A survey released on Monday, January 13th, revealed that the Eurozone's Sentix Investor Confidence Index for January rose more than expected at the start of the year. Driven by improved expectations, it climbed to its highest level since July 2025, although the overall figure remained in negative territory. Sentix noted, "Although the Eurozone, particularly Germany, is still grappling with structural challenges, there are signs of a bottoming out; meanwhile, the United States and Asia are providing new momentum for economic growth." The survey results showed a significant rebound in the economic expectations indicator, which surged to 10.0 in January, nearly doubling from December. The current situation index also improved, rising from -16.5 in December 2025 to -13.0. Aligning with the broader Eurozone trend, investor sentiment in Germany, Europe's largest economy, improved markedly. The Sentix Germany index increased from -22.7 to -16.4, reaching its highest level since August 2025; concurrently, the expectations indicator turned positive, rising from -1.3 in December to 5.5. However, Sentix also cautioned, "While this is often seen as a typical 'reversal signal,' and despite the index's rise, the current situation indicator remains deep in recessionary territory at -36.0."
In other news, Federal Reserve Chair Jerome Powell stated on Sunday evening that federal prosecutors have launched a criminal investigation into him. The probe focuses on the central bank's $2.5 billion renovation project at its Washington D.C. headquarters and his related testimony to Congress concerning it. Powell asserted that this investigation stems from longstanding dissatisfaction by President Trump, who is displeased that the Fed has not lowered interest rates at the speed and magnitude he demanded. In a video statement posted on the Federal Reserve's X account, Powell said, "The threat of criminal charges comes because the Fed sets interest rates based on our best judgment of the public interest, not in obedience to the President's preferences." Powell warned that the outcome of this investigation will determine the future direction of the central bank's policy decisions.
Data to be watched today includes the US unadjusted annual CPI rate for December, Canada's monthly building permits for November, and the US annualized total of seasonally adjusted new home sales for October.
The US Dollar Index trended lower yesterday, falling below the 99.00 mark, with the spot price currently hovering around 98.90. Besides profit-taking exerting some downward pressure, the primary factors weighing on the index were the potential criminal proceedings against Fed Chair Powell and the resulting blow to the Fed's perceived independence. However, diminished expectations for imminent Fed rate cuts limited the currency's decline. Attention today is on resistance near 99.50, with support found around 98.50.
EUR/USD edged higher during yesterday's session, reaching a new 3-day peak, and is currently trading around 1.1660. In addition to short-covering providing some support, the main driver for the euro's ascent was the US Dollar Index's decline below 99.00, pressured by concerns over the Fed's independence. Furthermore, the better-than-expected economic data from the Eurozone released during the session also contributed to the currency pair's strength. Resistance near 1.1750 is in focus today, while support lies around 1.1550.
GBP/USD also climbed yesterday, touching a 3-day high, and is now trading near 1.3470. Factors supporting the pound's rebound included short-covering and technically-driven buying interest around the 1.3400 psychological level. A significant additional factor was the general weakness in the US Dollar Index, which was dampened by the concerns over the Federal Reserve's independence. Today, market participants will watch for resistance near 1.3550, with support anticipated around the 1.3400 level.
Comments