HFMarkets (hfm.com): Market analysis services.

[HFblogNews]

Date: 29th January 2026.

US Dollar Slides on Shutdown Fears Despite Fed Pause.


Trading Leveraged products is Risky

The Federal Reserve chose not to adjust interest rates and gave no indication of a rate cut for March. In addition, the Federal Reserve Chairman told journalists that he believes the central bank will remain fully independent. The Federal Reserve’s moves can potentially support the US Dollar. Nonetheless, the US Dollar continues to decline.

After the US Dollar Index retraced to 96.60, the currency fell by 0.80%, particularly after the Fed’s press conference. Why are investors continuing to short the US Dollar?

The US Dollar Index

Even though the US Dollar is declining on Thursday and has come under pressure since the Fed’s press conference, it is not falling to a new low. The price has remained above its recent lows despite the pressure. The price remains 0.50% higher than yesterday’s low. The US Dollar Index is increasing as we edge closer to the European session open. However, the index must rise above 96.12 in order to start to obtain clear potential buy signals.


HFM - US Dollar Index 12-Hour Chart

The worst performing currencies of the day so far are the US Dollar and the Japanese Yen. The best performing currencies are again the Australian Dollar and New Zealand Dollar.

The US Dollar’s decline is not necessarily due to the Federal Reserve or monetary policy. Investors are shorting the US Dollar as they look to distance themselves from geopolitical tensions and a potential US shutdown. In addition, investors are negatively reacting to the US coordinating with the Japanese government regarding boosting the Japanese Yen. Investors tend to negatively view interventions into the currency market.

A Possible US Shutdown?

The current US budget is due to expire on 30 January. US President Donald Trump and Senate Democratic leader Chuck Schumer are reportedly negotiating on the new budget.

To avert a shutdown, the US administration is looking to separate the Department of Homeland Security (DHS) funding from a larger spending package. However, the Democrats are likely to add reforms to Immigration and Customs Enforcement (ICE). This could potentially be a key sticking point.

Many Democrats propose mandatory body cameras for agents, restrictions on mask use, tighter use-of-force standards, and independent oversight of alleged abuses. These measures are driven by recent controversies involving immigration agents and have emerged as the central obstacle in the negotiations.

According to analysts, there is a 70% chance of a US shutdown. A US shutdown could potentially pressure the US Dollar and sentiment further.

The Federal Reserve
The key takeaways from the Federal Reserve’s press conference from Wednesday evening are comments on the economy and future rate adjustments. The Chairman of the Fed, Jerome Powell, advised economic activity is expanding at a solid pace and the employment sector shows signs of stabilising.

However, Mr Powell also advises inflation remains above its target and does not show signs of stabilizing below 2.5%. As a result, the Federal Reserve is not likely to cut interest rates easily according to the Chairman.

The Federal Open Market Committee is largely supporting a pause, with only two members voting for an interest rate cut. In addition, Powell indicated that it’s unlikely the next policy move will be a rate increase.

Trump and The US Dollar

Earlier, US President Donald Trump commented on movements in the US Dollar, saying he was unconcerned about the sharp decline that has pushed the currency back to four-year lows. He added that he currently prefers to let the market determine a ‘fair value’ for the Dollar.

Investors interpreted this stance as a sign of continued market-driven pricing, but it also heightened uncertainty, as the absence of verbal or direct support for the currency leaves it more sensitive to economic data, central bank decisions, and foreign policy developments.

Key Takeaways

* The Federal Reserve held rates steady, signalled no March cut, and emphasised independence, but the US Dollar continues to weaken.
* The Dollar’s decline is driven more by geopolitical risks, shutdown fears, and investor positioning than by Fed policy.
* A potential US government shutdown, with negotiations stalled over DHS and ICE reforms, is adding downside pressure to sentiment.
* President Trump’s hands-off stance on the Dollar has increased uncertainty, making the currency more sensitive to data and policy developments.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click [url='https://www.hfm.com/hf/en/trading-tools/economic-calendar.html']HERE[/url] to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click [url='https://www.hfm.com/en/trading-tools/trading-webinars.html']HERE[/url] to register for FREE!

