Psychology for major markets January 22nd

EUR/USD – Continuing its recovery despite Trump threats of 10% tariffs on the EU. This may be seen as less aggressive than feared and yield spreads remain supportive.

USD/JPY – Softened helped by hawkish comments from BoJ governor Ueda but needs a BoJ rate hike this week to sustain JPY strength.

EUR/GBP – Still biased higher as UK data weakens and market remains concerned at UK fiscal position. Increasingly looks likely to rise whether UK yields fall or not.

AUD/USD – Made new post-pandemic lows near 0.61 on general USD strength and risk aversion, but has bounced strongly and looks good long term value near current levels unless risk aversion increases significantly or tariffs on China are aggressive.

Equities – S&P 500 recovering as yields edge lower, but upside limited by high valuation and worries about trade wars.