Trump's Dollar Comments, Fed Decision Day, and Big Tech Earnings: Market Impact Analysis

The market events of January 28, 2026, represent a convergence of several significant financial developments that collectively shape the investment landscape for the weeks and months ahead. President Trump’s comments on the dollar, the anticipated Fed decision, ASML’s robust semiconductor earnings, and Meta’s escalating AI infrastructure investments form an interconnected narrative about the evolving priorities of fiscal and monetary policy alongside corporate capital allocation strategies.

President Trump’s assertion that the dollar is “great” as it continues to decline represents a notable shift in U.S. currency policy rhetoric. The Dollar Index’s decline of 1.2% to 95.57—its lowest level since February 2022—reflects market participants’ interpretation of these comments as effectively authorizing further dollar weakness [1][2]. The dollar has declined 2.1% year-to-date and more than 9% over the course of 2025, suggesting a sustained shift in market sentiment rather than a temporary fluctuation [1][2]. The USD/JPY pair’s drop below 153, down from approximately 159.25 just the prior week, indicates particularly pronounced weakness against the yen, which carries implications for potential Japanese intervention and broader Asian currency dynamics [1].

The currency movements have triggered significant repricing in interest rate expectations. Fed funds futures now price in 50 basis points of rate cuts by year-end, up from 45 basis points previously, reflecting market expectations that a weaker dollar may create conditions conducive to more accommodative monetary policy [1]. Gold’s surge above $5,300 per ounce represents a record high and signals investor concerns about currency debasement and seeks store-of-value assets amid dollar weakness [1].

The Fed’s first policy decision of 2026 arrives at a critical juncture, with the central bank expected to hold rates steady while the market increasingly discounts future easing. The December dot-plot projection of only one 25-basis-point cut highlights the disconnect between Fed guidance and market pricing, with Fed funds futures now implying significantly more aggressive easing [1]. The division among FOMC members—with four projecting unchanged rates, four anticipating one cut, and four expecting two cuts—indicates no clear consensus, adding uncertainty to the policy outlook [1].

Trump’s statement that he is “very close to naming my new Fed Chair” introduces an additional layer of complexity to the Fed decision’s market impact [1]. Historically, Fed Chair announcements have significant implications for the policy trajectory, and Trump’s stated desire for “sharply” falling interest rates under new leadership suggests potential divergence from the current policy stance. This leadership transition uncertainty may diminish the market’s attention to Powell’s remarks in favor of signals about the successor’s policy orientation.

ASML’s fourth-quarter 2025 results demonstrate the continued strength in semiconductor capital equipment demand, particularly AI-related applications. The company reported €9.7 billion in net sales for Q4 2025, exceeding market expectations, with full-year sales reaching €32.7 billion [3]. The company’s 2026 outlook of €34-39 billion in sales represents 4-19% growth, with first-quarter 2026 guidance of €8.2-8.9 billion indicating a strong start to the year [3].

The record Q4 bookings of €13.2 billion, including €7.4 billion in extreme ultraviolet (EUV) systems, and a backlog of €38.8 billion provide substantial revenue visibility for ASML [3]. CEO Christophe Fouquet’s characterization of a “notably more positive assessment of medium-term market situation, primarily based on more robust expectations of sustainability of AI-related demand” underscores the structural growth drivers supporting semiconductor equipment spending [3]. The company’s shareholder return initiatives, including a new €12 billion share buyback program and a 17% year-over-year dividend increase to €7.50 per share, reflect confidence in sustained cash generation capacity [3].

Meta’s capital expenditure trajectory reveals the extraordinary scale of AI infrastructure investment among hyperscale technology companies. The progression from $37 billion in 2024 to $70-72 billion in 2025, with 2026 expectations exceeding $110-125 billion, represents nearly a fourfold increase in two years [4][5]. Bank of America’s projection of 2026 expense growth of 35% or higher highlights the earnings pressure these investments create, with EPS growth expected to be only approximately 2% despite anticipated 21% revenue growth [4].

The broader hyperscaler AI capital expenditure context shows total spending expected to exceed $470 billion in 2026, up from $350 billion in 2025, indicating that Meta’s spending plans are consistent with industry-wide trends rather than company-specific decisions [5]. However, concerns about LLaMA model performance having “under-delivered” relative to expectations introduce questions about the return on investment from these massive capital commitments [4]. Meta’s response—building tens of gigawatts of data center capacity and signing 6.6 gigawatts of new energy deals—demonstrates the infrastructure requirements underlying AI compute ambitions [4].

The simultaneous occurrence of dollar weakness, Fed decision uncertainty, strong semiconductor demand, and escalating AI spending reveals several interconnected themes that investors should consider.

The dollar’s decline represents more than a currency movement—it signals a potential reordering of policy priorities. Trump’s explicit endorsement of dollar weakness for export competitiveness purposes suggests the administration may prioritize trade benefits over traditional strong-dollar advocacy. This policy shift could have lasting implications for currency markets, multinational corporate earnings translation, and global capital flows. The combination of dollar weakness and rising gold prices indicates that some market participants view the currency trajectory as structurally significant rather than tactically temporary.

