Weekly Forex News & Market Pulse

This week, global markets remained highly volatile as investors reacted to major central bank decisions, rising US political uncertainty, and key US-China trade developments. With risk sentiment shifting throughout the week, the US dollar and safe-haven assets stayed in focus while traders closely watched policy signals and headline-driven moves.

1. Bank of England Holds Interest Rates Steady Amid Economic Uncertainty

The Bank of England kept interest rates unchanged, signalling a cautious approach as inflation slows but growth remains weak. Investors closely watched the BOE statement for hints on future rate cuts and the UK economic outlook.

2. European Markets React as ECB Keeps Rates Unchanged

The European Central Bank held rates steady, focusing on inflation stability and slow economic recovery. ECB comments influenced market expectations about upcoming policy easing, making the EUR and European equities highly sensitive to guidance.

3. Global Markets Turn Risk-Off as Tech, Crypto and Metals Face Heavy Selling

Global markets entered a risk-off phase as investors sold tech stocks, crypto assets, and commodities together. Rising uncertainty, weak sentiment, and profit-booking created a broad “sell everything” mood across major global financial markets.

4. Wall Street Weakens as Investors Watch Central Banks and Growth Data

US stock markets struggled as traders balanced central bank policy signals with slowing growth concerns. Investors tracked key macro indicators, earnings updates, and global risk events, keeping the S&P 500 and Nasdaq under pressure.

5. Davos 2026: Global Leaders Discuss Inflation, Growth and Geopolitical Risks

At the World Economic Forum Davos 2026, global leaders focused on inflation trends, recession risks, AI innovation, and geopolitical instability. Market participants watched discussions for clues about future global policy direction and investor confidence.

6. Trump Shutdown Threat Raises Political Risk and Market Volatility

Trump’s shutdown-related pressure and budget disputes raised fears of political instability in the US. Investors tracked shutdown headlines closely as they could impact government spending, economic confidence, and future fiscal policy direction.

7. US-China Meeting Boosts Market Optimism as Trade Tensions Ease Slightly

US-China discussions created fresh hope of easing trade tensions and improving global economic stability. Traders followed the meeting closely, as any positive outcome could reduce tariff risks and support global stocks and commodity demand.

8. US Dollar Gains Strength as Investors Shift to Safe Haven Mode

The US dollar strengthened as investors reacted to global uncertainty, political tensions, and central bank decisions. Strong USD demand reflected safe-haven buying, putting pressure on gold, emerging market currencies, and global risk assets.

9. Gold and Silver Face Pressure as Rate Expectations Shift

Gold and silver prices weakened as traders reacted to central bank decisions and stronger dollar momentum. Investors reduced bullish positions due to shifting interest rate expectations and lower demand for safe-haven metals this week.

10. Oil Prices Volatile as Markets Track Global Demand and China Outlook

Oil prices stayed volatile as investors watched US-China developments, global growth forecasts, and supply concerns. Traders focused on demand expectations from China and economic slowdown signals from major economies affecting crude oil trends.

Major Currency Pair Movements

EUR/USD: Stayed weak after the ECB interest rate decision. The euro struggled as traders focused on slow Eurozone growth and a stronger US dollar (USD) during risk-off market sentiment.

GBP/USD: Moved with high volatility after the Bank of England (BOE) rate hold. The pound stayed unstable as investors priced in possible UK rate cuts and a weak economic outlook.

USD/JPY: Remained volatile throughout the week as traders reacted to US bond yields and changing risk sentiment. Safe-haven demand supported JPY at times, but USD strength kept the pair unstable.

AUD/USD: Fell early in the week due to China growth concerns and weak risk sentiment. Later recovered slightly after positive headlines around US-China talks improved market confidence.

USD/CHF: Dropped at the start of the week as investors moved into the Swiss franc safe haven. Later recovered as the US dollar gained strength again on political uncertainty and risk-off demand.

EUR/GBP: Moved lower as the euro weakened after the ECB policy update, while the pound stayed relatively stronger due to BOE-driven market moves and better investor sentiment toward GBP.

Trader’s Takeaway

• Trade political headlines carefully: This week proved how Trump shutdown risk can instantly push markets into risk-off mode, strengthening the US dollar and increasing volatility.
• Do not ignore the central bank tone: Even though ECB and BOE held rates, their guidance shifted expectations and moved EUR and GBP sharply.
• Avoid chasing the first move: Early week selling in risk assets looked strong, but later price action stabilised after US-China talks improved sentiment.
• Focus on the US dollar trend: Safe-haven demand kept the USD strength active, and most major pairs moved based on the DXY direction.
• Gold is still a fear indicator: When shutdown headlines intensified, gold prices gained support, showing that investors still run to safe-haven assets quickly.
• Oil moves with China sentiment: Crude stayed volatile because traders reacted to China's growth outlook and global demand expectations.
• Wait for confirmation after major news: This week showed that first reactions after big headlines often reverse once the market gets more clarity.
• Risk-on and risk-off switched fast: Traders had to adapt quickly as markets moved between fear and optimism throughout the week.

What to Watch Next Week

• Watch for follow-up updates on the US government shutdown situation, as any new political developments can quickly impact the US dollar, gold, and market sentiment.
• Keep an eye on fresh signals from ECB and BOE officials, as traders will look for clarity on when the first rate cuts could happen.
• Monitor any new headlines from US-China talks, because trade-related updates can strongly move risk assets like equities, AUD, and commodities.
• Track US bond yields and inflation expectations, as they will continue to drive major USD pairs like EUR/USD, GBP/USD, and USD/JPY.
• Watch gold and oil closely, as both will remain sensitive to risk-off sentiment, geopolitical headlines, and changes in global demand outlook.

Weekly Summary

This week was driven by major global macro events, with markets reacting to central bank decisions, political uncertainty, and trade headlines. The ECB and BOE held interest rates unchanged, but their cautious tone kept EUR and GBP under pressure and increased volatility in forex markets.

Investor sentiment remained unstable as the Trump shutdown risk created risk-off moves, supporting the US dollar (USD) and boosting demand for safe-haven assets. Later in the week, optimism improved slightly after the US-China meeting headlines, which helped stabilise risk assets and reduce panic selling.

Overall, the week remained highly volatile, with traders shifting quickly between risk-on and risk-off, keeping USD strength and global uncertainty as the main market drivers.

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Disclaimer

This newsletter provides market insights and weekly summaries. These are expectations, not guarantees. Markets can change due to unexpected events. Always trade responsibly and use proper risk management.