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UK CPI in Focus, But Davos and Fed Independence Take Spotlight
In focus today
In the UK, focus turns to the December inflation print. While price pressures have eased recently, paving the way for potential Bank of England rate cuts, core inflation remains elevated at 3.2% y/y.
In Denmark, November payroll data will be released. Payrolls rose by 3,500 in October, slightly lower than September's increase but still indicating solid progress in the Danish labour market.
In the US, the Supreme Court will hear arguments on whether President Trump can remove Fed Governor Lisa Cook for cause over alleged mortgage fraud. The case has reignited tensions around Fed independence, particularly after last week's issuance of grand jury subpoenas to the Fed related to Fed Chair Powell. Oral arguments begin at 16.00 CET, with the timing of the ruling uncertain, potentially arriving in February or as late as the end of the term in June.
We will also look to developments from the World Economic Forum in Davos. Among the speakers are ECB's Lagarde and President Trump. Trump is scheduled to deliver a special address from 14.30-15.15 CET and has plans to discuss the Greenland dispute with various parties at the forum.
Economic and market news
What happened overnight
In the US, President Trump signed an executive order aimed at boosting home-ownership by restricting large institutional investors from purchasing single-family homes. The order also directs federal agencies, including the DOJ and FTC, to review investor acquisitions for anti-competitive practices in the single-family rental market, while promoting home sales to individual buyers. These measures come as Trump faces pressure to address housing affordability ahead of congressional elections.
What happened yesterday
In Germany, the January ZEW index rose more than expected, with the assessment of the current situation at -72.7 (cons: -76.0, prior: -81.0) and expectations at 59.6 (cons: 50.0, prior: 45.8). This marks the highest levels since August and summer 2021, respectively. With the infrastructure package now "live," we expect the growth momentum from Q4 2025 to continue into 2026, forecasting a 1.2% y/y rise in GDP as consumers also benefit from an increase in real incomes. However, President Trump's recent tariff threats pose a clear downside risk if implemented, as Germany's economy is more exposed to the US than other major euro area countries, with exports accounting for 4% of GDP.
In France, PM Lecornu invoked Article 49.3 of the French constitution to pass the revenue side of the 2026 budget without a parliamentary vote, exposing his government to no-confidence motions on Friday. Socialist Party leader Olivier Faure confirmed his party would not back efforts by far-left and far-right parties to topple the government, ensuring Lecornu's survival and increasing the likelihood of the budget passing before February. Following the vote on Friday, Lecornu is expected to trigger Article 49.3 immediately again to pass the spending side of the budget, triggering another vote next week, and finally a third activation and vote to pass the full budget. The new budget aims to cut France's deficit to 5% of GDP, which, all else equal, should be supportive for French government bonds.
In the UK, the December/November labour market report came in close to expectations. Payrolls declined by 43K in December, indicating a renewed acceleration in job losses. However, revisions to the October/November job loss makes up for the poorer December. Private sector wage growth (3M rolling average) slowed to 3.6% y/y in November (prior: 3.9%). Average earnings excluding bonus were 4.5%, as expected. The unemployment rate held steady at 5.1% in November.
Equities: Global equities sold off sharply yesterday, led by the US and cyclicals. However, the internal market dynamics are more nuanced than the headline suggests. Small caps outperformed large caps, value outperformed growth, and in Europe there was virtually no difference between cyclical and defensive performance. This is a key point for the current investment narrative. The rotation away from US growth/tech/AI leadership started well before the Greenland headlines and the renewed tariff threats against eight countries. What has changed more recently is the framing. As geopolitical tensions escalate, the story is increasingly morphing into a sell-America/de-dollarization narrative. We flagged this already in yesterday's Morning Espresso, but it became materially clearer throughout the session. This dynamic is also politically relevant: it does little to strengthen the US president's leverage in his Greenland project. Overnight, Asian equities are lower. European futures point down, while US futures are marginally higher.
FI and FX: After a violent, record sell-off in Japanese bonds yesterday that weighed also on global fixed income markets, things have stabilised somewhat overnight with 30Y Japanese yields coming 6-7bp lower. This has contributed to improving global risk appetite with the large equity futures modestly in green this morning. In FX markets the JPY has been remarkably stable despite both higher Japanese yields and risk-off. The GBP and USD have done poorly with market attention returning to the "Sell US"-narrative while the SEK and CHF have made for a quite unusual pair of winners in Majors space. This likely reflects the CHF safe-haven status on the one hand and the SEK's reverse "Sell US" properties. The NOK FX price action has mirrored global risk appetite closely while EUR/DKK declined yesterday likely reflecting rebalancing flows countering the usual upward pressure on the cross during periods of equity sell-offs. Finally, EUR/USD xCCY basis markets exhibited a slight widening pressure yesterday.
