Northern Ireland deal reached.

US durable goods orders declined 4.5% for January after a revised 5.1% increase the previous month and slightly weaker than consensus forecasts. Underlying orders increased 0.7% after a 0.4% decline the previous month.

Fed Governor Jefferson rejected the arguments for raising the inflation target to above 2%. On the short-term outlook, he commented that recent data suggested that wage inflation pressure was easing while the outlook for core services inflation is uncertain.

Wall Street equities managed to secure a tentative recovery on Tuesday and risk appetite was slightly more settled, but there were still important tensions and unease over global monetary policies. The dollar retreated slightly, but recovered from intra-day lows.

In a press conference with EU Commission President von der Leyen, Prime Minister Sunak confirmed that there was a deal on the Northern Ireland protocol with a new Windsor Framework. There will be hopes of a significant easing of trade friction.

There will be month-end position adjustment on Tuesday with the potential for choppy trading across currency markets, especially around the London fix.

The Euro managed to avoid further selling pressure on Monday. The dollar was subjected to a limited correction after Friday’s gains. EUR/USD moved above the 1.0600 level with highs near 1.0620 before retreating again. EUR/USD traded around 1.0585 on Tuesday.

The dollar edged lower amid a small decline in bond yields, but selling was limited with little in the way of yen support. USD/JPY found support below 136.00 and settled around 136.30.

The Swiss franc overall was little changed with moves dominated by global trends. EUR/CHF settled around 0.9930 with USD/CHF dipping to lows below 0.9350 before a recovery to 0.9370.

Sterling posted net gains amid a weaker dollar and recovery in equities. The UK-EU trade deal also helped underpin confidence. GBP/USD moved above the 1.2000 level to trade around 1.2040. GBP/EUR jumped to test the 1.1385 level and traded just below this level on Tuesday.

Commodity currencies secured a tentative recovery as equities moved higher. AUD/USD found support at 0.6700 and edged higher to 0.6730. USD/CAD retreated to 1.3575 before settling around 1.3585.

Economic Calendar