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UK labor market data showed further signs of cooling in December, led by outright job losses. Payrolled employment fell by -43k (-0.1% m/m), while the claimant count rose by 17.9k, pointing to softening hiring demand as growth momentum slows.

Wage dynamics were mixed but continued to ease on a broader trend basis. Median monthly pay growth rose to 4.0% yoy from yoy, though this follows a sharp deceleration from levels well above 5% seen through mid-2025.

In the three months to November, unemployment rate was unchanged at 5.1%, suggesting labour slack is building only gradually. Meanwhile, average earnings including bonuses slowed to 4.7% yoy from 4.8%, while earnings excluding bonuses eased to 4.5% from 4.6%.

Full UK labour market overview

The PBoC kept its benchmark lending rates unchanged, leaving the 1-year loan prime rate at 3.0% and the 5-year LPR at 3.5%. The decision was widely expected and reinforces the view that Beijing remains reluctant to deploy broad-based monetary easing despite slowing growth.

The policy stance reflects a clear preference for targeted support over headline rate cuts. The 1-year LPR continues to guide most corporate and household loans, while the 5-year rate anchors mortgage pricing. By holding both steady, authorities are signaling concern over financial stability and capital outflows, while relying on alternative tools to stimulate demand where needed.

Instead, the PBOC has intensified the use of structural monetary policy instruments. Last week, it cut rates on key relending facilities by 25bp, lowering the 1-year relending rate for agriculture and small businesses to 1.25%, effective Monday. By reducing the cost of central bank funding to banks, the PBOC aims to encourage cheaper credit for targeted sectors without reopening the door to broad leverage expansion.

The week started on a sour note in Europe. With the US markets closed, European equities spent the session trying to gauge the Greenland risks: how serious is this, how far could it go, and where could it end?

Tariffs are obviously part of the story, and European companies with the highest exposure to US tariffs took the biggest hit. That familiar group from last year was back in focus — German carmakers, for example, and French luxury houses like Louis Vuitton, which slid more than 4% on Monday.

The US was closed, but futures traded down. Nasdaq futures underperformed S&P and Dow futures, amid concerns that Big Tech could become Europe’s target in the trade war.

US Treasuries joined Monday’s selloff this morning. The US 10-year yield jumped past 4.25% on renewed tariff uncertainty and rising rumours that Europeans could “weaponize their US assets” — yes, weaponize is the word being used — to retaliate against Mr Trump’s aggressive trade and geopolitical policies.

Europeans hold roughly $10 trillion in US assets: around $6 trillion in US equities and roughly $4 trillion in Treasuries and other bonds. Selling those assets would pull the rug from under US markets — and because Mr Trump is highly focused on Wall Street, it could maybe get his attention. But make no mistake: this would mean European investors — private and public — willingly accepting financial pain to punish the US. And right now, with a cost-of-living crisis, an ageing population, and a clear lag in technological progress, it’s hard to imagine investors voluntarily dumping their US holdings. Would you really give up your Nvidia shares to buy Louis Vuitton? Tough choice.

US futures suggest that Wall Street will follow Europe lower when trading resumes on Tuesday. Technology will be in focus — not only because Europe could retaliate by targeting US tech companies, but also because earnings season is about to get going, with Netflix reporting after the bell. Netflix is not an AI story and has lost relevance for broader market sentiment, but the rest of Big Tech will follow in the coming weeks.

Geopolitical risks are now being added to an already long list of AI risks: circular deals, over-leveraged investments, delayed returns on investment, and rising metal and memory-chip prices.

As I’ve been saying, if you like tech, there are plenty of tech stocks outside the US — and they’re doing just fine. The Korean Kospi index has risen in every single trading session since the start of the year. Every one of them. Memory-chip makers, in particular, are benefiting from supply tightness, which allows them to raise prices aggressively. Without memory chips, very little else in technology works.

And from a European perspective, one can’t help but wonder: could ASML — the only supplier of EUV lithograph— be “weaponized” too?

Beyond tech, one group stood out: miners — especially gold miners — as gold prices pushed to fresh highs. Gold is trading above $4’700 an ounce this morning, while silver is consolidating just below $95 an ounce.

Fresnillo jumped more than 6.5% in London to a fresh record high, adding over 250 points to the FTSE 100 on its own. Endeavour (another gold miner) and Antofagasta (a copper miner) added roughly another 150 points combined, helping the UK blue-chip index outperform its European peers.

There’s little doubt that if gold continues to rally — and it’s hard to see what would reverse it when the headlines are this absurd — mining stocks will likely keep rising. Buying gold as a way to defy the US has become a theme (the debasement trade).

