“Trade Tension” Continues to Dominate the Market

Ultima Markets Daily Market Insights – January 20, 2026

US traders are returning from the long holiday weekend to a geopolitical storm. The “Greenland Trade Dispute” has escalated rapidly over the last 48 hours, morphing from a diplomatic disagreement into a tangible economic threat.

As Wall Street reopens today, the market is bracing for a repricing of risk assets. The S&P 500 futures are pointing lower, while safe-haven assets remain the preferred shelters against the growing fracture in the US-EU alliance.

US-EU Tensions: The “Retaliation” Phase

While the US was closed yesterday, Europe was scrambling. The narrative has shifted from the US threat of tariffs to the EU’s preparation for retaliation. The US deadline (Feb 1st for 10% tariffs) is creating immediate uncertainty for global supply chains.

In the European Union, overnight reports suggest Brussels is finalizing a list of “asymmetric countermeasures” targeting US tech giants (via “Digital Services Taxes”) and agricultural exports. This confirms that the EU will not back down, increasing the likelihood of a tit-for-tat trade war.

US President Trump, meanwhile, reiterated that he will “100%” follow through on his tariff threats if no negotiation on the “Greenland Trade Dispute” is reached by the deadline.

Market Impact: Major European stock indices (DAX/CAC) slid yesterday, and US futures are catching down today. The fear is that tariffs will once again reignite a new trade war and inflation just as the Fed was considering rate cuts.

Risk Aversion Dominates

Today’s session is likely to be defined by “Risk Aversion” as full liquidity returns to the market with the U.S. back from its long-weekend holiday. With the current market outlook and rising trade tensions, the “flight to safety” may continue to dominate trading today.

• Gold touched a record $4,690 yesterday on thin volume. Today, watch for “real money” buying. If the US opening bell brings fresh tariff headlines, Gold could target $4,700 on risk-aversion flows.
• Meanwhile, the S&P 500 is technically vulnerable, alongside the Nasdaq 100 and Dow Jones Index, especially as they threaten to break down from major support levels near record highs.

S&P500 Technical Outlook

SP500, Daily Chart | Ultima Markets MT5

The “Rising Wedge” pattern identified yesterday is under pressure. A break below 6,900 today would confirm a short-term correction is underway, driven by the realization that corporate earnings could be hit by new trade barriers.

NAS100 Technical Outlook

NAS100, Daily Chart | Ultima Markets MT5

Over on the NAS100, the recent converging triangle has also come under pressure. A break below the 25,000 key psychological level could add pressure to the breakdown of the index.

Outlook: The trade tension and fear that tariffs will ignite inflation—complicating the Fed’s easing path—could all contribute to a negative macro backdrop for the US Equities market.

Gold Technical Outlook

XAU/USD, H2 Chart | Ultima Markets MT5

For the safe-haven asset side, Gold continues to hover near record highs after yesterday’s opening gap. Watch the 4640 – 4690 zone, which is likely to determine the next move. For now, the outlook would still favor a break above 4700 if we see a breakout of the current range.

What to Watch Today

• US Market Reopen (9:30 AM ET): This is the moment of truth. Watch the US Session opening. If the S&P 500 slides lower and confirms a break of the 6,900 support, it can be identified that “Risk-Off” sentiment is dominant.
• EU Trade Commissioner Comments: Any official announcement regarding the “Anti-Coercion Instrument” will trigger volatility in global equity markets.
• US Earnings: Heavyweight Netflix will release earnings reports today; this may act as another market catalyst for the equities market, potentially increasing volatility.

Disclaimer

Comments, news, research, analysis, price, and all information contained in the article only serve as general information for readers and do not suggest any advice. Ultima Markets has taken reasonable measures to provide up-to-date information, but cannot guarantee accuracy, and may modify without notice. Ultima Markets will not be responsible for any loss incurred due to the application of the information provided.