The European Union plans to increase defence spending in response to cuts under Trump. Macron mentioned that Trump’s tariffs could obstruct the EU’s efforts to boost defence budgets and stressed the importance of avoiding a trade war.

These remarks were made during a television interview after Macron’s meeting with Trump. The situation continues to develop, and further information will be provided soon.

Macron’s comments highlight clear concerns about how new tariffs from the United States might make it harder for European countries to direct more resources to their militaries. With defence expenditures already under pressure, any disruptions to trade could make balancing budgets even more difficult. If European governments must divert funds to offset economic losses from tariffs, plans to strengthen military capabilities could face delays or reductions.

This presents a near-term challenge. In the coming weeks, it will be important to assess whether policymakers in Brussels propose adjustments to existing strategies. A shift in trade terms may require reconsideration of planned allocations, particularly if expected revenues decline. If governments hesitate in their response, financial markets could begin to reflect those concerns.

We should also consider the broader environment. If a trade dispute escalates, it could lead to retaliatory measures, affecting industries beyond defence. That would complicate efforts to maintain stable growth while increasing military budgets. At the same time, uncertainty around future U.S. policies means that long-term planning becomes harder for European leaders. They must determine whether to proceed as planned or to develop alternatives that offer flexibility.

As these discussions unfold, monitoring any announcements from Brussels, Paris, and Berlin will be advisable. A coordinated response could influence expectations, while hesitation might have the opposite effect. If market participants sense disorder or division among European leaders, that could introduce added volatility.

Beyond policy adjustments, monetary authorities may weigh in if trade measures disrupt economic projections. The European Central Bank’s stance will need to be considered should financing conditions shift. Interest rate expectations and funding costs could be affected if new tariffs alter growth forecasts.

For now, Macron has laid out his concerns, and the response from other European leaders will provide further insight into the potential direction ahead. If discussions between Washington and Brussels continue without resolution, market sentiment could adjust accordingly. In the meantime, any changes to official defence spending commitments should be watched closely.

The thrill of a quick win. The rush of watching a trade skyrocket in seconds. The idea that just one well-timed move could change everything. It’s easy to see why short-term trading gets all the hype. But here’s the truth: trading isn’t about momentary victories—it’s about lasting success.

The most successful traders don’t just aim for fast wins. They play the long game, focusing on steady growth, calculated risks, and disciplined strategies. Instead of reacting to every market swing, they zoom out, stay patient, and build something sustainable.

The question is: Are you thinking big enough?

Why Short-Term Wins Aren’t Enough

Sure, short-term trading has its appeal. The action is fast, the stakes are high, and when it works—it works. But for most traders, it also means higher risks, more stress, and unpredictable results.

🔹 Volatility Can Wipe You Out – Markets move fast, and short-term traders can get caught in unpredictable swings.

🔹 More Trades, More Costs – Frequent trading racks up fees, spreads, and commissions, chipping away at potential profits.

🔹 Emotional Burnout – Constantly chasing the next big trade? That’s a fast track to decision fatigue and overtrading.

On the other hand, long-term traders see the bigger picture. They don’t let a bad day shake them, and they don’t chase every minor fluctuation. Instead, they focus on strategies that stand the test of time.

How to Build a Long-Term Trading Mindset

A long-term approach isn’t just about holding onto trades longer. It’s about building a mindset that prioritizes strategy over speed and growth over quick gains. Here’s how to get started:

1. Set Clear Goals

Before you even place a trade, ask yourself: What am I really aiming for? Do you want steady portfolio growth, passive income, or wealth preservation? Defining your goals helps you stay focused and disciplined, no matter what the markets throw your way.

2. Diversify Like a Pro

The old saying is true: Don’t put all your eggs in one basket. Spread your risk by trading a mix of forex, commodities, indices, and stocks. That way, one bad trade won’t knock you out of the game.

3. Master Risk Management

A great trader isn’t just someone who makes big profits—it’s someone who knows how to protect them. Use stop-loss orders, position sizing, and risk-reward ratios to protect your capital.

4. Stick to Your Strategy

The best traders don’t react emotionally to market noise. They trust their analysis, follow their trading plan, and avoid impulsive decisions—even when the market gets wild.

The Payoff of Thinking Long-Term

Traders who commit to long-term success reap the benefits in ways short-term traders rarely do.

✅ Steady, Predictable Growth – Small, consistent wins add up over time, beating sporadic big gains.

✅ Lower Stress, Higher Confidence – Instead of chasing trades, you’re making smart, calculated moves.

✅ Stronger Discipline & Patience – Learning to wait for the right opportunities gives you an edge over the competition.