Gold Explodes to New Highs, WTI Crude Searches for Support
Gold price started a fresh surge above $4,800 and traded to a new all-time high. Crude oil is recovering and might rise toward $61.20.
Important Takeaways for Gold and WTI Crude Oil Prices Analysis Today
- Gold price rallied to a new all-time high and traded above $4,845 against the US Dollar.
- A key bullish trend line is forming with support at $4,775 on the hourly chart of gold at FXOpen.
- WTI Crude oil is recovering losses and trading above $59.00.
- There is a rising channel forming with support at $59.40 on the hourly chart of XTI/USD at FXOpen.
Gold Price Technical Analysis
On the hourly chart of Gold at FXOpen, the price formed support near $4,535. The price remained in a bullish zone and started a fresh increase above $4,600.
The bulls pushed the price above $4,800 and the 50-hour simple moving average. Finally, it traded to a new all-time high at $4,849. The price is still showing bullish signs above $4,800, and the RSI is above 80.
Initial bid zone on the downside could be near the 23.6% Fib retracement level of the upward move from the $4,536 swing low to the $4,849 high at $4,775. There is also a key bullish trend line forming with support at $4,775.
The next area of interest might be near the 50-hour simple moving average at $4,710. A downside break below $4,710 might send the price to $4,655 and the 61.8% Fib retracement.
If the bulls fail to protect $4,655, the price could start a larger downside correction. In the stated case, Gold could drop toward $4,535. The next area for the bulls might be $4,500. A daily close below $4,500 could spark bearish moves and send the price to $4,350.
If there is a fresh increase, the price could face resistance at $4,845. The next sell zone might be $4,880. An upside break above the $4,880 resistance could send Gold price toward $4,950. Any more gains may perhaps set the pace for an increase to $5,000.
WTI Crude Oil Price Technical Analysis
On the hourly chart of WTI Crude Oil at FXOpen, the price found support near $58.50 against the US Dollar. The price formed a base and started a recovery wave above $59.00 and the 50-hour simple moving average.
The bulls were able to push the price to the 50% Fib retracement level of the downward move from the $62.17 swing high to the $58.53 swing low. Besides, there is a rising channel forming with support at $59.40.
The hourly RSI is above the 80 level, and the price is currently consolidating below the $60.30 barrier. The next hurdle could be $60.80 and the 61.8% Fib retracement.
A clear move above $60.80 could send the price toward $61.20. Any more gains might open the doors for a test of $62.200. Conversely, the price might start a fresh decline from $60.35 or $60.80. Immediate support sits near $59.40 or the 50-hour simple moving average.
The key breakdown zone on the WTI crude oil chart might be $58.50. If there is a downside break, the price might decline toward $58.00. Any more losses might encourage the bears for a push toward $56.50.
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Bitcoin Gives Up Ground, Eyes Shift to Crucial Support Below
Key Highlights
- Bitcoin failed above $95,000 and trimmed most gains.
- BTC/USD traded below a bullish trend line with support at $92,000 on the 4-hour chart.
- Ethereum also dipped below $3,200 and $3,000.
- Gold extended its surge to a new record high above $4,720.
Bitcoin Price Technical Analysis
Bitcoin price failed to settle above $95,000 against the US Dollar. BTC started a fresh decline below $93,500 and $92,000.
Looking at the 4-hour chart, the price traded below a bullish trend line with support at $92,000. There was a move below the 50% Fib retracement level of the upward move from the $89,161 swing low to the $97,944 high.
The price even settled below the 100 simple moving average (red, 4-hour) and the 200 simple moving average (green, 4-hour). Immediate support sits at $88,200.
A downside break below $88,2000 might start another decline. The next major support is $87,500, below which BTC could decline toward $86,000. If there is a recovery wave, the price could face resistance at $90,500.
The first key hurdle is $92,000 and the same trend line. A close above $92,000 and then the 100 simple moving average (red, 4-hour) could start a steady increase. In the stated case, the price may perhaps rise toward the $95,000 level. Any more gains might call for a test of $97,000.
Looking at Ethereum, the price also reacted to the downside below $3,000. The bears might now aim for a drop below $2,880.
Today’s Key Economic Releases
- President Trump’s speech.
- ECB's President Lagarde speech.
Risk-Sentiment Sours Further, Gold (XAU/USD) Explodes
EU–US tensions are worsening, with the EU now pushing to suspend the tariff deal agreed upon in July, further clouding the political atmosphere.
