[MARKET ANALYSIS] DXY is slightly softer with no major surprises or market reaction seen so far from President Trump's State of the Union Address

DXY: -0.1%

• Dollar marginally softened in rangebound trade with very little reaction seen so far to US President Trump's State of the Union Address where he talked up the US economy in which he stated that their nation is back, bigger, better and stronger than before, as well as noted that inflation is plummeting, salaries are rising, and the roaring economy is roaring like never before. There was also a recent slew of Fed commentary, but did little to shift the dial as Goolsbee (2027 voter) reiterated that more progress is needed on inflation before resuming rate cuts, while Cook (voter) said the neutral rate could fall over time, and Collins (2028 voter) said they are quite likely to hold current rates for some time.

EUR/USD: +0.1%

• Eked mild gains but remains beneath the 1.1800 level amid a lack of major fresh catalysts, although there were comments yesterday from EU Trade Commissioner Sefcovic, who noted that US counterparts have reassured the EU that they will stand by the trade deal.

GBP/USD: +0.2%

• Gradually rebounded following the prior day's fluctuations and deluge of remarks from BoE policy makers, in which the main takeaway is that a cut in April/May remains an open question for markets, with Governor Bailey stating a rate cut in April is a genuinely open question, and he will be going into the coming meetings asking if a cut is justified.

USD/JPY: -0.2%

• Mildly pulled back after surging yesterday on a report that Japanese PM Takaichi relayed to BoJ Governor Ueda reservations about further rate hikes, being stricter than their previous meeting. Furthermore, Takaichi more recently commented that she is closely watching FX moves with a high sense of urgency, while participants are also eyeing her government's nominations to replace two outgoing BoJ members.

Antipodeans: AUD/USD +0.5% / NZD/USD +0.3%

• Antipodeans are firmer amid the positive risk appetite, and with AUD/USD leading the advances following firmer-than-expected monthly CPI data from Australia.

The DXY is slightly softer, indicating a stable USD that hasn't reacted significantly to Trump’s State of the Union Address, despite optimistic economic claims. While the address highlighted a robust economic outlook, the lack of fresh catalysts suggests the market is taking these comments in stride. Additionally, ongoing Fed commentary reinforces a cautious approach on rate cuts, which adds to the subdued market response in the FX space.