US consumer confidence dropped to decade lows (hard to do your shopping when ICE agents are dragging you out of your car) which was the real catalyst for another huge selloff in USD overnight as the DXY dollar index crashed to a four year low. Gold and silver surged to record highs again while Wall Street kept hope alive alongside a surge in European stocks as the new Indian/EU free trade deal continued the structural “sell America” divergence. Oil prices broke out on USD weakness to make a new monthly high amid Iranian tensions while and US 10 year Treasury yields lifted to their highest level since September 2025.
Looking at stock markets from Asia from yesterday’s session, where mainland Chinese share markets were up in the afternoon session with the Shanghai Composite pushing 0.2% higher to remain well above the 4100 point level while the Hang Seng Index is up more than 1.3% to crack the 27000 point level.
The daily chart of the Hang Seng Index showed a lot of wish washy action around the 26000 point level in the last couple of months with some recent weakness now turning into strength. Momentum is now overbought with price indicating a breakout:
Japanese stock markets are bouncing back with the Nikkei 225 up 0.8% to stay above the 53000 point level.
Daily price action wavered a little during the BOJ hike in the previous weeks but has firmed up strongly with the 50000 point level forming key support although it has gotten ahead of itself. This was looking like a launch point through longer term overhead resistance but the selloff in Japanese bonds and the election snap call is still worrying here:
Australian stocks are also doing well with the ASX200 up nearly 1% to 8941 points as SPI futures are following the uplift on Wall Street overnight.
The daily chart pattern shows that short term support has been reinforced after a period of hesitation before Christmas with a bounceback above resistance at the 8800 point area building into what could be a solid breakout:
European markets did better but still remain somewhat hesitant across the continent as the Eurostoxx 50 Index closed 0.6% higher to 5994 points, trying to get back on track after the breakdown of the recent rally.
The market had been failing to make headway in recent months due to the too high valuations but short term support was very solid and has pushed well above recent highs to start 2026 stronger than expected. Watch for any support levels to be built here after the Davos Diatribe:
Wall Street remains in a positive mood despite the poor consumer confidence print with the lower USD buoying expectations with the NASDAQ up nearly 1% while the S&P500 gained 0.4% closing at 6978 points.
The market manipulation here has been interesting to watch from the inverted J pattern bottoming out at the 6800 point level on the four hourly chart and now this one sided bid to take the market through the gap down level, negating a dead cat bounce as we go through yet another Trump Chicken Outs trade:
Currency markets are moving further and faster into anti-USD mode with big gaps overnight sending the DXY to a four year low but also into dangerous oversold territory on all timelines. While this looks like a structural selloff, it will involve a snapback soon against the undollars so watch out if leverage to the hilt here! Euro is leading the way with surge above the 1.20 handle overnight but we’re not alone as everything sold
The union currency had snapped back below the 1.17 handle previously but has now re-engaged to the upside with a new high surging off short term ATR support. The four hourly candle and technicals suggest this is WAY overbought so caution reigns even as profit as the US sinks enlightens the mood!
The USDJPY pair pushed well above the 157 handle on the new year sessions, despite stronger inflation in Japan with a move above the 159 level at the start of the week now turning into a massive rout against USD as the pair hit the 152 level overnight.
The previous price action was sending the pair beyond the March highs and had the potential to extend those gains through to start of year position at the 158 handle. As I said last week, this could be the one undollar that accelerates down the tubes:
The Australian dollar has soared higher alongside gold due to USD weakness, now pushing above the 70 handle on overall “Sell America” volatility where it made another new yearly high.
Price action was not looking good for the Pacific Peso in the medium term as the interest rate differential squeeze sent it back to the doldrums, but short term support is shoring up as overhead resistance is pushed aside here:
Oil markets have been on a multi week/monthly downtrend prior to the Venezuelan invasion but shot out of the gate last week with some big gains but have since settled into a sideways pattern. This may turn into another breakout however as Brent crude starts to move higher again with a small breakout above the $66USD per barrel level overnight:
Gold is now accelerating into a blowoff pattern having blasted through the $5000USD per ounce level in recent sessions. The shiny metal has lifted ever since the Davos drivel with trend lines becoming more and more parabolic – this does indicate a probable top soon but no one is going to short this:
Glossary of Acronyms and Technical Analysis Terms:
ATR: Average True Range – measures the degree of price volatility averaged over a time period
ATR Support/Resistance: a ratcheting mechanism that follows price below/above a trend, that if breached shows above average volatility
CCI: Commodity Channel Index: a momentum reading that calculates current price away from the statistical mean or “typical” price to indicate overbought (far above the mean) or oversold (far below the mean)
Low/High Moving Average: rolling mean of prices in this case, the low and high for the day/hour which creates a band around the actual price movement
FOMC: Federal Open Market Committee, monthly meeting of Federal Reserve regarding monetary policy (setting interest rates)
DOE: US Department of Energy
Uncle Point: or stop loss point, a level at which you’ve clearly been wrong on your position, so cry uncle and get out/wrong on your position, so cry uncle and get out!