But caution is warranted: some mining valuations are starting to look stretched. Fresnillo now trades on a P/E of around 76. This is not tech. Supply is limited, so most upside must come from price increases alone. A 76x earnings multiple simply doesn’t make sense. Endeavour’s P/E, at around 18, already looks elevated for a miner. For context, diversified miners like BHP, Rio Tinto, or Glencore typically trade on roughly 6–10x earnings, while precious-metal miners tend to sit closer to 8–15x. Above that, things start to look overheated.

Coming back to the uglier global questions: is this shaping up to be another TACO trade? Optimists argue that the Greenland saga is just another example of the now-familiar US negotiating tactic — punch first, talk later.

But when you consider the possibility of three more years of this, diversification starts to look like the obvious answer. Diversifying away from the US — and perhaps from US tech — might be prudent if this “Season of the Stupidest Trade War in the World History” pushes Europeans to lose patience and slap tariffs on US technology.

The problem is: where do you go? Let’s be honest, despite existing Asian alternatives, the US Big Tech’s appeal is hard to replicate elsewhere, and the deep integration and near-monopolistic nature of US tech services means Europe can’t really afford to lose them either.

Americans know — as well as you and I do — that if US tech were to leave Europe, there would be two choices: go with China - replace WhatsApp with WeChat and experience the joys of a mega-app — along with mysteriously disappearing messages? Or simply have no tech at all. No WhatsApp, no Word, no Excel, no social media. Back to SMS, MMS — maybe even fax.

My guess: a market selloff may be brewing, but a 15–20% pullback could once again be followed by another wave of TACO trades. Then we count down three more years, hoping the damage being done among Western allies doesn’t last longer than that.

In focus today

In Germany, the ZEW indicator for January is released today. The assessment of the current situation remains low while expectations for future growth have improved slightly in recent months. The German economy started growing again in the final quarter of 2025 as fiscal spending is now finally kicking in. Therefore, we also see scope for an improvement in ZEW in January.

In the UK, the jobs report is released. Labour market data has been soft recently with job losses and unemployment edging higher. PMIs suggest the trend continues.

Economic and market news

What happened overnight

In China, the People's Bank of China kept the one-year and five-year loan prime rates unchanged at 3% and 3.5%, respectively. This was fully anticipated due to the stability of the 7-day reverse repo rate, which serves as a key policy benchmark. However, this could change soon, as the central bank has signalled further easing in 2026.

What happened yesterday

In the euro area, the EU finance ministers picked Boris Vujcic, Croatia's central bank chief, as the new ECB vice president succeeding Luis de Guindos on 1 June. While the European Parliament and ECB Governing Council must still be consulted before formal appointment, Vujcic is likely to secure the role, as finance ministers' decisions has historically been backed by the council. Competition for the six-member ECB executive board is highly political, with four positions, including the presidency, opening over the next two years. We anticipate that eurozone leaders will aim for a balanced composition of doves and hawks, similar to the current board. Vujcic, seen as a moderate hawk, may temporarily tilt the ECB's balance, allowing for a minor hawkish market reaction. However, given the consensus to keep the policy rate steady, we do not expect significant market impact.

In France, PM Lecornu confirmed plans to use article 49.3 to pass the 2026 budget without a majority in parliament. By passing the budget with article 49.3 the budget deficit in 2026 will likely be smaller than what would have been the result of a negotiation in parliament. After passing it with article 49.3, the government is going to face a no-confidence vote where the Socialist party will hold the pivotal votes in deciding the future of the government. All attention will thus be on comments from the Socialists leader regarding their voting intentions in the no-confidence vote. All else equal, a budget pass points to a tightening of the 10-year French-German government bond spread. However, this comes with the risk of a government collapse through a no-confidence vote.

In Japan, PM Takaichi called a snap election, pledging to suspend the 8% food levy for two years to ease rising living costs. Parliament will be dissolved on 23 January, and the election, set for 8 February, will decide all 465 lower house seats. Calling an early election may help Takaichi leverage public support and address the LDP coalition's narrow majority in the House of Representatives. The announcement sent the yield on the 10-year Japanese government bond to a 27-year high of 2.275%, as markets prepare for Takaichi to expand her fiscal policies if she secures victory.

In Sweden, surveyed money market CPIF inflation expectations for January dropped to 1.5% (prior: 1.6%) in one year according to Origo Group, reflecting the one-off impact from reduced food VAT tax. Two- and five-year expectations were roughly stable at 2.1%, which suggests that the drop in inflation this year is not expected to de-anchor longer-term expectations. In all, a good report for the Riksbank.

