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Geopolitical Tensions & PMI Data Fuel Broad USD Strength | 5th January 2026

USD Surges Amid Tensions Global markets opened the week on a defensive footing as geopolitical tensions and key economic data reinforced broad US Dollar strength. The Greenback pushed higher across the board, supported by rising US–Venezuela tensions and cautious positioning ahead of the ISM PMI release. Safe-haven flows weighed on major counterparts, pressuring the Japanese Yen, British Pound, Swiss Franc, and Australian Dollar, while risk-sensitive currencies struggled amid softer signals from China. US Dollar Index (DXY) Forecast Current Price and Context The US Dollar Index is trading above the 98.50 level as rising US–Venezuela tensions and cautious positioning ahead of ISM PMI data support safe-haven demand for the Greenback. Key Drivers Geopolitical Risks: Escalating tensions between the US and Venezuela are boosting demand for the US Dollar as a safe haven. US Economic Data: Markets are focused on the upcoming ISM PMI release for signals on US economic resilience. FOMC Outcome: Expectations that the Federal Reserve will maintain a restrictive policy stance continue to support the USD. Trade Policy: Concerns over potential disruptions linked to geopolitical frictions are adding to USD demand. Monetary Policy: Policy divergence between the Fed and other major central banks remains USD-supportive. Technical Outlook Trend: Bullish Resistance: 98.80, 99.20 Support: 98.20, 97.80 Forecast: A sustained move above 98.50 could allow the index to test the 99.00 psychological level. Sentiment and Catalysts Market Sentiment: Risk-averse Catalysts: ISM PMI data, further geopolitical headlines USD/JPY Forecast Current Price and Context USD/JPY has climbed beyond 154.00 as the Japanese Yen slides to a two-week low amid broad US Dollar strength. Key Drivers Geopolitical Risks: Global geopolitical uncertainty continues to favor USD demand over the Yen. US Economic Data: Strong US data expectations are supporting higher USD yields. FOMC Outcome: The Fed’s higher-for-longer stance contrasts with the Bank of Japan’s accommodative policy. Trade Policy: Limited trade-related developments keep focus on yield differentials. Monetary Policy: Persistent policy divergence between the Fed and BoJ weighs heavily on JPY. Technical Outlook Trend: Bullish Resistance: 154.50, 155.20 Support: 153.60, 152.90 Forecast: Continued momentum may drive the pair toward the 155.00 area in the near term. Sentiment and Catalysts Market Sentiment: USD-positive Catalysts: US economic data, BoJ commentary, shifts in risk sentiment GBP/USD Forecast Current Price and Context GBP/USD is trading below the mid-1.3400s as heightened geopolitical tensions underpin the US Dollar and weigh on the Pound. Key Drivers Geopolitical Risks: Rising global tensions are driving safe-haven flows into the USD. US Economic Data: Anticipation of solid US data supports the Greenback. FOMC Outcome: The Fed’s restrictive policy outlook continues to pressure GBP/USD. Trade Policy: Trade-related uncertainty limits risk appetite for Sterling. Monetary Policy: Cautious Bank of England policy expectations cap GBP upside. Technical Outlook Trend: Bearish to neutral Resistance: 1.3460, 1.3520 Support: 1.3380, 1.3300 Forecast: A break below 1.3380 could expose the pair to further downside toward 1.3300. Sentiment and Catalysts Market Sentiment: Defensive Catalysts: US PMI data, geopolitical developments, UK economic releases USD/CHF Forecast Current Price and Context USD/CHF is trading above 0.7930 as cautious market conditions and broad US Dollar strength dominate early-week trade. Key Drivers Geopolitical Risks: Global uncertainty is supporting demand for USD liquidity. US Economic Data: Investors remain focused on upcoming US macro data. FOMC Outcome: The Fed’s policy outlook continues to favor the USD over the CHF. Trade Policy: Limited trade developments keep focus on risk sentiment. Monetary Policy: The Swiss National Bank’s cautious stance contrasts with a still-restrictive Fed. Technical Outlook Trend: Mildly bullish Resistance: 0.7960, 0.8000 Support: 0.7900, 0.7865 Forecast: Holding above 0.7900 may allow a move toward the 0.8000 psychological level. Sentiment and Catalysts Market Sentiment: Cautious Catalysts: US data releases, shifts in global risk appetite AUD/USD Forecast Current Price and Context AUD/USD remains under pressure as weaker services PMI data from China weighs on the Australian Dollar amid broad USD strength. Key Drivers Geopolitical Risks: Global tensions continue to suppress risk appetite. US Economic Data: Anticipation of firm US data supports the Greenback. FOMC Outcome: Higher-for-longer Fed expectations limit AUD recovery. Trade Policy: Ongoing concerns around China-linked trade demand weigh on AUD. Monetary Policy: The RBA’s cautious stance contrasts with the Fed’s restrictive bias. Technical Outlook Trend: Bearish Resistance: 0.6680, 0.6720 Support: 0.6620, 0.6550 Forecast: Sustained downside pressure could drive the pair toward the 0.6550 area. Sentiment and Catalysts Market Sentiment: Risk-off Catalysts: China economic data, US PMI figures, global risk developments Wrap-up Overall, the US Dollar remains firmly supported as geopolitical uncertainty and resilient US data expectations dominate market sentiment. The Yen and Pound continue to weaken against the Greenback, while the Swiss Franc and Australian Dollar struggle to attract demand in a cautious risk environment. With ISM PMI data and further geopolitical developments in focus, traders are likely to stay defensive, keeping USD strength intact in the near term. Ready to trade global markets with confidence? Join Moneta Markets today and unlock 1000+ instruments, ultra-fast execution, ECN spreads from 0.0 pips, and more! Start now with Moneta Markets!

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Publication date:

2026-01-05 11:32:09 (GMT)

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