The global financial market is experiencing significant volatility as traders shift their focus towards the US Federal Reserve's upcoming meeting and ongoing trade tensions. The US Dollar (USD) shows signs of weakness despite looming support ahead of the 1 February deadline involving Canada, Mexico, and China. Meanwhile, the meme-based cryptocurrency PEPE sees a bearish trend with a long-to-short ratio below one, indicating more traders expect its value to fall. As the Federal Open Market Committee (FOMC) meeting approaches this Thursday at 3 am SGT, all eyes are on Federal Reserve Chair Jerome Powell's press conference, given the absence of a dot plot projection.
In the currency market, the DXY index, which measures the USD against a basket of other currencies, was last recorded at 107.40 levels. This comes as the preliminary services PMI revealed a downside surprise, further affecting USD sentiment. The GBP/USD pair managed to trim losses and regain the 1.2450 mark during the European session on Monday. This recovery was driven by fresh demand as the US Dollar's recovery momentum faded, despite an extended global stock sell-off and investor caution regarding President Donald Trump's tariff plans.
President Trump's recent decision to impose tariffs on all imports from Colombia has revived trade war fears, triggering renewed global risk aversion. Despite this, the USD's upswing appears to be losing steam, allowing the GBP/USD pair to find renewed upside momentum. Trump's interview with Fox News last week also played a role in denting USD's bullish momentum. During the interview, Trump expressed confidence in his ability to negotiate trade deals with China, stating:
"Trump also said he would rather not have to use tariffs on China."
Originated from: Trump
Pepe, the frog-themed meme coin, continues its decline, trading around $0.000012 and experiencing a nearly 10% drop at the time of writing on Monday. This trend reflects a broader market sentiment where traders exhibit caution towards riskier assets.
In other markets, gold prices recovered a significant portion of their intraday losses and traded with a mild negative bias around the $2,760 area during the first half of the European session on Monday. This recovery underscores ongoing market volatility as investors weigh safe-haven assets against broader economic uncertainties.
Looking ahead, capital market participants anticipate a series of interest rate cuts throughout the year in both the Eurozone and the US. The US Federal Reserve is expected to make two cuts of 25 basis points each, while the European Central Bank (ECB) is projected to implement four cuts. These anticipated policy changes reflect ongoing efforts to stimulate economic growth in response to global financial challenges.