In the end, successful trading isn’t about being the fastest—it’s about being the smartest.

The Markets Reward Patience. Are You Ready?

The traders who win aren’t the ones chasing every short-term move. They’re the ones who stay patient, disciplined, and focused on the bigger picture.

So ask yourself: Are you here for the thrill, or are you here to build something that lasts?

Trade smart. Think long-term. And watch how the market rewards you.

Federal Reserve Bank of Chicago President Austan Goolsbee stated that further clarity is needed before the central bank can consider cutting interest rates again. He indicated that if policies enacted by the administration drive up prices, the Fed must take this into account.

The US Dollar Index (DXY) is currently trading 0.08% higher at 106.75. The Federal Reserve holds eight policy meetings each year to assess economic conditions and make monetary policy decisions.

Policy measures such as Quantitative Easing and Quantitative Tightening can influence the flow of credit and the value of the US Dollar.

Goolsbee made it clear that before any discussion of rate cuts can take place, policymakers must first assess whether recent economic trends provide enough reassurance. He also pointed out a potential complication: if government decisions contribute to inflationary pressure, the Fed must take those effects into account when shaping monetary policy. This means any fiscal policies that add to consumer price increases could delay rate cuts further.

At present, the US Dollar Index remains slightly higher on the day, holding at 106.75. This metric offers a broad measure of the US currency’s strength against a basket of key foreign currencies. Movements in the index can reflect market confidence in US monetary policy and economic stability. A rise, however small, suggests that investors are keeping a close eye on the Fed’s decision-making process.

When considering monetary policy, it is worth remembering that the central bank meets eight times a year to evaluate economic conditions. These gatherings provide opportunities to adjust interest rates if incoming data supports a shift. Investors and traders tracking policy changes need to factor in these scheduled reviews, as they can determine short-term currency fluctuations.

Monetary tools such as Quantitative Easing and Quantitative Tightening shape credit availability and influence the dollar’s value. The former increases liquidity by purchasing assets, while the latter does the opposite, pulling money from the system. Each approach sends signals about the central bank’s stance and future policy direction.

For those involved in derivative markets, the main takeaway is clear. Monitoring statements from key policymakers, like Austan, is essential. If the Fed exercises caution before adjusting rates, that hesitation could lead to prolonged strength in the dollar. Traders need to assess whether policy shifts will occur in response to inflation concerns or external economic pressures.

Staying ahead in these situations means paying attention not just to scheduled Fed meetings but also to any fiscal policy changes that could alter inflation expectations. If Goolsbee’s concerns about policy-driven price hikes prove accurate, that would lend more weight to the argument for keeping rates elevated. The dollar would likely retain support as a result, making certain currency pair trades more favourable than others.

Understanding the macroeconomic forces at play allows traders to adapt. If the Fed does indeed take a measured approach in the coming months, interest rate expectations will shift accordingly. Those positioning themselves in the market should consider how prolonged periods of tight monetary policy might influence bond yields, corporate borrowing costs, and overall financial conditions.

Economists from Bank of America indicate an increasing risk of stagflation in the US. They reference various “growth negative policies,” including deportations of undocumented workers, government job cuts, and threats of higher tariffs.

They point out that the modest and delayed fiscal stimulus is influenced by the narrow Republican majority in the House of Representatives. However, Bank of America anticipates that stagflation will be mild, with growth expected to remain in the low 2% range and inflation rising but staying below 3%.

The economists suggest that should growth decline further or inflation rise excessively, there may be a reversal in tariffs and immigration restrictions.

We see a clear warning from Bank of America’s economists about a growing risk of stagflation in the US, though they expect it to be relatively mild. They argue that current government policies—such as deporting undocumented workers, cutting public sector jobs, and discussing possible tariff hikes—could slow economic growth. These measures, according to them, weigh on the economy, making it harder for businesses to maintain costs and productivity.

At the same time, an underwhelming fiscal stimulus adds to the challenge. With Republicans holding only a slim majority in the House, any stimulus measures that do pass are likely to be modest and delayed. That means the economy doesn’t get much of an extra boost, making it harder to offset any slowdown from other policies. Despite that, the expectation is that growth will still hover around the low 2% range. Inflation, meanwhile, is expected to climb but not spiral out of control, staying under 3%.

The economists do leave room for adjustment. If growth falters more than expected or inflation climbs too fast, there’s a chance that policymakers will rethink some of these measures. Tariffs could be eased, and immigration restrictions might be softened, particularly if industries start struggling with labour shortages or higher supply chain costs. That possibility suggests a level of flexibility in economic policy, even if the current direction leans towards tightening.

