A New World Order or TACO order? – North American mid-week Market update

• Mid-Week review where we dive into the major developments for North American and global traders
• US President Trump creates panic by moving towards acquiring Greenland in his America First policy – EU-US Tensions rise to new highs but Trump de-escalates
• The US Dollar tumbles as the World Economic Forum is happening – Presidents and Prime Ministers make many mentions of a new World Order

Log in to our mid-week North American Markets overview, where we examine the current themes in North America and provide an overview of indices and currency performances.

Have we entered the New World Order?

That's the question, which got extensively and intensely covered by Global Leaders in their speeches at the ongoing World Economic Forum (WEF) in Davos, Switzerland.

President Trump awakened Prime Ministers and Presidents around the world, particularly in the OECD, with his latest threats to acquire Greenland, a "national interest" that has remained so for centuries. (Note: Trump is backing up from his words in the Latest TACO)

Read More:Breaking: TACO Time – US President Trump de-escalates regarding Greenland, Stocks explode

Having a defense line in the North Pole, anticipating new trade routes as Global Warming continues, and extracting precious materials (Rare earths and more) are decent reasons for the US to entertain such desires.

But the issue here is one of sovereignty.

Economists and strategists were already addressing the question as Trump began to lead the polls in September 2024.

After the operation in Venezuela, the doors opened wide for outside interventions.

The thing is, when it's far from us, it's not such a big deal (Iraq in 2003, Venezuela today). It's particularly the case when OECD interests don't get actively compromised.

The bigger issue is when a friend, an ally, or a sovereign territory is threatened. Things change, pacts and promises break, and the situation gets all over the place.

The immediate reactions in Markets at the Globex open on Sunday were major down gaps in Equities, the US Dollar, and risk assets. At the same time, Gold kept shining amid the geopolitical turmoil – Note: These flows are now sharply reversing after Trump's comments!

This start to 2026 is simply the realization of most of what was feared in 2025.

A new world order where polarized geographic powers will dominate is not far off – it's already happening with Russia and China, and now the US could be heading in this direction.

Canada's PM, Mark Carney, actually gave a beautiful speech on that aspect, which I strongly encourage you all to listen to – "The Rules-Based Order is fading".

America First doesn't mean it's going to be about the Mainland US only, as was said in our past week's Mid-Week Recap.

Today, as Trump arrived in Davos, he calmed the tone slightly by saying he won't use force to acquire Greenland, but he still did not back down entirely from his words.

TACO or not? Traders are undecided about today's Stock market rebound.

EDIT: As I was about to publish this, the TACO officially got confirmed.

Trump is taking out the latest tariffs announced for February 1 through a Truth Social Post, Stocks are exploding higher.

Let's dive right into our Mid-Week North American Markets recap.

Read More:

• Stocks pump but doubts remain – Dow Jones and US Stock Index Outlook
• US President Trump speaks at the Davos World Economic Forum

With the latest TACO, the tone is shifting fast from bearish worries to "actually nothing happened".

The ongoing rebound is gigantic and most Stock Indexes have paired their weekly losses that extended all the way to -3% compared to last Wednesday.

The rest is to see if the positive sentiment holds as uncertainty still lingers.

The Dollar Index is showing a sudden rise as Trump backs off from his words.

Bouncing from the 200-Period Moving Average, the Dollar is now bouncing against its major FX peers.

Imminently going to test the 99.00 Level which will hold as a key indicator, as it also combines with its 50-period MA.

• Breaking back above should lead to a further rebound in the USD, continuing the upside path it was taking in early 2026.
• Rejecting indicates further doubts from Market participants regarding the unstable words from the US President.

Levels of interest for the Dollar Index:

Resistance Levels

• Testing Upper bound of 98.80 Pivot Zone
• 4H 40-period MA 99.00
• Immediate Resistance 99.25 to 99.50
• 100.00 to 100.50 Main Resistance Zone
• 100.376 November highs

Support Levels

• 98.25 Weekly lows
• 98.00 Key support (+/- 100 pips)
• December Lows 97.75
• 97.40 to 97.80 August Range Support
• 2025 Lows 96.40 to 96.80 Support

Except for the Pound which got consistently offered throughout the past week following its several dovish data points, it is difficult to see what direction the US Dollar is taking against its major peers.

Weakening strongly in this weekly open, the recent switch in tone from the President largely changes the trend – My view is that the Dollar could bounce somewhat before holding rangebound conditions until the situation gets clear.

On the other hand, Antipodean currencies (AUD and NZD) really are shining from their externalities to such ongoing developments.

As implied by their surnames, they are really far from the tense geopolitical action.

Except against the USD and GBP, weakest currencies among the G7 FX, the CAD is struggling to hold strong.

Mark Carney's speech could potentially generate some strength for the Loonie but Canadian data will first have to consistently bounce back.

USD/CAD corrected strongly throughout the beginning of the week but as Trump comments preceded a decent rebound in the US Dollar, Bulls have appeared at the recent test of the 1.38 Support.

If the rally extends above the 50-period 4H MA (1.3876), look for a test of the past week highs (1.3930)

My view is one of a more rangebound action between 1.37 to 1.39 for the time being.

• Any breakout beyond these boundaries will require further analysis.

Levels of interest for USD/CAD:

Resistance Levels

• 4H 50-MA at 1.3876
• 50-Day MA and psychological level 1.39
• Past Week highs 1.3930
• 1.40 to 1.4050 Key Resistance

Support Levels

• 200-Day MA 1.38425
• 1.38 Pivotal Support (current bounce)
• 1.3787 Daily Lows
• Major Support Zone 1.3650 to 1.37
• December 26 lows 1.36430
• 1.3550 Main 2025 Support

Stay in touch with the latest geopolitical developments, as things could still get very spicy.

Keep a close eyes on the World Economic Forum and their speeches – And don't forget about Iran.

I think the latest developments with Greenland could really just be to create diversions from Iran.

Safe Trades!

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