866—untested thus far—needs overcoming for sustained upward movement. I believe this pair could be significant for long trades, but patience is key.
Finally, silver’s volatility has been remarkable, breaking through the $100 mark, which is quite a milestone. Despite anticipating some profit-taking there, that hasn’t come to pass. If the momentum persists, it could reach $125, prompting considerations for long positions—though I’ll keep my sizes in check.
Gold also saw a considerable rise last week, yet some caution is warranted as it flirts with a potential exhaustion point near the $5,000 mark.
In summary, the top trades this week could include:
- Long the EUR/USD pair as it closes beyond $1.1866.
- Long silver.
- Long gold after closing above $5,000.
Are you ready to dive into Forex trading based on these weekly forecasts? Consider exploring options from various Forex brokers.