For those of us watching market trends, these projections shape expectations for the coming weeks. Inflation rising—while still under control—suggests that we shouldn’t expect dramatic shifts in monetary policy just yet. The Federal Reserve is unlikely to take drastic action unless inflation accelerates beyond forecasted levels. Growth holding steady in the low 2% range also implies that the economy is slowing but not collapsing, which means markets will be keeping an eye on consumer spending and business investments.

One key factor to monitor is how these policies unfold in practice. Government actions sometimes take longer to filter through the economy than expected, and businesses tend to adjust more gradually. That means the direct effects of immigration limits or tariff changes may not be fully visible right away. However, if industries reliant on immigrant labour begin to struggle or manufacturing firms face higher costs due to trade pressures, we may start seeing clearer economic shifts.

Another point worth considering is how policymakers react to changing conditions. If inflation starts rising above expectations, we may see stronger pushback against further fiscal tightening. Likewise, if growth deteriorates beyond what Bank of America projects, discussions around trade and immigration could take a different turn.

In the meantime, the expectation of mild stagflation suggests a more cautious approach when evaluating economic momentum. While inflation remains a concern, it’s not yet at a level requiring aggressive intervention. At the same time, growth isn’t strong enough to offset concerns over policy decisions that could act as a drag on economic performance.

US President Donald Trump announced that tariffications on imports from Canada and Mexico will proceed when a one-month delay ends next week. He confirmed this during a joint press conference with French President Emmanuel Macron.

As of the latest data, the USD/CAD currency pair showed a decrease of 0.01%, trading at 1.4270. Tariffs, which are customs duties on imported goods, are implemented to enhance the competitiveness of local producers.

In 2024, Mexico, China, and Canada accounted for 42% of US imports, with Mexico being the leading exporter at $466.6 billion. Trump plans to use revenues from these tariffs to reduce personal income taxes.

When Donald spoke alongside Emmanuel, he reiterated what markets had already suspected—the additional levies on goods from the neighbouring nations would not be postponed any further. Traders had priced in some level of uncertainty over whether the delay could be extended, but his statement removed that doubt.

With the US dollar barely moving against the Canadian counterpart following this, we see that currency markets had largely braced for this decision. A drop of just 0.01% suggests that traders were already positioned for the tariffs to be implemented. This also indicates that unless further details emerge or an unexpected policy shift arises, exchange rates may not react markedly in the immediate term.

Looking at the trade figures, the reliance on goods from these three markets cannot be overstated—nearly half of all foreign purchases came from Mexico, China, and Canada last year. Mexico’s lead position at $466.6 billion underscores why any shifts in trade policy with the country will inevitably have repercussions across multiple sectors.

Donald’s intention to allocate tariff revenues towards reducing personal income taxes adds another element to the discussion. If implemented as suggested, the effects could be twofold: potential relief for households but also the possibility of inflationary pressure if businesses pass the added costs on to consumers. It will be important for traders to watch for any confirmation of how these tariff collections are used, as signals on tax policy could shape expectations around consumer spending and business investment.

We should also consider the knock-on effects of this approach. If the administration depends on tariffs to offset tax reductions, changes in trade volumes could directly impact the amount collected. If imports fall due to these higher rates, revenue projections might not align with actual collections. This could lead to adjustments in fiscal policy, which markets would need to assess carefully.

With these factors in motion, derivative traders should track shifts in sentiment closely. Option pricing on affected currency pairs, commodities that rely on cross-border supply chains, and even equity markets tied to international trade will be areas where volatility could surface. Watching for any immediate retaliatory measures from Canada or Mexico would also be advisable, as such moves could introduce rapid shifts in pricing.

The ANZ-Roy Morgan Australian Consumer Confidence index has increased to 89.8, the highest since May 2022, rising from 85.1. While the index is still below 100, it indicates a noticeable improvement in consumer sentiment.

This rise in confidence is linked to recent interest rate cuts by the Reserve Bank of Australia and positive job numbers. Consumers appear to be responding to these economic changes, leading to a shift in overall sentiment.

A lift in sentiment like this suggests people are feeling more assured about their financial prospects. Although the index remains under 100, which indicates continued caution, this is the strongest reading in nearly two years. That in itself conveys a shift in how the public perceives the economy. When we see an upswing of this scale, it’s not just a number—it reflects changing expectations about household finances and spending habits in the months ahead.

Driving this improvement are two key factors: lower borrowing costs and steady employment growth. The Reserve Bank’s decision to reduce rates has eased financial pressure, particularly for households with variable-rate loans. At the same time, job figures have remained resilient, reinforcing confidence in income stability. When these two elements move in the same direction, they create a noticeable impact on spending behaviour, which influences various markets beyond just consumer goods.

