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US traders are closely monitoring the Federal Reserve’s looming rate decision, despite ongoing headlines about cuts. President Trump has renewed criticism of trade imbalances, sparking market chatter about new tax cuts and oil price demands. Solid US growth between 2.5% and 3.0% supports the Greenback, but policy ambiguities weigh on sentiment. Jobless claims rise slightly, suggesting that labor market conditions remain resilient. The US Dollar has turned flat during the trading session on Thursday, with the US Dollar Index (DXY) back above 108.00. Trump reiterated his intent to seek deeper tariff measures if necessary and slashed business taxes, pressuring OPEC to reduce oil prices, and aiming to influence the Federal Reserve’s independence. New unemployment filings climbed to 223K for the week ending January 18, with the insured unemployment rate standing at 1.2%. The US economy remains robust at roughly 2.5%–3.0% annualized, driven by hiring gains that support consumption and keep inflation buoyant. Analysts expect the Fed to hold rates steady next week.
Market Focus on Federal Reserve and Trump’s Trade Policies
As US traders keep a close watch on the Federal Reserve’s upcoming rate decision, President Trump’s renewed criticism of trade imbalances has sparked market chatter about potential new tax cuts and demands for lower oil prices. Despite solid US economic growth between 2.5% and 3.0%, policy ambiguities continue to weigh on market sentiment. Jobless claims have risen slightly, indicating that labor market conditions remain resilient.
US Dollar Faces Mild Selling Pressure
During Thursday’s US trading session, the US Dollar turned flat. President Trump addressed the World Economic Forum in Davos, and the US Dollar Index (DXY) climbed back above 108.00, although it faced some mild selling pressure.
Daily Digest: Market Movers
Trump’s Tariff Hints: At the World Economic Forum, President Trump reiterated that the US trade deficit with Canada is unsustainable and emphasized his intent to implement deeper tariff measures if necessary. He also committed to slashing business taxes, pressuring OPEC to reduce oil prices, and aiming to influence the Federal Reserve’s independence.
Unemployment Filings: New unemployment filings rose to 223K for the week ending January 18, slightly above prior forecasts. The insured unemployment rate stands at 1.2%, with continuing claims edging higher to nearly 1.9 million.
Economic Growth: The US economy remains robust, with annualized growth between 2.5% and 3.0%, driven by hiring gains that support consumption and keep inflation somewhat buoyant. Analysts widely expect the Federal Reserve to hold rates steady next week, seeing no compelling reason for a rate cut.
Upcoming Data: Kansas City Fed Manufacturing data is set for release, followed by the Services gauge on Friday. Markets remain attentive to potential headwinds, but leading indicators suggest the US economy retains its underlying strength.
Technical Outlook for the DXY
The US Dollar Index continues to struggle against selling pressure and has yet to sustain gains beyond 108.50. Momentum indicators, such as the Relative Strength Index (RSI), remain below the 50 threshold, indicating a weaker bias. The MACD’s red bars are expanding, hinting at growing bearish momentum.
The DXY stabilized around 108.20, but a lack of follow-through could lead to further downside. Without fresh catalysts to renew buying interest, the Greenback’s rebound may be short-lived, leaving it vulnerable to continued profit-taking.