US President Trump is currently addressing the public to celebrate “365 Days, 365 Wins,” highlighting what he frames as his key achievements over the past year as he marks the first anniversary of his second term.
He is, unsurprisingly, showcasing the strongest anecdotes from his perspective.
However, such addresses are unlikely to sit well with several EU leaders, especially amid growing pushback against the President’s recent rhetoric regarding Greenland.
The FX pair to watch to monitor how serious current discussions get is USD/CHF, situated at the perfect intercept between European issues, safe-haven demand and dedollarization trends – Down 1.90% since Friday!
USD/CHF 2H Chart – January 20, 2026 – Source: TradingView
While this morning’s appearance by Treasury Secretary Scott Bessent briefly eased the tone — urging everyone to “take a deep breath and let things play out” — markets did not take comfort for long.
Gold had already gapped higher in yesterday’s session and continued to extend gains as US traders returned from the Martin Luther King Day holiday, now pushing toward $4,760. Silver and other metals are following suit, printing fresh highs.
XAU/USD (Gold) 2H Chart – January 20, 2026 – Source: TradingView
A look at the daily performance in Commodities, January 20, 2026 – Source: TradingView. XAG = Silver, XAU = Gold, XCU = Copper, XPT = Platinum, XPD = Palladium
Equities, on the other hand, tell a very different story. Stock indices bounced early in the session but topped quickly and failed to recover. The Dow Jones is now down 1.80%, while both the Nasdaq and S&P 500 are lower by around 2%.
The key question now shifts to US Treasuries, which are facing renewed selling pressure as European banks and funds consider further diversification away from the US dollar.
Dollar Index (DXY) 2H Chart, January 20, 2026 – Source: TradingView
The weaponization of foreign-owned assets has set a precedent — as seen with Russian assets in Europe and the US — and remains a growing concern for investors as Global leaders call out the New World Order and the World Economy Conference is ongoing.
Safe Trades!
Elliott Wave Outlook: Dow Futures (YM) Correcting Cycle From Nov 2025
The short-term Elliott Wave view in Dow Futures (YM) indicates that the cycle from the November 21, 2025 low has concluded as a five-wave diagonal. From that low, wave ((i)) advanced to 49,299, followed by a corrective pullback in wave ((ii)) that reached 48,092, as shown in the one-hour chart. The subsequent rally in wave ((iii)) unfolded as a clear five-wave impulse. Within this sequence, wave (i) terminated at 48,686, while wave (ii) retraced to 48,556. Momentum then carried wave (iii) higher to 49,463, before a modest pullback in wave (iv) ended at 49,096. The final push in wave (v) reached 49,899, completing wave ((iii)). Afterward, the index corrected in wave ((iv)) toward 49,001, and the final leg in wave ((v)) advanced to 49,899, thereby completing wave 1 of a higher degree cycle.
Currently, the index is retracing in wave 2, correcting the advance from November 21. The internal structure of wave 2 is unfolding as a zigzag formation. From the peak of wave 1, wave (i) declined to 49,057, while wave (ii) rallied to 49,799. The downward move in wave (iii) reached 48,689, and wave (iv) rebounded to 49,095. The market is now expected to complete wave (v) of ((a)) shortly. Once this occurs, a corrective rally in wave ((b)) should follow, addressing the cycle from the January 13, 2026 high. This rally is anticipated to unfold in three, seven, or eleven swings, consistent with Elliott Wave guidelines. Afterward, the index is projected to resume its downward trajectory, continuing the broader corrective phase.
