As Donald Trump officially assumes the presidency on Monday, January 20, 2025, markets are bracing for potential turbulence. Traders and investors worldwide will closely monitor his initial policy announcements and remarks, given their potential to influence both the U.S. and global economies.

Here’s a breakdown of the key factors and currency pairs to watch as Trump begins his term.

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Factors Driving Market Volatility

1. Policy Announcements
Trump’s presidency is expected to bring significant attention to trade policies, particularly around tariffs and international negotiations. Markets will be especially sensitive to any changes that could impact the U.S. dollar (USD) and trade relations globally.

2. Fiscal Stimulus and Immigration Policies
Hints of tax cuts or deregulation could bolster confidence in the U.S. economy, potentially strengthening the USD. On the other hand, restrictive immigration policies might have a more nuanced impact, creating uncertainty in certain sectors while boosting others.

3. Market Sentiment
Political transitions often spark uncertainty, and Trump’s return to office is no exception. However, if his administration signals a clear pro-growth agenda, this could trigger bullish momentum for the USD, even amidst short-term volatility.

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Key Currency Pairs to Watch

USD/JPY (U.S. Dollar / Japanese Yen)

• What to Watch: A positive tone from Trump’s policy speech, particularly around economic growth, could lead to a breakout above resistance levels for USD/JPY.
• Why It Matters: A weaker yen, coupled with a stronger USD, often signals confidence in risk-on assets, driving further upside for this pair.

EUR/USD (Euro / U.S. Dollar)

• What to Watch: Pro-growth U.S. policies could strengthen the USD, potentially pushing EUR/USD lower.
• Target: A move toward key support levels as traders favor the dollar over the euro.

USD/CHF (U.S. Dollar / Swiss Franc)

• What to Watch: The Swiss Franc often acts as a safe haven during times of uncertainty. However, bullish sentiment for the USD could challenge support levels around 0.9050, with a potential move higher if optimism prevails.

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What This Means for Traders

Trump’s return to office brings both risks and opportunities. Markets thrive on clear signals, and traders should remain vigilant, focusing on Trump’s initial policies and their implications for global trade, fiscal stimulus, and overall market sentiment.

Pro Tip: Keep an eye on economic indicators and central bank actions that may amplify or counteract the impact of Trump’s policies. Short-term volatility can be challenging but also rewarding for those prepared to adapt.

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