South Korea Races to Avert 25% US Tariff Threat

BNB (BNB), a Binance-tied cryptocurrency, may plunge by another 15% in February, continuing its slide from the October top above $1,300 and now struggling to hold above the $750 support level.

BNB/USD daily price chart. Source: TradingView

Let's examine the reasons behind my bearish outlook.

Macro Risks: AI Bubble, Fed Chair Nomination is Bad For BNB

Markets have started pricing a sharper pullback in AI-linked equities after a crowded rally, and crypto has tracked that risk-off move.

A Goldman Sachs basket of US software stocks fell 6% on Tuesday, marking its biggest one-day drop since April's tariff-driven selloff. The tech-heavy Nasdaq-100 slipped 1.6%.

BNB/USD vs. Nasdaq Composite daily performance chart. Source: TradingView

BNB fell alongside, showing how closely cryptocurrencies have been tracking the tech sector's gains and losses.

AI trades have dominated US equities for the past three years. Still, more investors now see that rally, driven by the "Magnificent Seven" megacaps, starting to fade as leadership broadens across the market.

In 2026, that shift has become clearer, with value stocks sharply outperforming growth. I therefore expect further downside in these riskier assets, as gold (XAU) and silver (XAG) show signs of recovery.

XAU/USD vs. XAG/USD daily price chart. Source: TradingView

That's a bid for protection from equities' overvaluations, which will likely hurt BNB.

At the same time, the nomination of Kevin Warsh as the next Fed chairman has pushed traders to reassess the "higher-for-longer" path for rates. Higher expected rates usually pressure liquidity-sensitive assets like BNB first.

Bad Press For Binance is Not Helping Either

BNB has also faced coin-specific pressure from negative coverage tied to Binance and co-founder Changpeng Zhao.

The latest wave centers on allegations of market manipulation linked to '10/10,' with claims circulating that Binance-linked activity amplified a price crash on Oct. 10 that triggered roughly $19 billion in liquidations across the crypto market.

Binance and CZ have pushed back on manipulation claims previously, and no new confirmed legal determination has emerged yet. Still, the headlines have weighed on sentiment during an already fragile BNB market.

BNB Technical Analysis: Bear Pennant Puts a 15% Dip Back on the Table

On the 4-hour chart, BNB is carving a bear pennant: a sharp drop followed by tight, contracting consolidation. That structure often resolves in the direction of the prior downside move.

BNB/USD four-hour price chart. Source: TradingView

A breakdown from the pennant's lower trendline would keep the downtrend intact and open the door to a move toward the mid-$650s, roughly another 15% lower from current levels.

The nearby moving averages sit above the BNB price, which adds overhead resistance if bulls try to reclaim momentum.

Moreover, BNB cost-basis bands keep the downside pressure intact.

Most buyers from the last 12 months are sitting on losses, according to Glassnode data. That makes quick selloffs more likely if BNB tries to bounce, because many holders will use rallies to reduce damage.

BNB realized price by age vs. price. Source: Glassnode

Buyers from around 12 months ago sit close to break-even. That creates another layer of selling if the price climbs back toward their average entry level.

Overall, my bias is strongly bearish toward BNB.

Source: FX Empire

Key Highlights

GBP/USD Technical Analysis

The British Pound rallied above 1.3650 and 1.3750 against the US Dollar. GBP/USD even climbed above 1.3850 before the bears appeared.

Looking at the 4-hour chart, the pair traded as high as 1.3869 and recently saw a downside correction. There was a drop below the 1.3800 and 1.3750 levels. The pair declined below the 38.2% Fib retracement level of the upward move from the 1.3342 swing low to the 1.3869 high.

It found bids near the 1.3640 zone. Immediate support could be 1.3645. The first major area for the bulls might be near 1.3600 or the 50% Fib retracement level of the upward move from the 1.3342 swing low to the 1.3869 high.

There is also a declining channel or a possible bullish flag forming with support at 1.3600. The main support sits at 1.3550 and the 100 simple moving average (red, 4-hour), below which the pair might test the 200 simple moving average (green, 4-hour).

If there is a fresh increase, the pair could face resistance near 1.3750. The first key hurdle could be 1.3800. The next stop for the bulls might be 1.3860, where they could face hurdles. A close above 1.3860 could open the doors for more gains. In the stated case, the bulls could aim for a move toward 1.4000.

