Pips for Breakfast: January 4, 2026

Good morning. Grab your coffee and find a seat, because the geopolitical landscape just had a very busy weekend while you were sleeping.

On This Day

In 2019, the market experienced a "flash crash" during the thin liquidity of the Asian session, sending USD/JPY tumbling 400 pips in seconds. It was a stressful morning for anyone who thought they could leave a trade unattended while getting a snack. Traders learned that when the robots get lonely, they get destructive.

The Play

Gold and Safe Havens: The big story is the US military action in Venezuela. When markets open this evening at 5pm EST, expect a massive gap up in safe haven assets. XAU/USD: is the obvious play here, as precious metals were already trending higher to start the year. If you aren't already long, chasing the opening gap is a dangerous game, so wait for the initial panic to settle before looking for a retracement entry.

USD/CAD: This pair is stuck in a tug-of-war. The "US attacks Venezuela" headline is a massive bullish catalyst for oil prices, which usually helps the Loonie. However, Canada's manufacturing index is still underwater for the 11th straight month. The play here is to watch for USD/CAD: to test support levels near 1.3400. If oil stays high, the Loonie might actually find its legs despite the mediocre domestic data.

What's on Deck

The calendar for the Asian session tonight is light on data but heavy on "vibes." Traders will be digesting the final manufacturing PMIs from the UK and Eurozone, which both showed a bit of a New Year's hangover by missing preliminary estimates. The real action starts when the first liquidity hits the screens tonight. Watch EUR/USD: specifically, as the January Effect often triggers fund rebalancing that can move the needle without a specific economic catalyst.

The Data Behind the Patterns View Packages →

Quick Pips

USD/JPY: Look for a flight to quality. If the Venezuela news keeps escalating, the Yen might finally regain its status as the market's favorite bunker.
GBP/USD: The UK manufacturing miss isn't a disaster, but it's enough to keep the Pound from making any hero moves against a strengthening Dollar.
Oil (WTI): Expect a volatile open. Venezuela is a major player in the oil world, and a captured president tends to complicate supply chains.

Why Your P&L Cares

The January Effect: is more than just a clever name for a gym membership spike. It's when institutional desks come back from vacation, realize they hate their current positions, and hit the reset button. This causes a natural surge in volatility that usually centers around EUR/USD.

History shows us that the first full week of January is a graveyard for traders who assume the low-volume drift of December will continue. In 2015, the SNB decided currency floors were overrated and deleted the EUR/CHF peg, proving that early January is the prime time for "unthinkable" events. With the US military currently active in South America, the "unthinkable" is already happening. Your stop losses shouldn't be optional suggestions this week.

The Bottom Line

The world is messy, oil is jumpy, and the Dollar is looking like the only adult in the room. This evening's open will be a test of who stayed sober over the weekend. Now go make some pips. You're fed.