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Date: 26th January 2026.

Are the US Eying A Weaker USD?
 

The US Dollar Index has seen its strongest decline in eight months and has fallen to its lowest since September 2025. The downward price movement is due to threats of new tariffs on key trade partners, including the EU and Canada, as well as intervention talks between corporations to boost the Japanese Yen.

A key question during the elections which is now resurfacing is whether the US is aiming for a weaker Dollar. The US president has been clear that he is looking to bring back manufacturing to the US. Countries looking to boost manufacturing and exports tend to benefit from a weaker currency, such as China, Japan and Korea.
 

USDJPY - Are the US and Japan Coordinating Currency Intervention

The Japanese Yen saw two major price movements, the first on Friday where the price rose 1.99% and another on Monday increasing a further 1.15%. The USDJPY is now trading at its lowest level since November 2025. The Japanese Government has intervened into the currency exchange on four occasions over the past three years.

The Japanese government does not confirm if a price movement is due to intervention once it happens. However, government officials have been signalling intervention was imminent if the price did not quickly move in favour of the Yen.

Investors should note that the decline in the USDJPY is causing the value of the US Dollar to decline in general. In the past week, the Japanese Finance Minister Mr Katayama, and the US Treasury Secretary, Mr Bessent have made comments about supporting the Yen against the US Dollar. For many investors watching the Dollar, signs that the US is willing to support a stronger Yen revive talk of coordinated action to push the US Dollar lower. As a result, the US Dollar is declining against all currencies as this move hurts sentiment towards the currency.

The US Dollar is the worst performing currency of today and this year so far. The best performing currencies have been the Australian Dollar, New Zealand Dollar and Japanese Yen. Strategists also note that these three currencies are at a low risk from geopolitical tensions and tariffs.
 

US Geopolitical Tensions and Gold

The US over the past week has been the centre of both internal political crises as well as global ones. Investors are struggling to avoid pricing in the possibility of trade tariffs at some point in 2026. As a result, countries and institutions are limiting their exposure to the US Dollar.

Gold’s price moves are also another indication that investors expect the value of the US Dollar to decline in the medium to long term. On Monday, Gold rose above $5,000 for the first time and is up 10% over the past six days. A key price driver is US Dollar weakness and geopolitical tensions.
 

Risks of a US Shutdown?

Funding expires on 30 January, and Congress has not yet passed a full budget or a new stopgap bill. As a result, investors are weighing the risk of another US Shutdown. This is another reason for the US Dollar’s decline and the upward price movement seen in metals. President Trump on Saturday threatened to impose 100% tariffs on Canada over that country's trade deal with China, even though he had previously called the agreement ‘a good thing’.
 

How Long Can the US Dollar Index Fall?

HFM - US Dollar Index Daily Chart

Even though the current price of the Dollar seems to be relatively low, the price remains higher than that seen before the COVID lockdowns. Nonetheless, the price remains below the five-year average price and slightly below the ten-year average.

Key support levels can be seen at 89.41, 91.89, and 94.55. Traders will expect the price to fall towards these levels if the currency remains under pressure. Trend-based indicators such as Moving Averages, Crossovers and the VWAP all indicate downward price movement. However, this will also depend on the Federal Reserve’s guidance on interest rates and the US budget developments.

The Federal Reserve is due to announce its interest rate decision on Wednesday evening at 19:00 GMT.
 

Key Takeaways:

• Dollar Index hits eight-month low amid tariff threats and speculation of coordinated yen-support intervention.
• Yen surges sharply; USDJPY falls to November 2025 lows as intervention signals intensify.
• Comments from Katayama and Bessent fuel expectations of US-Japan coordination weakening the dollar.
• Geopolitical tensions, shutdown risk, and gold’s record rally reinforce bearish sentiment towards the US Dollar.
• Technical indicators point lower, with key Dollar Index support at 94.55, 91.89, and 89.41.

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.

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Michalis Efthymiou
HFMarkets

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