Looking at EUR/USD, the pair corrected some gains and tested the 1.1780 support. It is now stuck in a range and facing hurdles near 1.1850.

Upcoming Key Economic Events:

Source: Titan FX

Yen selloff returned to focus in Asian trading today as investors positioned ahead of Japan's snap election this weekend. continues to enjoy solid public support. Although recent polls show a modest dip in approval, her standing remains strong enough to anchor expectations of electoral success.

More importantly for markets, her ruling Liberal Democratic Party appears on track to comfortably exceed the 233-seat threshold needed for a single-party majority in the House of Representatives. A new survey by Asahi Shimbun, conducted between January 31 and February 1, suggests that with coalition partner Nippon Ishin, the ruling bloc could secure more than 300 of the 465 seats at stake in a landslide outcome.

Voting on February 8 will determine the next lower house, but markets are already pricing in the implications of a decisive LDP victory rather than waiting for confirmation. A commanding victory would strengthen Takaichi's hand in pursuing fiscal stimulus. Investors fear that expanded spending plans would worsen Japan's already heavy debt load, pressuring government bonds and undermining Yen.

In the US, attention briefly shifted away from shutdown risk after President Donald Trump signed a spending deal into law on Tuesday, ending a partial government shutdown. The legislation ensures full-year federal funding through September, with the exception of the Department of Homeland Security, which receives only a two-week extension as lawmakers debate immigration enforcement measures. The deal passed the Senate with broad bipartisan backing and scraped through the House by a narrow margin, removing a near-term tail risk for markets.

Elsewhere, oil prices rebounded as geopolitical risks intensified. Markets reacted after the US military said it had shot down an Iranian drone that approached the Abraham Lincoln in the Arabian Sea. The incident has raised concerns that efforts to de-escalate US–Iran tensions could falter. Oil markets are rapidly repricing geopolitical risk as the perceived probability of direct US action increases.

For the week so far, Yen sits firmly at the bottom of the FX performance table, followed by Swiss Franc and Euro. Aussie remains the strongest performer, trailed by Kiwi and Sterling. Dollar and Loonie trade in the middle of the pack.

In Asia, at the time of writing, Nikkei is down -0.92%. Hong Kong HSI is down -0.21%. China Shanghai SSE is up 0.12%. Singapore Strait Times is up 0.10%. Japan 10-year JGB yield is down -0.009 at 2.251. Overnight, DOW fell -0.34%. S&P 500 fell -0.84%. NASDAQ fell -1.43%. 10-year yield fell -0.001 to 4.274.

New Zealand jobs grow 0.5% in Q4, unemployment ticks to decade-high

New Zealand's labor market delivered mixed signals in Q4. Employment rose 0.5% qoq, beating expectations for a 0.3% gain, pointing to continued job creation. Employment rate edged up to 66.7% from 66.6%, reinforcing the view that labor demand remains resilient.

At the same time, unemployment rate climbed to 5.4% from 5.3%, above expectations and the highest since the September 2015 quarter. The rise was accompanied by an increase in the labor force participation rate to 70.5% from 70.3%, suggesting that more people are entering or re-entering the job market, which is adding to slack even as hiring continues.

Wage pressures remained contained. The labor cost index rose 2.0% yoy, with private sector wages up 2.0% and public sector wages up 2.2%. The combination of steady employment growth, rising participation, and moderate wage inflation points to a labor market that is still cooling gradually.

NZD/USD in range awaits upside breakout, as RBNZ outlook holds after job data

NZD/USD is trading steadily in range after New Zealand's Q4 employment data delivered few surprises for policy expectations. The mixed report offered early hints of stabilization but stopped well short of forcing a rethink at the RBNZ. Interest rate is expected to remain on hold at 2.25% for most of the year.

The next policy move is still expected to be a hike rather than another cut, but timing remains highly uncertain. Whether that comes late in 2026 or slips into early 2027 will depend on how growth, inflation, and labor market slack evolve. For now, it is too early to draw firm conclusions.

