Currencies

The US dollar index ($DXY) continued to weaken during January, hitting a low of 95.55 late in the month before rallying to close at 96.99, still down 1.33 from the December settlement. The January low was the weakest the Index had been since February 2022. Fundamentally, the Fed fund futures forward curve continues to show 2 rate cuts by the US Federal Open Market Committee this year (see Monthly Analysis: Financials), the first in June – the first FOMC meeting chaired by the president’s new puppet – and the second in October. But there is more to the weakness of the US dollar than rate cuts as the rest of the world continues to “sell the United States”. Theoretical Positions: Based on Rule #1: Don’t get crossways with the trend, investors would still be short, and continuing to sell the US dollar against global currencies.

The Euro (^EURUSD) posted a high of $1.20806 during January, its strongest mark since June 2021. With the world dealing with the loss of the United States as a democratic leader*, governments and investors alike are turning to other currencies and markets while selling the US. The situation in Europe is not perfect, but enough to attract some of the money fleeing the US dollar. Theoretical Positions: Investors are still long the euro, and likely added positions as it took out its previous high of 1.19186 during January.

The euro/Canadian dollar (^EURCAD) still looks to be in a the early stages of a major (long-term) downtrend. After completing a bearish spike reversal during October 2025, the currency has consolidated below that month’s high of 1.64678. Heading into February, the previous 4-month low is December’s mark of 1.60618. Theoretical Positions: Short positions could’ve been established near the October settlement of 1.61659 with sell stops to establish additional positions below the December low of 1.60618. The currency closed January at 1.61391.

The Canadian dollar (^CADUSD) extended its major uptrend to a high of 0.74170 during January, its strongest level versus the US dollar since October 2024. Global investors likely view Canada as the more stable North American government, and possibly the new democratic world leader. Given this while the world “Sells the United States”, it could “Buy Canada” instead. Theoretical Positions: Investors would be long the Canadian dollar from the close of February 2025 at roughly 0.69125, adding positions along the way as the loonie took out previous high marks, including January above the previous peak of 0.73854 from June 2025. The Canadian dollar closed January at 0.74543, up 0.8% for the month.