The latest confidence boost isn’t occurring in isolation; it follows months of economic data pointing towards stabilisation after a period of doubt. People tend to adjust decisions based on their outlook on inflation, employment, and credit conditions. When rate cuts take effect, the response isn’t immediate—it unfolds in stages, first through improved sentiment, then gradually showing up in actual purchasing decisions.

For those assessing market movements, sentiment shifts of this kind always deserve attention. When consumers start feeling less uncertain about the future, the effects ripple through multiple sectors. Discretionary spending can pick up, borrowing appetite can increase, and savings behaviour can alter. Each of these dynamics has the potential to steer certain market trends more clearly than headline figures may initially suggest.

Given that this index is one of the earliest indicators of changing economic sentiment, it serves as an advance signal for what may lie ahead. If confidence continues to rise in the coming weeks, it could point towards further momentum in economic activity. On the other hand, should external pressures—such as cost-of-living concerns or global market shifts—intensify, this improvement may face hurdles. Tracking how sentiment translates into actual consumer behaviour will be the next measure of whether this shift gains further strength.

AUD/JPY has shown a modest recovery after experiencing sharp losses last week. Despite this recovery, the currency pair remains below its 20-day Simple Moving Average (SMA), indicating a prevailing bearish outlook.

The Relative Strength Index (RSI) continues to linger in negative territory, reflecting limited buying strength. The MACD histogram remains flat, indicative of a lack of momentum for an upward trend.

A decisive break above the 20-day SMA could change the current sentiment. Conversely, if selling pressure persists, the pair may return to lows around the 94.50 mark. Resistance is noted around 96.00, which could suggest a potential shift if surpassed.

The latest movement in AUD/JPY suggests a temporary breather from its prior decline, though it has yet to clear levels that would indicate a stronger recovery. Remaining below the 20-day SMA keeps a cautious tone in place, and traders will be watching to see if sentiment changes. When the RSI stays in negative territory, it underlines weak buying interest, meaning any rallies could struggle for follow-through. Meanwhile, a flat MACD histogram shows that momentum is lacking, which adds weight to the idea that markets are waiting for a stronger catalyst before committing to a direction.

If the pair manages to push above the 20-day SMA, it might encourage more buying, but without additional confirmation, scepticism will remain. On the flip side, should selling pressure intensify again, recent lows around 94.50 would re-enter the picture, as previous price action has shown support in that region. Resistance at 96.00 means that if buyers step in more decisively, a move beyond that point could reshape near-term expectations.

Given these conditions, traders should be prepared for shifts depending on whether strength builds or weakness returns. Watching for confirmation signals such as RSI breaking higher or MACD turning positive will be key before adjusting positions.

Ethereum (ETH) has fallen below US$2600 as market conditions worsen. This decline is part of a broader trend affecting multiple assets.

The recent announcement by former President Donald Trump regarding the continuation of tariffs on Canada and Mexico has contributed to market volatility. This development underscores ongoing concerns about trade relations and their impact on various cryptocurrencies.

Traders have responded swiftly, adjusting their positions as uncertainty increases. Donald’s statement has reinforced existing investor anxiety, leading to more cautious behaviour across markets that are already under pressure. Ethereum’s decline mirrors broader sentiment, with other digital assets also slipping as traders reassess risk exposure.

Beyond trade concerns, Federal Reserve policy expectations have played a role in shaping short-term movements. Rising speculation about delayed interest rate cuts has weighed on risk assets, cryptocurrencies included. A more restrictive monetary stance reduces liquidity, which in turn pressures valuations. Market participants are watching for central bank signals that might clarify the timing of any policy shifts. Jerome Powell’s recent comments about inflation staying above target for longer than expected have only added to these concerns.

Speculation about regulatory developments has also affected sentiment. Ongoing discussions within US and European legislative bodies have kept traders alert to possible rule changes. Recent enforcement actions further highlight the uncertain environment in which digital assets operate. Shifting regulations influence participation levels and liquidity, meaning even small shifts in policy language can lead to outsized reactions.

Market behaviour suggests many traders are adjusting their strategies in response to these pressures. Recent liquidation data indicates leveraged positions have been unwound at an increasing pace. The resulting price action hints at forced selling, where traders exit positions not necessarily by choice but due to margin requirements. This only intensifies downward momentum, at least in the short term, as automated trades accelerate selling activity.

Looking ahead, volatility is expected to remain elevated. External factors such as macroeconomic news and shifting investor sentiment will continue shaping price action. Any new announcements from policymakers, particularly regarding interest rates or trade restrictions, could trigger further movements. Because of the heightened sensitivity to such developments, traders are likely to remain defensive until clearer signals emerge.