Equities traded lower yesterday, broadly in line with expectations. One notable exception was Asia, where markets ended higher despite the ongoing geopolitical escalation. Europe sold off, led by Denmark, which is fully consistent with Denmark being perceived as closer to the core of the current conflict. Importantly, this was not accompanied by a pronounced defensive rotation. The sell-off was broad-based. Yes, there was a marginal relative outperformance of defensives versus cyclicals, but nothing outside what could easily occur on any given trading day. Implied volatility measures moved higher, with both VIX and V2X. This is entirely textbook behaviour and underlines that investors are not necessarily pricing in a materially weaker economic outlook, but rather a more uncertain one. With VIX around 19, volatility is somewhat elevated relative to where we are in the economic cycle, yet still far from levels that would signal market stress. This morning, several Asian markets are again trading higher. European equity futures are marginally lower, while US futures are down around 1 percent, largely reflecting a catch-up to yesterday's move, as US markets were closed.

FI and FX: Market sentiment remains shaky amid the reignited EU/US trade war and the annual World Economic Forum in Davos. While aggregate market moves across asset classes all else equal have been relatively modest for a risk-off event, the "sell America" narrative is seeing a revival with a weaker USD, higher treasury yields (US cash market opening after yesterday's US holiday) and lower US equities. While long-dated government bond yields in Europe have been more stable or even risen slightly, European curves have generally bull steepened since the weekend as markets price in a larger potential impact on growth than inflation from the renewed trade war/Greenland concerns. Overall, Scandie FI has outperformed peers with especially short-end spreads moving lower.

The DAX Index advanced in a clear three-swing rally from the November 21, 2025 low, reaching a new all-time high. Elliott Wave Theory states that a sustained trend typically develops in five waves, not three. The fresh high confirms strong bullish momentum, making it unlikely that the market would conclude its cycle with only three swings.

From the November low, wave 1 ended at 24,474.62. A corrective decline followed, with wave 2 finishing at 23,923.96. This pullback unfolded in a zigzag structure: wave ((a)) ended at 24,173.28, wave ((b)) at 24,318.30, and wave ((c)) at 23,927.96. The completion of this sequence marked the end of wave 2 at a higher degree.
The index then resumed higher in wave 3. From the termination of wave 2, wave ((i)) ended at 24,356.11, while wave ((ii)) retraced to 24,203.37. A strong rally in wave ((iii)) carried prices to 25,428.43. Wave ((iv)) corrected modestly to 25,338.30, and the final leg, wave ((v)), extended to 25,507.79. This completed wave 3 at a higher degree.

Currently, wave 4 is unfolding as a corrective phase. It is designed to adjust the cycle from the December 18, 2025 low before the next upward stage begins. In the near term, as long as the pivotal support at 23,927.96 remains intact, the expectation is for the decline to stabilize. Support is likely to appear in a three, seven, or eleven-swing structure, setting the stage for renewed upside momentum.

DAX 60 minute chart

DAX Elliott Wave video:

https://www.youtube.com/watch?v=OJp30YTw7Fs

Key Highlights

• GBP/USD found support near 1.3340 and recovered some losses.
• A bearish trend line is forming with resistance at 1.3440 on the 4-hour chart.
• EUR/USD started a consolidation phase below 1.1665.
• Bitcoin price corrected some gains and again settled below $95,000.

GBP/USD Technical Analysis

The British Pound declined below 1.3400 against the US Dollar before the bulls appeared. GBP/USD tested 1.3340 and recently started a recovery wave.

Looking at the 4-hour chart, the pair climbed above 1.3365 and 1.3380. The bulls pushed the pair above the 38.2% Fib retracement level of the downward move from the 1.3494 swing high to the 1.3342 low, and the 200 simple moving average (green, 4-hour).

However, the pair faces many hurdles near 1.3450. Immediate resistance sits near 1.3440 and a connecting bearish trend line. It coincides with the 61.8% Fib retracement level of the downward move from the 1.3494 swing high to the 1.3342 low.

A close above 1.3450 could open the doors for a move toward the 100 simple moving average (red, 4-hour) at 1.3460. Any more gains could set the pace for a steady increase toward 1.3500.

If there is no move above 1.3450, there could be a bearish reaction. On the downside, immediate support is near the 1.3380 level. The first major area for the bulls might be near 1.3340.

A close below 1.3340 might spark heavy bearish moves. The next support could be 1.3300, below which the bears might aim for a move toward 1.3250.

Looking at Gold, the price remained elevated, and the bulls might soon aim for more gains above the $4,680 zone.

