Investor sentiment turned cautious on Monday, January 27, as markets braced for a significant week of central bank meetings and macroeconomic data releases. The US Dollar (USD) recovered from last week’s losses, buoyed by risk aversion and trading above 107.50, with concerns heightened by reports of President Trump’s plan to impose 25% tariffs on Canada and Mexico starting February 1.
Technology stocks faced steep losses, with Nasdaq futures falling nearly 2.5% and S&P futures down 1.4%, following reports of China’s DeepSeek AI outperforming models from major players like Meta and OpenAI.
Key currency pairs saw mixed movement: EUR/USD and GBP/USD, which posted significant gains last week, corrected slightly, trading around 1.0450 and 1.2450, respectively. USD/JPY remained stable near 156.00 after the Bank of Japan’s modest rate hike, with the Yen struggling to strengthen as Governor Kazuo Ueda avoided signaling further tightening.
Gold retreated slightly from its near-record high of $2,780, holding steady above $2,750. Markets now await critical economic data, including the Federal Reserve’s monetary policy decisions and US new home sales figures, for further direction.


