• U.S. investors are closely watching the Federal Reserve’s upcoming interest rate decision, despite constant headlines about cuts.
• President Trump renews his criticism of trade imbalances, sparking market discussion on recent tax cuts and oil price demands.
• Solid US growth of 2.5-3.0% is helping to strengthen the dollar, although policy uncertainties are weighing on sentiment.
• The number of unemployed people is rising slightly, which suggests that labor market conditions remain stable.

The US dollar lost value during Thursday’s US session. US President Trump spoke at the World Economic Forum in Davos. The US Dollar Index (DXY) is back above 108.00, although it is again experiencing some selling pressure.

Daily market update: USD depreciates despite Trump’s suggestion of tariffs for Canada and Mexico

• During his appearance at the World Economic Forum, President Trump reiterated that the U.S. trade deficit with Canada is unsustainable and emphasized his intention to pursue deeper tariff measures if he deems it necessary.
• He also announced his commitment to cutting business taxes, putting pressure on OPEC to lower oil prices and seeking to influence the independence of the Federal Reserve.
• New unemployment claims rose to 223,000 in the week ending Jan. 18, slightly above previous forecasts. The insured unemployment rate is 1.2% and the number of continuing claims is rising to almost 1.9 million.
• U.S. economic growth remains solid at around 2.5-3.0% annualized, driven by job growth that supports consumption and keeps inflation fairly high. Analysts widely expect the Fed to keep interest rates unchanged next week, seeing no compelling case for a quick cut.
• The Kansas City Fed’s manufacturing data will be released and the services index will be released on Friday. Markets continue to watch for potential downsides, but leading indicators suggest the U.S. economy is maintaining its underlying strength.

DXY Technical Outlook: Indicators struggle as index fails to hold near 108.50

The US Dollar Index continues to battle selling pressure but has yet to sustain gains above 108.50. Dynamic signals such as the Relative Strength Index (RSI) remain below the threshold of 50, indicating a weaker deviation. The red MACD bars are expanding, indicating increasing bearish momentum.

DXY stabilized around 108.20, although lack of continuation may lead to further declines. Without recent catalysts to renew buying interest, the dollar’s rebound may be short-lived, leaving it vulnerable to further profit-taking.