Trade War

The start of the trading week has not been particularly favorable for the Canadian dollar. Over the last two trading sessions, USD/CAD has gained more than 0.6% in favor of the U.S. dollar, reflecting a loss of momentum for the CAD in the short term.

The trading week is almost over, and one of the main factors still standing out is the lack of strength in the Japanese yen. So far, USD/JPY has remained mostly neutral, moving by only around 0.1% over the last two sessions, without showing a clear recovery from the Japanese currency.

The week continues to move in favor of the US dollar against its main rivals, and this is also reflected in USD/CAD price action. Over the last three trading sessions, the pair has gained more than 0.6%, showing that the Canadian dollar continues to lose ground in a meaningful way.

Fresh tariff threats have revived familiar USD underperformance themes, yet the euro has so far struggled to capitalise. With EUR/USD stuck in a stalemate and the calendar thinning, conviction remains elusive.

Tariff drama has revived safe haven flows, lifting bullion through resistance and resetting the tactical landscape for traders.

Just as USD/JPY was beginning to show signs of a cleaner macro narrative, a fresh wave of uncertainty has complicated the picture. With several potential volatility catalysts looming, traders may find clarity harder to find in the sessions ahead.

Since the beginning of 2026, USD/MXN has depreciated by more than 3%, moving closer to the 17 pesos per dollar area—levels not seen for several years. This move reflects a clear bearish bias that favors the Mexican peso.

The markets breathed a sigh of relief during Trump’s speech marathon, where the US President ruled out the use of military to acquire Greenland. Up went stocks, and the dollar and down went the likes of the euro and franc. But does this mean it is risk back on, and markets will kick on from here after the recent falls? Well, time will tell. But caution remains the order of the day. After all, Trump will continue to weaponise his tariffs policy to get the same result.

US index futures remained on the back foot, after a short-lived relief bounce, as traders waited for President Donald Trump’s speech at Davos. The key question for markets is whether he chooses to dial down days of escalating tensions with Europe over Greenland.

The euro has started to gain dominance in the short term, with EUR/USD posting two consecutive bullish sessions and accumulating gains of more than 1%. The recent buying pressure has been driven mainly by a loss of momentum in the U.S. dollar, amid a backdrop of intensifying political and economic tensions between the United States and Europe.

Gold extended its gains, continuing to march higher into the first half of Tuesday’s session and printing fresh record highs as investors once again reach for safety. The latest gains to the tune of over 2.8% so far this week has been driven by a sharp deterioration in risk sentiment, sparked by renewed geopolitical tensions between the US and Europe. At the centre of it all is Donald Trump, who has re-affirmed his desire to acquire Greenland and, more controversially, threatened to impose tariffs on European nations that oppose the move.

The unthinkable would be if Donald Trump used military force to take over Greenland. This is something he stayed silent on when pressed by NBC. But his desire to annex Greenland could re-ignite another trade war, which is equally damaging for markets.