Technically, NZD/USD continues to consolidate below the 0.6092 short-term top. While a deeper pullback cannot be ruled out, downside should be contained well above 0.5852 resistance turned support. Current rise from 0.5580 is seen as the third leg of the pattern from 0.5484 (2025 low). Above 0.6092 should send NZD/USD through 0.6119 (2025 high) to 100% projection of 0.5484 to 0.6119 from 0.5580 at 0.6215.

Longer term, the 0.62 resistance area is decisive. Sitting near 38.2% retracement of 0.7463 (2021) to 0.5484 at 0.6240, it will define whether the recovery from 0.5484 evolves into a broader bullish trend reversal or stalls as a corrective rally within a dominant downtrend.

Japan PMI composite finalized at 53.1, broadening growth at start of 2026

Japan's PMI Services was finalized at 53.7 in January, up from December's 51.6. PMI Composite rose to 53.1 from 51.1. The data point to a clear acceleration in private-sector activity at the start of 2026, with growth firmly back above expansionary levels.

According to Annabel Fiddes of S&P Global Market Intelligence, business activity rebounded at the fastest pace since May 2023. Services remained the primary growth engine, posting the strongest rise in activity in nearly a year, while manufacturing output also returned to growth for the first time since last June.

The surveys suggest the recovery is becoming more broad-based. Demand improved across both manufacturing and services simultaneously for the first time in more than two-and-a-half years, a notable shift after a prolonged period of uneven momentum. Employment was another bright spot, with firms adding staff across both sectors to expand capacity in response to stronger demand.

Cost pressures eased at the start of the year, with input prices rising at their slowest pace in almost two years. However, companies raised selling prices more aggressively, indicating efforts to rebuild margins.

GBP/JPY Daily Outlook

Daily Pivots: (S1) 211.69; (P) 212.29; (R1) 213.28;

Immediate focus is back on 214.83 as GBP/JPY's rebound accelerates higher. Firm break there will resume larger up trend to 220.90 projection level next. Rejection by 214.83 will bring more consolidations first. But in case of another dip, downside should be contained by 55 D EMA (now at 209.70) to bring rally resumption.

In the bigger picture, up trend from 123.94 (2020 low) is in progress. Next target is 61.8% projection of 148.93 (2022 low) to 208.09 (2024 high) from 184.35 at 220.90. On the downside, break of 205.30 resistance turned support is needed to indicate medium term topping. Otherwise, outlook will stay bullish even in case of deep pullback.

Source: ACTIONFOREX

The gap in borrowing costs between Southern European governments and Germany has shrunk to its narrowest point since the 2008 Lehman Brothers collapse. This rally, driven by expectations of European Central Bank interest rate cuts, has compressed yield spreads to levels not seen in over a decade.

However, investors and analysts are questioning how much further this trend can run. Without deeper institutional reforms and with new geopolitical pressures forcing a rethink on spending, the era of easy gains may be coming to an end.

The Great Compression: Why Spreads Are Shrinking

Since late 2023, the yield premium that countries like Italy, Spain, and Portugal pay over ultra-safe German Bunds has steadily declined. The catalyst was the growing certainty that the ECB was preparing to lower interest rates.

This has brought spreads to historically tight levels:

• Italy: around 53 basis points (bps)

• Spain: around 37 bps

• Portugal: around 24 bps

• Greece: around 43 bps

While impressive, these levels are still wider than in 2007, before the global financial crisis when debt loads were much smaller. Back then, Italy's spread was about 22 bps, while Spain and Portugal were near 5 bps.

Figure 1: Yield spreads for Italy, Spain, and Portugal over German Bunds have compressed dramatically since the 2011-2012 sovereign debt crisis, recently hitting their lowest points since before 2008.

Roadblocks to a Unified Bond Market

Market participants believe there's limited room for spreads to fall further toward a unified point. Such a convergence would be a critical step in creating a deeper, more liquid European bond market and strengthening the euro's global role.

Konstantin Veit, a portfolio manager at PIMCO, notes that the pre-crisis optimism was fueled by a different dynamic. "It wasn't always about fundamentals," he said, explaining that spreads were near zero "because there was a hope that over time, the monetary union would evolve into a fully-fledged fiscal and political union."

That hope remains unfulfilled. "We remain constructive on peripheral spreads, but compression potential might be limited without improvements on the institutional side," Veit added. Key reforms include completing the banking and capital markets unions, establishing a shared fiscal capacity, and enabling common debt issuance—steps ECB President Christine Lagarde has identified as essential for the euro.