Upcoming Key Economic Events:

• UK Claimant Count Change for Dec 2025 – Forecast 18.8K, versus 20.1K previous.
• UK ILO Unemployment Rate for Nov 2025 (3M) – Forecast 5%, versus 5.1% previous.

In case you missed the headlines, the attention quickly shifted from a potential intervention in Iran to heightened US threats to acquire Greenland by purchase.

After the threats over the weekend, EU heads of state are planning an emergency meeting, even as the World Economic Forum in Davos begins.

The recent geopolitical intimidation against Denmark and Greenland, combined with additional economic warnings, has prompted the European Union to raise the current 15% tariff rate by 10% if the European Union disagrees, starting February 1.

Despite American Markets being closed today for MLK Day, US assets have sold off quite harshly, with the latest tariff and general Trump volatility hurting the US Dollar.

On the other hand, the European Central Bank is consolidating its power and stability as Vice President de Guindos officially steps down, with hawk-leaning Croatian Governor Boris Vujcic selected as his replacement.

With the latest events and flows, EUR/USD is breaking to the upside and could attract quite a bit of attention (and volatility) for the times to come – keep a close eye on these developments.

In the meantime, let's dive into a multi-timeframe EUR/USD technical analysis.

EUR/USD Multi-timeframe Technical Analysis

Daily Chart

EUR/USD Daily Chart, January 19, 2026 – Source: TradingView

EUR/USD is attempting an upside breakout from its end-2025 Descending Channel.

Bouncing off of its 200-Day Moving Average (which just caught up from the 10% 2025 rally in the pair), the immediate flows and events could cause a larger breakout from its 6-month long 4,000 pip consolidation.

Several hurdles will need to be breached before that.

• The immediate test comes around 1.1630 which acts as key momentum pivot and coincides with the actual breakout from the Channel.
• Breaking and closing 1.18 on the weekly could test the 1.20 levels – Such developments would take more time
• Such scenarios exclude a potential Trump TACO where he backs off of his recent words ~ The best scenario for the USD

4H Chart and Technical Levels

EUR/USD 4H Chart, January 19, 2026 – Source: TradingView

Watch if tomorrow closes above or below the 4H-50 MA to confirm a breakout or rejection of the Channel higher bound.

Resistance levels

• 1.1640 to 1.1660 Intermediate Pivot and 4H 50-MA (1.16490)
• 1.17 Psychological Level
• 1.1750 minor resistance
• Main resistance 1.18 (range Highs)

Support levels

• 1.1580 to 1.16 Key Support
• 1.1550 Channel lows
• 1.1470 to 1.15 Pivotal Support (Range Lows)

1H Chart

EUR/USD 1H Chart, January 19, 2026 – Source: TradingView

EUR/USD shows a more balanced price action as volumes largely fall off (US Traders are off).

It will be very interesting to see whether bulls push for a (descending) channel breakout or the 1H 200 MA/4H 50 MA stalls the price action.

Rejecting the channel highs would point either to a retest of Sunday lows or (1.15780) or continued downside (lower odds looking at the current situation).

Note: The Euro could still be affected negatively from the current development, reason why the Swiss Franc is leading the daily FX flows.

Safe Trades!

Gold: ⬆️ Buy

• Gold reversed from key support level 4547.00
• Likely to rise to resistance level 4800.00

Gold recently reversed up from the key support level 4547.00 (former resistance from the end of December, acting as support after it was broken).

The upward reversal from the support level 4547.00 created the daily Japanese candlesticks Hammer.

Given the strong daily uptrend, Gold can be expected to rise to the next resistance level 4800.00 (target price for the completion of the active impulse wave (C)).

Silver: ⬆️ Buy

• Silver broke resistance level 93.30
• Likely to rise to resistance level 100.00

Silver today broke above the resistance level 93.30, which reversed the price with the daily Evening Star eerier this month.

The breakout of the resistance level 93.30 should accelerate the active impulse wave 3 which belongs to the intermediate impulse wave (3) from November.

Given the clear daily uptrend, Silver can be expected to rise to the next round resistance level 100.00 (target price for the completion of the active impulse wave (5)).

EURJPY: ⬆️ Buy

• EURJPY reversed from support zone
• Likely to rise to resistance level 185.30

EURJPY currency pair recently down from the support zone between the support level 182.70 (low of the previous minor correction iv) and the lower daily Bollinger Band.

This support zone was further strengthened by the 50% Fibonacci correction of the sharp upward impulse from December.

Given the clear daily uptrend, EURJPY currency pair can be expected to rise to the next resistance level 185.30 (which reversed the price earlier this month).