[url='https://analysis.hfm.com/']Click HERE to READ more Market news.[/url]

Michalis Efthymiou
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

[HFblogNews]

Date: 30th January 2026.

Markets on Edge as Kevin Warsh Emerges as Fed Chair Frontrunner.


Trading Leveraged products is Risky

Gold and stocks decline as markets prepare for the US President, Donald Trump, to announce the new Federal Reserve chairman. Markets were previously expecting the President to announce the new chairman towards the end of next week. However, Trump shocked markets by announcing last night that he will announce the new Chairman this morning.

Since this announcement, the US stock market was quick to decline, as did Gold. A consequence of the shock announcement was a drop in the market’s risk appetite. This was the main reason for the stock market’s decline. However, why is the US Dollar increasing in value and Gold declining?

Kevin Warsh

Analysts were expecting President Trump to nominate an ultra-dovish economist to head the Federal Reserve for the next four years. The market was not expecting any rate cuts from the Fed in the upcoming months. However, with the appointment of a new dovish chairman, investors were pricing in frequent cuts in the second half of the year.

The US President has said that he will confirm his nomination for the Federal Reserve chairman this afternoon. Many members of his party have said they believe it's better to wait for the announcement, but Trump does not seem willing. Yesterday afternoon, former Fed member, Kevin Warsh, was seen meeting at the White House. Political analysts and journalists believe Mr Warsh will be the President’s nominee.

According to Bloomberg, there is a 90% chance of Kevin Warsh being the Fed’s new chairman. Though many traders may be asking, why is this development prompting a stock market decline and weakness in Gold.

Markets expected a banker or economist with a traditionally dovish stance, but Kevin Warsh does not fit that profile. In the past, Warsh has established himself as a clear inflation hawk and has criticised the Federal Reserve for failing to bring inflation back to target. This was particularly the case under the Biden administration, where inflation rose to extreme highs.

In addition to this, the potential nominee is also known not to be a supporter of using quantitative easing, which is known to support the stock market. For this reason, markets do not see him as a clear dovish banker. Over the past few months, his tone has somewhat changed and at times has made dovish comments. However, judging by the market moves, investors have not forgotten his past.

Tensions Amongst Republicans

Tom Tillis will not approve the nominee unless the US drops legal proceedings against Federal Reserve members. Trump is reportedly looking for a nominee who would reassure markets while also supporting his push for faster and deeper rate cuts. However, if his nomination does not get the backing required, uncertainties can create a lower risk appetite within the market.


HFM - XAUUSD 1-Hour Chart

Market Trends

Warsh has recently moved closer to the president’s stance, publicly advocating for lower interest rates despite his long-held reputation as an inflation hawk.

Currently, markets are pricing in a more hawkish outlook for the Federal Reserve or at least backtracking on previous projections. This can be seen in the price action of Gold, the US Dollar and Indices. Gold has fallen by 8.50% since the opening of the US session on Thursday. The stock market has also fallen with the S&P 500 trading almost 1.00% lower on Friday and all other indices also trading lower.

The US Dollar started the day with a bullish price gap measuring 0.30%, but has remained more or less stable since the open. Volatility is likely to continue as investors await the confirmation of Trump’s nominee. Traders also await the release of another key announcement, the US Producer Price Index.

Key Takeaways

* The surprise timing of the Fed chair announcement triggered risk-off sentiment, pressuring stocks and Gold.
* Markets fear a Kevin Warsh nomination due to his inflation-hawk stance and QE skepticism. Markets question whether Mr Warsh is indeed dovish.
* Hawkish repricing lifted the US Dollar while gold dropped sharply, down 8.5%.
* Political uncertainty and PPI data keep volatility elevated across equities, FX, and commodities.

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Please note that times displayed based on local time zone and are from time of writing this report.

Click [url='https://www.hfm.com/hf/en/trading-tools/economic-calendar.html']HERE[/url] to access the full HFM Economic calendar.

Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click [url='https://www.hfm.com/en/trading-tools/trading-webinars.html']HERE[/url] to register for FREE!

[url='https://analysis.hfm.com/']Click HERE to READ more Market news.[/url]

Michalis Efthymiou
HFMarkets

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.