Forex Market Insights - January 9, 2026

Overview

The US dollar is showing signs of recovery, with anticipation building around the upcoming US jobs report. Analysts are keen to see if this report will lead to significant market movements, particularly in the US treasury market.

Key Economic Data

Recent US economic data has been largely neutral to positive. The JOLTS report indicated more favorable conditions with a rise in quits and layoffs, while the ISM Services index showed a rebound, especially in the employment component, which has risen above 50 for the first time since May. The upcoming jobs report is expected to either reinforce or challenge the current narrative surrounding the US dollar's resurgence.

Geopolitical Developments

Geopolitical tensions are escalating, with notable events including:

• Trump's announcement of potential military actions against Mexican drug cartels.
• Iran's internal unrest, leading to internet shutdowns and flight cancellations.
• Rising tensions between China and Japan over comments regarding Taiwan and trade restrictions on rare-earth minerals.

Market Sentiment

Despite recent declines in US stock averages, the overall market sentiment appears resilient, particularly as earnings season approaches. High-yield bond spreads are nearing their tightest levels since 2007, indicating a robust risk appetite among investors.

Currency Analysis

USDJPY

The USDJPY pair is consolidating within a range, with a critical level at 157.89. A close above this level could signal a challenge towards 160.00, raising concerns about potential Japanese intervention.

EURUSD

The EURUSD is experiencing a slow decline, with a potential breakdown below 1.1600 that could reset the trend focus towards lower levels.

JPY Pairs

Japanese yen pairs are showing weakness, with a need for a significant move in US treasury yields to support a bearish outlook.

GBPUSD and EURGBP

EURGBP has established a resistance level at 0.8700, while GBPUSD is facing pressure after a recent decline, with support at 1.3415 being crucial to avoid a drop towards 1.3000.

AUDUSD

The Australian dollar has shown disappointing performance, with risks of a deeper plunge if it falls below 0.6700 following the US jobs data.

USDCAD

The bearish trend in USDCAD may be at risk of neutralization if the US dollar continues to strengthen after the jobs reports.

Volatility and Trends

Market volatility remains low, with the Norwegian krone (NOK) showing the lowest volatility reading in 1,000 trading days. The US dollar is experiencing a comeback, although it has not yet established a clear uptrend.

Conclusion

As the market awaits the US jobs report, traders are closely monitoring currency pairs and geopolitical developments that could influence market dynamics. The potential for significant movements in the forex market remains high, particularly with the backdrop of evolving economic data and geopolitical tensions.