Another week begins with US President Donald Trump back in the headlines, once again shifting market focus away from data and towards geopolitics.

The opening weeks of 2026 have been dominated by Trump-related developments. The first week featured Venezuela, followed last week by renewed attacks on the Federal Reserve’s independence and rising tensions involving Iran. This week with new tariff threats aimed at the European Union.

Markets are reacting nervously after Trump warned of broad-based tariffs on EU goods. The proposal includes a 10% tariff on “any and all goods” starting 1 February, escalating to 25% from 1 June. The comments are linked to demands around Greenland, further adding to geopolitical uncertainty.

The EU has responded quickly, signaling potential retaliation. Officials have flagged a €93 billion tariff package on US goods, which had been suspended last year following a temporary trade agreement. According to reports, these countermeasures could be reactivated as early as 6 February, just days after US tariffs are expected to come into force. The renewed trade threat has put risk assets under pressure at the start of the week, with investors turning more cautious.

Monday, January 19

China released fourth-quarter economic data showing growth slowing to its weakest pace in three years. GDP expanded 4.5% year-on-year in Q4 2025, down from 4.8% in the previous quarter. While the figure came in slightly above market expectations, it underscores the challenges facing the Chinese economy as domestic demand remains weak.

On a quarter-on-quarter basis, the economy grew by 1.2% in the October–December period, beating forecasts of 1.0% and improving marginally from the prior quarter’s 1.1%. Despite the stronger quarterly print, economists caution that overall momentum remains fragile, with consumer confidence and private investment still struggling to recover.

Tuesday, January 20

Eurozone economic sentiment data will provide an early read on how businesses and consumers are feeling at the start of the year. An improvement would suggest growing confidence and some stabilization in growth prospects, while a weaker reading would reinforce concerns about sluggish activity across the region.

Wednesday, January 21

UK inflation data takes center stage midweek. The Consumer Price Index remains a key input for the Bank of England’s policy decisions. Economists expect headline inflation to edge higher to around 3.3% from 3.2%. Any meaningful surprise could influence expectations around the timing of future interest rate cuts.

Thursday, January 22

Thursday brings the release of US core PCE, the Federal Reserve’s preferred measure of inflation. This data will be closely watched for confirmation that price pressures continue to cool at a steady pace. Consensus expects core PCE to ease to 2.7% year-on-year from 2.8%, with a monthly increase of around 0.2%.

A softer reading would strengthen expectations for a Fed rate cut later in the year, while an upside surprise could push back easing expectations and keep US yields supported.

Friday, January 23

The week concludes with the Bank of Japan’s interest rate decision. Markets widely expect the BOJ to keep rates unchanged at 0.75%, following December’s hike. Attention will be on the policy statement and economic projections for clues on the timing of the next move, which is currently seen as April or later.

A more hawkish tone could trigger a sharp move higher in the yen, while steady guidance would keep expectations for a mid-year hike intact, especially amid continued currency weakness and easing inflation pressures.

Technical Outlook

Nasdaq

What initially looked like a triangle breakout has proven to be false. This downside move changes the range dynamics, and with no clear trend established in the past three months, volatility may increase. If the bearish setup holds, any rallies are unlikely to push above 25,800.

Key Levels
Support: 24,680 / 24,400
Resistance: 25,330 / 25,560

Volatility Index (VIX)

Although the broader trend remains downward, the recent lower high raises caution about potential stress in financial markets. Geopolitical developments are already influencing momentum, keeping the index on watch.

Key Levels
Support: 15.30 / 14.10
Resistance: 18 / 21.5

Disclaimer

The information in this article is for general information only and does not represent financial or investment advice. Markets are unpredictable, and past performance does not guarantee future results. Before making any financial decisions, please do your own research or consult a licensed financial advisor. We are not responsible for any loss or damage caused by reliance on this content.