Speculation over early elections in Japan has driven renewed Japanese Yen (JPY) underperformance, pushing USD/JPY toward the 160 level while lifting JGB yields and domestic equities.

EUR/GBP trades around 0.8660 on Wednesday at the time of writing, down 0.12% on the day, as the Pound Sterling (GBP) benefits from cautious investor positioning ahead of UK growth data.

The New Zealand Dollar is ticking higher on Wednesday but remains trading within Tuesday’s range, with upside attempts capped below 0.5750 and FX volatility subdued.

Slight increase in downward momentum is likely to lead to a lower range of 0.5720/0.5765 rather than a continued decline. In the longer run, for the time being, NZD is likely to trade in a range between 0.5720 and 0.5805, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

There is a chance for Australian Dollar (AUD) to test 0.6670; the major support at 0.6655 is not expected to come into view. In the longer run, the current price movements are likely part of a range-trading phase between 0.6655 and 0.6745, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.

EUR/USD is practically flat on Wednesday, trading just below 1.1650 at the time of writing, with one-month lows in the 1.1615 area in sight, which are at a relatively short distance.

There seems to be no way of stopping the USD/JPY rally. Speculation of snap elections is mounting, and the return of some degree of political risk premium is offering another chance to test Japan’s tolerance band on its currency.

GBP/JPY eases below 214.00 after hitting fresh all-time highs at 214.30.

The Pound Sterling (GBP) gains against its major peers, except antipodeans, on Wednesday. The British currency trades higher ahead of the United Kingdom (UK) monthly Gross Domestic Product (GDP) and factory data, which will be released on Thursday.

Slight increase in downward momentum could lead to Euro (EUR) edging lower, but a break of 1.1615 appears unlikely.

The AUD/USD pair is recovering its recent losses registered in the previous session, trading around 0.6700 during the European hours on Wednesday. The daily chart’s technical analysis indicated a weakening bullish bias as the pair is positioned slightly below the ascending channel pattern.

EUR/JPY extends its winning streak for the fourth successive session and reaches fresh all-time highs, trading around 185.40 during the early European hours on Wednesday.

Here is what you need to know on Wednesday, January 14:

The USD/JPY pair posts a fresh one-and-a-half-year high near 159.45 during the early European trading session on Wednesday. The pair strengthens as the Japanese Yen (JPY) continues to underperform across the board amid political uncertainty in Japan.

The Indian Rupee (INR) trades higher against the US Dollar in the opening session on Wednesday. The USD/INR pair drops to near 90.30 as the Indian Rupee gains on the outcome of trade talks between the United States (US) and India on Tuesday.

The USD/CHF pair posts modest gains around 0.8010 during the early European session on Wednesday. The Greenback strengthens against the Swiss Franc (CHF) after US inflation data that was broadly in line with estimates.

EUR/USD moves little after registering modest losses in the previous session, trading around 1.1650 during the Asian hours on Wednesday. The 14-day Relative Strength Index (RSI) momentum indicator, currently at 40 (below the 50 midline), signals weak momentum without indicating oversold conditions.

USD/CAD remains stronger for the second successive session, trading around 1.3900 during the Asian hours on Wednesday.

AUD/USD holds ground after registering modest losses in the previous session, trading around 0.6680 during the Asian hours on Wednesday.

NZD/USD extends its losses for the second successive day, trading around 0.5730 during the Asian hours on Wednesday.

The General Administration of Customs will publish its data for December on Wednesday at 03.00 GMT. Trade balance is expected to widen to $113.60B in December, compared to $111.68B in the previous reading.

EUR/USD trades with losses on Tuesday even though the latest inflation in the United States was benign, hinting that the Federal Reserve could indeed reduce interest rates as priced in by the financial markets. At the time of writing, the pair trades at 1.1642, down by over 0.20%.

The USD/JPY pair jumps to near 159.15, the highest since July 2024, during the early Asian session on Wednesday. The Japanese Yen (JPY) weakens against the US Dollar (USD) amid concerns about looser fiscal and monetary policy in Japan.

South Korea Unemployment Rate increased to 4% in December from previous 2.7%

The US Dollar (USD) resumed its robust recovery on Tuesday, leaving behind Monday’s pessimism as investors continued to assess the latest US CPI data while gearing up for further inflation readings, Retail Sales and comments from Fed officials.

The Australian Dollar (AUD) trades on the back foot against the US Dollar (USD) on Tuesday, pressured by a firmer Greenback following the release of the latest US inflation figures. At the time of writing, AUD/USD trades around 0.6677, retracing all of the previous day’s gains.

USD/CAD trades around 1.3880 on Tuesday at the time of writing, virtually unchanged on the day, amid mixed macroeconomic signals from the United States (US) and Canada-specific supportive factors.

The Japanese Yen (JPY) weakens further against the US Dollar on Tuesday as the Greenback strengthens following the release of the latest US inflation report. USD/JPY trades around 159.00 at the time of writing, hovering near levels last seen in July 2024.

The British Pound turns negative on the day, yet it remains near its Tuesday’s opening price after the latest inflation report in the US indicates that the Federal Reserve could continue to ease policy in 2026. The GBP/USD trades at 1.3450, down 0.03%.

The Euro (EUR) recovers modestly against the British Pound (GBP) on Tuesday, trimming earlier losses after attracting dip-buying interest near the 0.8650 region.