Its all about the cost

Talk of a Chinese Artificial Intelligence (AI) startup, DeepSeek, gaining attention as a competitor to ChatGPT has been circulating recently. At the World Economic Forum, its R1 model was highlighted as a reason for the U.S. to ramp up AI efforts. Interest surged after major investors, including Marc Andreessen and Yann LeCun, praised DeepSeek’s model as a remarkable breakthrough.

By the weekend, DeepSeek’s AI assistant topped the download charts for iPhones and Google Play, leading to system strain and a brief outage. In response, the company limited signups to mainland China phone numbers, citing attempts to secure its services.

This spike in interest contributed to a nearly $1 trillion decline in U.S. and European tech stocks, with Nvidia losing $589 billion in market value alone. Despite some recovery in after-hours trading, DeepSeek’s popularity is shaking up the tech industry. Founded by Liang Wenfeng, DeepSeek’s cost-effective, open-sourced model challenges the billions spent by competitors on AI advancements.

DeepSeek can process data at an unprecedented scale, making predictions and decisions faster than any human or existing AI. But what truly sets it apart is its cost-effectiveness. Unlike other AI models that require massive computational resources and expensive infrastructure, DeepSeek delivers superior performance at a fraction of the cost.

Trump’s tariff threats

President Donald Trump announced plans to implement tariffs significantly higher than the current 2.5% to reshape U.S. supply chains. 

“I have it in my mind what it’s going to be but I won’t be setting it yet, but it’ll be enough to protect our country,” he stated on Monday night. 

When asked about incoming Treasury Secretary Scott Bessent’s support for a 2.5% starting rate, Trump disagreed, insisting he wants a “much bigger” rate. 

While returning to Washington, D.C., from a Florida speech, Trump pledged tariffs on sectors like semiconductors, pharmaceuticals, steel, copper, and aluminum. He also suggested possible tariffs on automobiles from Canada and Mexico, threatening a 25% levy to begin February 1.

DXY reaches 108.0 again

The US Dollar Index has risen once more as the US president continues to discuss tariffs. The index climbed from 107.0 on Monday to reach 108.0 earlier this morning. However, according to the Time/Price method, the previously positive relationship between time and price appears to have ended, indicating that the upward trend may be over. This current rally could be a short-term movement before downward pressure resumes. For now, the key resistance level is set at 108.50.

EURUSD near positioning area

The Euro climbed to a high of 1.0533 at the beginning of this week but declined earlier today to around 1.0430 due to the threat of tariffs from the US president. However, the negative relationship between time and price that characterized last week’s trading seems to have ended, indicating a potential conclusion to the short-term downtrend. As a result, the current decline can be viewed as a temporary setback before the upside trend resumes. For those looking to buy, the key positioning area for the Euro is between 1.0400 and 1.0360.

Gold rally paused near record high

Gold prices reached a peak of around $2,785 last week, nearing their record high, but have since dropped to as low as $2,730 earlier this week. The rally has now paused, and it is likely to take some time before it resumes. In the meantime, a downward correction is expected to continue, potentially reaching between $2,700 and $2,685 before the upward trend picks up again.

Brent crude price update

Brent Crude has continued to decline after reaching a peak of around $82 two weeks ago, dropping to as low as $76.30 earlier this week. Currently, Brent is trading near a new bullish positioning area, which ranges from $77.50 to $76.00. This support zone is expected to hold, potentially paving the way for a rally back towards $80 and possibly even $82.

Prepared by Nour Hammoury, Chief Market Analyst at SquaredFinancial
Nour is an investor, independent market strategist, and financial advisor. He holds a BA in Finance and Banking Science from Al-Ahliyya Amman University and a CFTe in Economics from the International Federation of Technical Analysts. He has more than 15 years of experience in forex, stocks, and global economic developments, as well as central bank policies and intermarket analysis. He appears regularly on major international TV networks, such as BBC, Al-Jazeera, Al Hurra, CNBC, and Bloomberg, holding open discussions and sharing insights and readings of the markets and trends.

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