Dow Futures (YM) 60 minute chart
YM Elliott Wave video:
https://www.youtube.com/watch?v=CRSqWUUOBoo
Eco Data 1/21/26
| GMT | Ccy | Events | Act | Cons | Prev | Rev |
|---|---|---|---|---|---|---|
| 07:00 | GBP | CPI M/M Dec | 0.40% | 0.40% | -0.20% | |
| 07:00 | GBP | CPI Y/Y Dec | 3.40% | 3.30% | 3.20% | |
| 07:00 | GBP | Core CPI Y/Y Dec | 3.20% | 3.30% | 3.20% | |
| 07:00 | GBP | RPI M/M Dec | 0.70% | 0.50% | -0.40% | |
| 07:00 | GBP | RPI Y/Y Dec | 4.20% | 4.10% | 3.80% | |
| 07:00 | GBP | PPI Input M/M Dec | -0.20% | -0.10% | 0.30% | 0.50% |
| 07:00 | GBP | PPI Input Y/Y Dec | 0.80% | 1.10% | ||
| 07:00 | GBP | PPI Output M/M Dec | 0.00% | 0.10% | 0.10% | |
| 07:00 | GBP | PPI Output Y/Y Dec | 3.40% | 3.40% | ||
| 07:00 | GBP | PPI Core Output M/M Dec | -0.10% | 0.00% | 0.10% | |
| 07:00 | GBP | PPI Core Output Y/Y Dec | 3.20% | 3.50% | 3.60% | |
| 13:30 | CAD | Industrial Product Price M/M Dec | -0.60% | 0.30% | 0.90% | |
| 13:30 | CAD | Raw Material Price Index Dec | 0.50% | -0.50% | 0.30% | |
| 15:00 | USD | Pending Homeles M/M Dec | -9.30% | -0.30% | 3.30% |
| 07:00 | GBP |
| CPI M/M Dec | |
| Actual | 0.40% |
| Consensus | 0.40% |
| Previous | -0.20% |
| 07:00 | GBP |
| CPI Y/Y Dec | |
| Actual | 3.40% |
| Consensus | 3.30% |
| Previous | 3.20% |
| 07:00 | GBP |
| Core CPI Y/Y Dec | |
| Actual | 3.20% |
| Consensus | 3.30% |
| Previous | 3.20% |
| 07:00 | GBP |
| RPI M/M Dec | |
| Actual | 0.70% |
| Consensus | 0.50% |
| Previous | -0.40% |
| 07:00 | GBP |
| RPI Y/Y Dec | |
| Actual | 4.20% |
| Consensus | 4.10% |
| Previous | 3.80% |
| 07:00 | GBP |
| PPI Input M/M Dec | |
| Actual | -0.20% |
| Consensus | -0.10% |
| Previous | 0.30% |
| Revised | 0.50% |
| 07:00 | GBP |
| PPI Input Y/Y Dec | |
| Actual | 0.80% |
| Consensus | |
| Previous | 1.10% |
| 07:00 | GBP |
| PPI Output M/M Dec | |
| Actual | 0.00% |
| Consensus | 0.10% |
| Previous | 0.10% |
| 07:00 | GBP |
| PPI Output Y/Y Dec | |
| Actual | 3.40% |
| Consensus | |
| Previous | 3.40% |
| 07:00 | GBP |
| PPI Core Output M/M Dec | |
| Actual | -0.10% |
| Consensus | |
| Previous | 0.00% |
| Revised | 0.10% |
| 07:00 | GBP |
| PPI Core Output Y/Y Dec | |
| Actual | 3.20% |
| Consensus | |
| Previous | 3.50% |
| Revised | 3.60% |
| 13:30 | CAD |
| Industrial Product Price M/M Dec | |
| Actual | -0.60% |
| Consensus | 0.30% |
| Previous | 0.90% |
| 13:30 | CAD |
| Raw Material Price Index Dec | |
| Actual | 0.50% |
| Consensus | -0.50% |
| Previous | 0.30% |
| 15:00 | USD |
| Pending Homeles M/M Dec | |
| Actual | -9.30% |
| Consensus | -0.30% |
| Previous | 3.30% |
Swissie Wins: CHF Demand Spikes as Traders Shun Dollar
As Macron noted, this trading week initiates what many call the new world disorder – "A world without rules".
This shift arguably began with Russia's invasion of Ukraine, but the precedent has only deepened. With Trump landing in Davos tomorrow for the WEF, global leaders are voicing strong concerns about the current geopolitical landscape.
The latest Board of Peace initiatives from the Trump administration appear designed to further sideline the UN.
Consequently, the US Dollar is facing further rejection as market participants diversify away from erratic US policies. Confidence in the Greenback as a stable reserve currency is eroding as fears from 2025 materialize.
These fears include tariffs, provocations against allies, and attacks on Federal Reserve independence. Despite the US Economy's and Fed's resilience, capital is flowing away from the Dollar.
Gold hit new record highs this morning (to $4,750) as a direct beneficiary.
Conversely, the Japanese Yen remains in a steep downtrend driven by debt burdens and rising yields, hence it can't really sustain its safe-haven reputation.
In this environment, the Swiss Franc has emerged as the primary safe haven.
With SNB rates at 0%, it is also becoming a target for the carry trade. As risk assets like stocks and crypto face rejection alongside the Dollar, the Franc is up another 1% in today's session.
Let's explore the multi-timeframe chart analysis for USD/CHF to see where these flows might take the high-volume traded pair.
USD/CHF Multi-Timeframe Technical Analysis
Daily Chart
USD/CHF Daily Chart – January 20, 2026 – Source: TradingView
USD/CHF has been stuck in a broader range since July 2025, unable to manage a proper rebound or continue to the downside as the geopolitical and economic dynamics completely eased in the second half.
