FX Daily: Davos relief can bring focus back to macro and Fed in Daily Currencies Ratings 22/01/2026 USD: Room to strengthen into FOMC The dollar has followed the relief rally in risk assets after a framework deal on Greenland prompted Trump to scrap new tariffs on the EU. Trump is handing over negotiations to other top officials, including JD Vance and Marco Rubio. So far, very little is known about the agreement. Markets may require learning more about that and perhaps a few days of additional conciliatory remarks to finally turn their focus away from Greenland. But the approaching Fed meeting (28 January) means some refocus on macro drivers is on the cards. The combination of stabilising unemployment and the DoJ probe on Powell may be tilting the balance more on the hawkish side. We discussed last week how Powell’s fierce response to the criminal investigation signalled upside risks to the dollar, as he and other members could have turned more hawkish in a meeting without any rate change to reinforce the independence message. Some downside risks for the dollar persist: more volatility in JGBs spilling into Treasuries, scrutiny on upcoming US tech earnings, reignition in geopolitical/tariff risk. But the macro picture should favour a bit more dollar strength in the coming days, in our view. On the data side, jobless claims will be watched closely today after dipping below 200k last week. Core PCE inflation for November is also due today: we expect it to be a modest 0.2% MoM, confirming evidence of muted price pressures from the CPI report. Improved jobs figures have, however, had a much bigger weight on pricing, and we doubt this will trigger any dovish repricing. Finally, we expect November personal income and spending at 0.4% and 0.5% MoM, respectively, in line with the consensus. Francesco Pesole EUR: Still USD driven, no surprises in Norway EUR/USD has slipped back below 1.170 in line with our call. The pair continues to be almost entirely driven by USD moves and the unwinding of tariff risk on the back of a framework Greenland deal, which is proving enough to revive some dollar bulls. As discussed above, the USD downside risks haven’t all disappeared, but further abating of geopolitical tariff risk can favour another gentle leg lower in EUR/USD. We still see risks extending to 1.1600 in the short term for EUR/USD. Today appears to be a better opportunity for a move lower in the pair than tomorrow, when eurozone PMIs are released and can fit the narrative of an improved eurozone macro outlook. In the rest of Europe, Norway’s central bank announces policy this morning. We don’t expect any major surprises. The December inflation report showed another small rebound in both headline (3.2%) and core (3.1%). We still think the second matters the most for Norges Bank, and that any dovish turn remains contingent on a decline below 3.0%. The Bank may well stick to its projection for only one cut this year for this meeting, underpinning NOK’s good performance since the start of the year. We continue to see more upside for NOK over the short term and overvalued SEK in the coming weeks. EUR/NOK could test 11.50 soon. Francesco Pesole Antipodeans: Clearing the data tests AUD and NZD have been the biggest gainers in G10 since the start of January. Their isolation from rising geopolitical risk and stable fiscal prospects relative to other major economies has raised their attractiveness significantly of late. Domestic inputs also helped AUD overni