Geopolitics and Defense Spending Complicate the Picture

The strategic landscape is also shifting. The United States, under President Donald Trump, has become a less predictable partner on trade and security, insisting that Europe must shoulder more of its own defense costs.

In response, Eurozone governments, led by Germany, are planning significant increases in borrowing to fund military spending. This new fiscal pressure adds another layer of complexity to the bond market outlook. Even short-lived political tremors, like Trump's brief threat in January to take over Greenland, caused spreads to temporarily widen before tightening again.

Will Policy and Politics Sustain the Rally?

ECB Easing and Joint Debt Hopes

Analysts widely expect the ECB to deliver another rate cut this year, a move that should help keep yield spreads stable.

Figure 2: The ESTR forward curve shows market pricing for future ECB interest rates, with traders seeing less than a 50% probability of a rate cut by 2026.

Furthermore, the EU’s pandemic-era Next Generation fund, combined with the push for higher military spending, has fueled expectations for more joint debt issuance. This prospect has supported the bonds of Southern European nations, an effect analysts believe could last through 2027.

The Hurdle to Deeper Integration

Despite these tailwinds, many economists are skeptical about greater joint issuance, primarily due to Germany's opposition.

"I think more integration will only come in a stress scenario, and we're not yet in a stress scenario," said Carsten Brzeski, global head of macro research at ING. He warned that debt-to-GDP ratios in Southern Europe could rise if the economy slows. "We can enjoy the good place, but we should be cautious in deriving any longer-term conclusions from the current state."

Italy's Shifting Role and Future Risks

The political calculus has also changed. Italy, long considered a source of instability, has become one of Europe's more politically stable countries. Meanwhile, German politics has grown more volatile, partly due to the rise of far-right, eurosceptic parties like Alternative für Deutschland.

"Politics in Italy or other Southern European countries is the part I'm least concerned about," said Rohan Khanna, head of euro rates strategy at Barclays. "What I'm more concerned about is how the market thinks about Italy in a post-NGEU world."

Barclays anticipates that spreads will trade in a tight range, concluding that there is less room for Italian spreads to fall compared to those of other Southern European countries.

Figure 3: The Italian-German yield spread and the STOXX 600 index have often moved in tandem, reflecting how tightening credit risk can align with broader market optimism.

Poland's central bank faces a difficult interest rate decision this week, as stronger-than-expected economic growth has left economists sharply divided on the next policy move.

A Bloomberg survey reveals the split: while a majority of 19 out of 32 economists expect the Monetary Policy Council (MPC) to hold its key rate at 4% for a second consecutive month, 13 are betting on a quarter-point cut. This represents the largest minority calling for a rate reduction since the current easing cycle began last May.

Surprise GDP Data Complicates Rate Cuts

The primary factor fueling the uncertainty is recent economic data. A report last week showed that Poland's gross domestic product expanded by 3.6% in 2025, surpassing forecasts. This robust performance could give policymakers a reason to delay further rate cuts.

Compounding the difficulty, the central bank will make its decision without the latest consumer price figures. Publication of the data has been postponed due to annual updates to the inflation basket.

"The MPC may prefer to wait for the March macroeconomic projection, particularly given that recently published GDP data confirmed a strong finish last year," noted Cezary Chrapek, an economist at Bank Millennium SA.

Roman Ziruk, an analyst at Ebury Technology Ltd., described the upcoming decision as "one of the hardest to call in recent months," citing the short three-week interval since the January meeting and the absence of fresh inflation numbers.

Central Bank Officials Also Divided

The division isn't limited to external analysts; members of the rate-setting committee have also sent conflicting signals.

After cutting rates by a total of 175 basis points in 2025, the path forward is unclear.

• MPC member Ludwik Kotecki suggested that the bank could resume rate cuts this month.

• In contrast, newly appointed policymaker Marcin Zarzecki indicated that further easing is not guaranteed and might only happen later.

Central bank Governor Adam Glapinski, who leads the 10-member panel, did not rule out a rate cut in February. However, he also stated there was little room left for more monetary easing throughout 2026.

The central bank is expected to announce its decision on Wednesday afternoon, with Governor Glapinski scheduled to hold a press conference at 3 p.m. in Warsaw on Thursday.