The Fed’s dilemma has intensified as political pressure and market expectations diverge. With Trump signaling preference for lower rates and approaching the nomination of a new Fed Chair, the current FOMC’s guidance may carry diminished forward-looking value. Markets may increasingly discount current Fed projections in favor of anticipated policy under new leadership, creating potential for volatility around both the Fed decision and subsequent leadership announcement.

ASML’s robust results and order book suggest that despite near-term uncertainties, the semiconductor equipment cycle remains firmly positive. The company’s explicit attribution of improved outlook to “sustainability of AI-related demand” provides validation for the AI infrastructure investment thesis at the hardware level. However, the substantial capital returns through buybacks and dividends also indicate management’s confidence in the company’s competitive position without needing to retain all earnings for growth investments.

TheMeta AI spending trajectory illustrates the tension between strategic positioning and near-term earnings pressure. While total hyperscaler AI capital expenditure approaching $500 billion supports the infrastructure build-out thesis, the limited EPS growth despite substantial revenue expansion highlights the margin dilution from these investments. The market’s tolerance for sustained capital expenditure at these levels will likely depend on visible progress in AI application monetization and model capability improvements.

The accelerating dollar decline creates several risk vectors for market participants. Multinational corporations with significant foreign revenue exposure face translation headwinds that may pressure reported earnings. The potential for sharp currency movements around the Fed statement and subsequent Fed Chair announcement introduces elevated volatility risk for currency and interest rate-sensitive assets. Additionally, USD/JPY movements below 150 may trigger speculation about Japanese monetary intervention, adding another layer of potential policy response to currency dynamics [1][2].

The interest rate uncertainty surrounding the Fed leadership transition introduces policy trajectory risk. Markets have priced in significant rate cuts, and any indication that the new Fed Chair may be less dovish than anticipated could trigger substantial repricing across fixed income and equity markets. Conversely, aggressive rate cutting could revive inflation concerns and create uncertainty about the neutral rate level.

The concentration of capital expenditure among a small number of hyperscale technology companies creates sector-specific risks. Meta, Microsoft, Alphabet, and other major technology companies face margin compression from AI investments that have yet to fully translate into revenue growth [5]. The approaching Meta earnings release in February 2026 will provide critical insight into how the company communicates its AI investment strategy and timeline for returns [4][5].

The semiconductor equipment sector, while currently strong, faces medium-term risks if hyperscaler AI capital expenditure discipline changes. ASML’s substantial backlog provides near-term visibility, but order trends over the coming quarters will indicate whether the AI hardware demand trajectory remains sustainable.

Currency weakness creates opportunities for U.S. export-oriented companies and multinational corporations with significant international revenue. Sectors with substantial foreign sales may experience tailwinds from favorable currency translation.

The semiconductor equipment sector’s strength suggests continued allocation opportunities for investors seeking exposure to AI infrastructure build-out. ASML’s position as the only producer of extreme ultraviolet lithography machines provides structural competitive advantages, and the record backlog supports revenue visibility through 2026 and beyond [3].

Gold and precious metals represent opportunity for portfolio diversification given currency debasement concerns. Record gold prices reflect flight-to-quality flows that may persist if dollar weakness continues [1].

The Fed decision on January 28, 2026, represents an immediate market catalyst with potential for elevated volatility. The Meta earnings release in February 2026 will be the next major inflection point for AI spending sentiment. ASML’s order book trends over the coming quarters serve as leading indicators for semiconductor capital spending trajectory and warrant ongoing monitoring.

The market developments of January 28, 2026, reflect several converging forces shaping the investment landscape. President Trump’s endorsement of dollar weakness has accelerated currency declines, with the Dollar Index reaching its lowest level since February 2022 at 95.57 [1][2]. This development, combined with anticipation of the Fed’s first 2026 policy decision and potential leadership transition, creates elevated uncertainty about the interest rate trajectory.

ASML’s fourth-quarter 2025 results demonstrate continued strength in semiconductor equipment demand, with €9.7 billion in quarterly sales, record bookings of €13.2 billion, and a 2026 sales outlook of €34-39 billion [3]. The company’s explicit attribution of improved outlook to sustainable AI-related demand validates infrastructure investment themes at the hardware level.

Meta’s escalating AI capital expenditure—from $37 billion in 2024 to an expected $110-125 billion in 2026—illustrates the substantial investment requirements underlying AI compute ambitions [4][5]. However, analyst expectations of only 2% EPS growth despite 21% revenue growth highlight the near-term earnings pressure from these commitments.

Market performance has been mixed, with the S&P 500 reaching a record high of 6,978.59 while the Dow Jones declined, reflecting divergent sector performance amid these developments [0]. Investors should monitor currency hedging positions given dollar weakness, evaluate technology sector allocations in light of AI capital expenditure guidance, and assess semiconductor exposure given continued equipment demand strength.