We see these shifts reflected in options markets, where implied volatility has risen. Traders have shown a preference for downside protection, with demand for put options increasing. This suggests hedging activity as investors prepare for potential further declines. At the same time, liquidity pockets have thinned, which may contribute to sharper price swings in response to news events.

In the coming weeks, price action will be closely tied to institutional activity. The positioning of large market participants could provide hints about sentiment shifts. If accumulation trends emerge, that may suggest renewed confidence, while continued outflows would reinforce the cautious tone currently prevailing. Trading volumes will also serve as an indicator of conviction behind any price moves.

We will be monitoring key levels, particularly near previous support zones, to gauge whether buyers step in aggressively or remain hesitant. If selling pressure persists, it could lead to further declines, but if defensive positioning starts unwinding, it may set the stage for recovery attempts. These dynamics will play out alongside broader economic developments, making the next phase particularly reactive to external influences.

The AUD/USD pair attempted to recover from a significant decline but faced resistance near 0.6400. Following US tariff announcements, market participants are closely monitoring Australian inflation data, expected to rise by 2.6% for January.

The Reserve Bank of Australia recently reduced its cash rate, emphasising its ongoing effort against inflation. This cautious monetary policy has contributed to a careful trading environment for the Australian Dollar.

Currently, the AUD/USD is encountering solid resistance at the 100-day Simple Moving Average, with a potential for fluctuation influenced by upcoming economic data and trade developments.

The Australian Dollar struggled to gain traction after its initial recovery attempt, finding itself restricted by sellers near the 0.6400 mark. The pressure on the currency mounted following tariff decisions from the United States, which have shifted investors’ focus to domestic inflation data. January’s figure is anticipated to come in at 2.6%, a figure that will either reinforce or challenge expectations about Australia’s pricing pressures.

Philip Lowe’s team at the Reserve Bank recently opted to lower the cash rate, a move signalling a softer stance amidst concerns about economic growth. This approach reflects an effort to balance inflation management with economic stability, keeping traders keenly aware of potential shifts in monetary outlook. Markets remain watchful for any rhetoric from policymakers that could sway sentiment further.

At present, traders are observing how the Australian Dollar reacts to resistance at the 100-day Simple Moving Average. This technical barrier has proven to be a sticking point, with buyers needing stronger economic backing to push through. A weaker-than-expected inflation reading could trigger additional selling interest, whereas an elevated figure might support another retest of resistance.

Short-term direction is also linked to wider trade policies, particularly how tariff strategies unfold between major economies. Commodity-related influences, always a key factor for the Australian Dollar, will continue to affect positioning. Traders should weigh incoming data carefully, managing risk as volatility could persist in response to economic releases and external pressures.

UBS forecasts continued market volatility due to concerns over tariffs. However, they project gains for the S&P 500, predicting it will reach 6,600 by the end of the year.

The firm identifies a strong US economy, robust corporate earnings growth, and advancements in AI as factors supporting this potential rally. These elements are expected to contribute positively to market performance.

This outlook signals both opportunities and risks for traders. On one hand, a healthy economy and rising earnings create conditions that could support further gains. On the other, trade policies may inject short-term instability that could unsettle investors.

With UBS projecting the S&P 500 to climb to 6,600, we should pay attention to how corporate earnings continue to develop. Growth remains a central factor behind their optimism, particularly with firms benefiting from artificial intelligence advancements. As businesses integrate these technologies, market confidence may strengthen—especially in sectors directly tied to AI infrastructure and applications.

At the same time, tariffs remain a pressing issue. Trade restrictions can influence supply chains, raise costs, and alter consumer demand. If further measures are introduced, they could lead to swift adjustments in valuations. Traders should monitor any announcements that impact key industries, particularly those that depend on global supply networks.

Volatility is likely to persist in the coming weeks, making it necessary to stay aware of any shifts in investor sentiment. Although UBS expects gains by year-end, short-term price swings could be sharp. Those with exposure to derivatives should be prepared for the potential effects on pricing and leverage. Moves driven by policy changes or earnings surprises could create heightened fluctuations, requiring close attention to risk management.

The AI sector stands out as a major element of this forecast. If companies continue accelerating investments in automation and data processing, valuations in certain industries may keep rising. However, regulatory scrutiny and competition could challenge some of these expectations. Traders should assess whether current pricing already reflects future growth or if there is still room for upside.

With these factors at play, the outlook remains both promising and uncertain. Staying informed on earnings trends, trade policy decisions, and AI developments will be essential. Movements in key sectors could bring new opportunities, but they may also require swift adjustments to trading strategies.