Volatility is now back to some extremes in FX Markets, particularly in a pair normally held in a ~400 pip average daily range – Today's 1.10% max movement took USD/CHF down some monthly lows and prompting a further breakdown.
Indeed, the action had completely waned out but bears could retake the upper hand looking at the ongoing themes, combined with a 200-Day Moving Average which just caught up with prices.
Sellers also used the 50-Day MA (0.7987) as selling signal and will act as key pivotal indicator for bull/bear action going forward.
4H Chart and Technical Levels
USD/CHF 4H Chart – January 20, 2026 – Source: TradingView
Dip-buyers are now attempting a retracement from the key support.
Still, some key supports which quickly turned into resistances will now have to be breached for a further rebound (without counting a strong turn in current fundamentals).
- Look for key reactions at the 0.7950 - 0.7960 resistance.
Levels of interest for USD/CHF Trading
Resistance levels
- 0.7925 Minor Pivot
- 0.7950 - 0.7960 Key Resistance
- Short-timeframe pivot 0.7990 and 4H 50-period MA (yesterday's highs)
Support levels
- 0.79 (+80 pips) 2025 main support (Immediate Bounce
- Current Session Lows 0.7878
- 2011 support 0.7830 to 0.7860
- 2025 Lows 0.7830
1H Chart
USD/CHF 1H Chart – January 20, 2026 – Source: TradingView
Looking closer shows how steep the current move is, with dip-buyers re-entering the pair.
When watching the current pace of the selloff, mean-reversion is not suprising but might also not be long-lived.
- A 15 point rally to the 0.7925 Pivot is not far away, and forming a pullback-top here will test the session lows.
- Below that, the next major point will be found at the 2025 0.7830 lows
- If bulls manage a rebound above, the 0.7950 Resistance looks like a decent entry for sellers to retake the advantage
- USD/CHF can really breakout higher only in the event of another Trump TACO.
- Keep a close eye on the WEF headlines!
Safe Trades!
USD/CHF Mid-Day Outlook
Daily Pivots: (S1) 0.7951; (P) 0.7987; (R1) 0.8012; More….
Intraday bias in USD/CHF remains on the downside for the moment. Firm break of 0.7860 support will argue that larger down trend is ready to resume through 0.7828 low. Next target will be 0.7382 projection level. For now, risk will stay on the downside as long as 55 4H EMA (now at 0.7978) holds, in case of recovery.
In the bigger picture, price actions from 0.7828 are seen as a correction. Larger down trend from 1.0342 (2017 high) is still in progress. Break of 0.7828 will target 100% projection of 1.0146 (2022 high) to 0.8332 from 0.9200 at 0.7382. In any case, outlook will stay bearish as long as 0.8332 support turned resistance holds (2023 low).
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 157.64; (P) 157.91; (R1) 158.38; More...
USD/JPY is still bounded in consolidations below 159.44 and intraday bias stays neutral. With 156.10 support intact, outlook remains bullish. On the upside, break of 159.44 will resume the rise from 139.87 towards 161.94 high. However, firm break of 156.10 will confirm short term topping, and turn bias back to the downside for deeper pullback.
In the bigger picture, corrective pattern from 161.94 (2024 high) should have completed with three waves at 139.87. Larger up trend from 102.58 (2021 low) could be ready to resume through 161.94. Decisive break of 158.86 structural resistance will solidify this bullish case and target 161.94 for confirmation. On the downside, break of 154.38 support will dampen this bullish view and extend the corrective range pattern with another falling leg.
GBP/USD Mid-Day Outlook
Daily Pivots: (S1) 1.3368; (P) 1.3402; (R1) 1.3460; More...
Intraday bias in GBP/USD remains neutral with focus on 1.3494 resistance. Firm break there will suggest that pullback from 1.3567 has completed at 1.3342, after drawing support from 55 D EMA (now at 1.3375). Intraday bias will be back on the upside for 1.3567 first. Break there will resume the rally from 1.3008 to retest 1.3787 high. On the downside, sustained trading below 55 D EMA will argue that the decline is another falling leg in the corrective pattern from 1.3787.
In the bigger picture, price actions from 1.3787 (2025 high) are seen as a correction to the larger up trend from 1.3051 (2022 low). Deeper decline could be seen as the pattern extends, but downside should be contained by 38.2% retracement of 1.0351 to 1.3787 at 1.2474 to bring rebound. Break of 1.3787 for up trend resumption is expected at a later stage.
