The new week begins with escalating tensions between the US and the EU. Donald Trump claims Greenland, while EU representatives, including Denmark, refuse any negotiations related to this matter. The US president announced 10% tariffs on Saturday on goods imported from major EU countries. These tariffs will take place on February 1 and will be active until the deal on purchasing Greenland by the United States is set. 

Geopolitical risks still weigh on risk assets and amplify market volatility. The escalation between the US and EU may support safe-haven assets, including gold, and put pressure on most major currencies as well as oil. Financial markets now evaluate whether this conflict evolves into policy actions, which may have a tougher impact on financial markets.

Traders also evaluate the latest US labor market data that was released recently, showing that the labor market is stronger than expected, which provides the Fed with some room to postpone the next rate cut. According to market participants, the FOMC may conduct the next rate cut in June, which supports the US dollar. 

Attention now switches to the US data that will be released this week. Market participants will closely monitor the Core PCE Price Index, which will be released on Thursday, together with quarterly GDP data from the United States. In case of better reading, the US dollar may gain additional support. 

Taken together, the combination of geopolitical uncertainty and critical US macroeconomic data creates a challenging backdrop for markets this week. Investors will be forced to weigh political risk against economic fundamentals, with any surprises likely to drive sharp moves across currencies, equities, and rates. As volatility risks remain elevated, market direction will hinge on whether diplomacy calms tensions and whether US data reinforce or challenge expectations for future Federal Reserve policy.

EUR/USD: Geopolitics Weigh on the Currency Pair

While bursting higher today, EUR/USD remains under pressure amid geopolitical tensions and the upcoming US tariffs. Rising volatility continues to discourage investors, and the capital outflow may put significant pressure on the EUR. However, there will be several important data releases this week from both the EU and the US, which may have a strong impact on price fluctuations.

From the technical analysis perspective, the currency pair is trading above the higher band of the Bollinger Bands indicator, showing the overbought condition. Traders can buy above 1.1740, targeting 1.1800-1.1840. On the downside, short positions below 1.1710 may target 1.1650 and 1.1600.

GBP/USD: The British Pound Benefits from BoE Hawkish Stance

While the British pound remains under pressure due to tensions between the US and EU (which include 10% tariffs on goods from the UK as well), the currency pair’s downside is limited amid the hawkish stance of the local central bank. 

On the technical analysis front, the currency pair stays above the upper band of the Bollinger bands indicator, but the downside correction is already in place. Traders can buy from 1.3490, targeting 1.3550 and 1.3600. On the downside, by selling from 1.3450, traders can target 1.3400 and 1.3370.

WTI: Crude Oil Next Step Remains Uncertain

Crude oil is still supported by the Middle East tensions, with deescalation is still under question. While Donald Trump refused to send forces to the region, any further developments there may change the situation. Moreover, the US may soon release significant volumes of oil from Venezuela, which may add to supply and put pressure on WTI prices.

From a technical analysis perspective, oil is trading close to the upper band of the Bollinger Bands indicatorю Long positions can be opened above 60.20, targeting 61.00 and 61.70. On the downside, traders can sell from 59.50, targeting 59.00 and 58.00.

Gold: XAU/USD Is Supported by Geopolitical Tensions

Being a safe-haven asset, gold is supported by the ongoing tensions between the US and the EU, as well as the situation in the Middle East, which is still far from being calm. Moreover, the situation around Venezuela adds to the capital outflow from the risk assets, which adds support to the previous metal. 

From a technical analysis perspective, gold is trading close to the upper band of the Bollinger Bands indicator. Traders can buy from 4,740 to 4,780. On the downside, traders can sell from 4,720, targeting 4,700 and 4,680.