Fiscal Fears Trigger a "Truss Shock" in JGBs

Japan’s government bond (JGB) market was thrown into turmoil last month, triggering a selloff that echoed across global debt markets. The catalyst was a snap election call by Prime Minister Sanae Takaichi, who pledged to suspend a food levy for two years.

This move immediately stoked fears of increased fiscal spending, which would add to Japan's already enormous national debt. In a rout reminiscent of the 2022 "Truss" shock in the UK, when unfunded tax cuts caused a collapse in British gilts, yields on super-long JGBs surged to record highs.

With Takaichi's party poised for a potential landslide victory this Sunday, bond investors remain on high alert. A win would give her a mandate for an expansionary fiscal policy, intensifying concerns over the country's deteriorating finances.

Bank of Japan Remains on the Sidelines

While the market volatility has alarmed the Bank of Japan (BOJ), the central bank is unwilling to step in, according to three sources familiar with its thinking. At this stage, the risks associated with market intervention are seen as outweighing any potential rewards.

Japanese policymakers are caught in a difficult bind. They need to prevent a chaotic spike in bond yields while also trying to support a weak yen through threats of currency intervention. Any attempt by the BOJ to suppress long-term interest rates would directly conflict with its strategy of gradual rate hikes, a policy intended to tame inflation driven by the weak currency.

The tension was evident at the BOJ's policy meeting on January 22-23. A summary of opinions showed one board member calling for vigilance against a "one-sided steepening" of the yield curve, while another warned of high volatility in super-long JGBs.

BOJ Governor Kazuo Ueda also escalated his warnings, describing the recent pace of yield increases as "quite fast" and reiterating the bank's readiness to act only under exceptional circumstances.

A High Bar for Bond Market Intervention

Despite a temporary calm returning to markets, investors are focused on whether the BOJ will intervene if another rout occurs after the election. However, the sources confirmed that recent market moves do not meet the central bank's very high threshold for action.

The BOJ has several tools it could deploy, including:

• Conducting unscheduled, emergency bond-buying operations.

• Adjusting the mix of bonds it purchases under its quarterly plan.

• Suspending or overhauling its bond taper program, which began in 2024.

Intervention would only be considered during a panic selloff driven by speculation or a destabilizing event that forces the central bank to act as the market maker of last resort. Sources say neither of these scenarios has yet materialized. Any action would also be temporary, designed to avoid signaling a new price target for bonds.

"If bonds are being sold on speculative trading, the BOJ could see scope to intervene. But it's clear the recent rise in yields reflects market concern over Japan's fiscal policy," said Takahide Kiuchi, a former BOJ board member. "It's the government's job, not the BOJ's, to deal with the consequences of market distrust over fiscal policy."

Governor Ueda has echoed this sentiment, stating that the BOJ and the government must each play their designated roles, placing the responsibility for managing fiscal-policy-induced yield rises squarely on the government.

The High Costs of Stepping In

The BOJ's reluctance is rooted in the significant costs of intervention. Ramping up bond purchases would undo its efforts since 2024 to gradually shrink its massive balance sheet.

More critically, intervening in the bond market would risk dragging the BOJ back toward the yield-curve-control policy it abandoned in 2024. Analysts warn this could trigger a fresh wave of yen selling, as markets would interpret it as a return to monetary easing. A weak yen is already a major headache for policymakers because it drives up the cost of imports and fuels inflation.

"Trying to push down bond yields would send a conflicting message to markets at a time the BOJ is raising its short-term policy rate," said Mari Iwashita, an executive rates strategist at Nomura Securities. She added that it would also risk the BOJ's credibility by stoking fears it is directly financing government debt.

Some analysts believe the current market calm could be temporary. With investor concern over Japan's fiscal health unlikely to fade, the JGB market remains vulnerable to sudden and sharp selloffs. Domestic life insurers, historically stable buyers of super-long JGBs, are now pulling back and may even become sellers before the fiscal year ends in March.

"I'm sure policymakers are extremely nervous about the bond market now," said former BOJ official Nobuyasu Atago. "The BOJ would need to act if markets go into a free fall, but stepping in at the wrong moment could amplify panic and make things worse. Either way, it would be an extremely hard decision."