[MARKET ANALYSIS] DXY mildly pressured whilst the CHF gains on renewed trade tensions, Japan to hold elections on February 8th

• DXY is a little lower this morning, with pressure facilitated by the renewed trade tensions sparked by US President Trump. He announced 10% tariffs on eight European countries, effective February 1st – a move which he is hoping will lead the countries to curtail support for Greenland.
• Trump's plan is not going as he had hoped. The FT reported that the EU is preparing EUR 93bln of tariffs on the US or restrict American companies from the European market. Moreover, as the morning got underway, several European leaders have slammed Trump’s tariffs; notably, the German Finance Minister said there will be a strong response to the US tariffs. 
• Thus far, the DXY is a little lower and currently at the mid-point of a 99.05 to 99.46 range; the trough for today is a couple of pips above its 50 DMA at 99.00. Other G10s broadly gain vs the USD (ex-JPY), with the CHF the favoured haven this morning, sitting towards the top of the G10 list. Elsewhere, the Antipodeans benefit from the continued strength in metals prices. NZD outperforms, and is currently at the upper end of a 0.5741 to 0.5779 range, with the peak for the day surpassing both its 100 DMA (0.5773) and 21 DMA (0.57767).
• Finally, attention has been on Japan, with PM Takaichi announcing in a presser that she will formally call a snap election this Friday once the Lower House reopens – no move on that announcement, given it was widely touted; an election will be held on Feb 8th. She then spurred some two-way action in USD/JPY after she said they will end excessively restrictive fiscal policy, but then suggested that she intends to suspend the sales tax on food for a two-year period, vs opposition plans to remove it entirely. USD/JPY is flat and currently underperforming vs peers and within a 157.42-158.16 parameter, holding around the 158.00 mark.

The DXY is under pressure as renewed trade tensions fuel concerns about potential retaliatory tariffs from the EU, affecting market sentiment around the USD. This shift highlights a complex geopolitical landscape, with the CHF gaining traction as a safe haven amid these uncertainties. Additionally, Japan's upcoming elections and shifting fiscal policies could impact the JPY, presenting volatility in the USD/JPY pair that traders should monitor closely.