US Dollar Gains as Trump Eases Rhetoric on Greenland

While attending the World Economic Forum in Davos, Donald Trump adopted a more conciliatory tone regarding Greenland. Media reports indicate that the US President ruled out the use of military force against NATO allies and stepped back from earlier threats to introduce tariffs on imports from several European countries. This shift helped to reduce geopolitical tensions, supporting a rebound in US equities and boosting demand for the US dollar.

Price action in USD/JPY reflects this change in sentiment, with the dollar strengthening against the yen (highlighted by the orange arrow). The Japanese currency remains under pressure ahead of the Bank of Japan’s interest rate decision, due tomorrow.

USD/JPY: Technical Outlook

At the end of December, our analysis of dollar–yen movements identified a long-term upward channel, which remains intact, albeit with minor adjustments incorporating January price data.

The lower boundary of this channel continues to provide support, although its resilience is being tested:

→ as shown by the red arrow, bearish pressure is evident along the lower internal trendlines of the channel;
→ today’s high (B) exceeded the 15 January peak (A) only slightly, a pattern that may indicate a bull trap, where a failed upside attempt could encourage sellers to re-enter the market.

The next phase of price action will largely depend on a busy and fast-evolving fundamental backdrop. Beyond the developments already mentioned, traders will be watching US GDP figures and initial jobless claims, scheduled for release today at 16:30 GMT+3, which could play a decisive role in shaping USD/JPY direction.