What is the TACO trade and why does it matter today?

The TACO trade is a pattern where Trump talks tough on policy, edges toward escalation, then backs off. Traders buy risk on pauses, fade volatility, and rotate to cyclicals. It matters today because a tariff pause tied to a Greenland framework sparked a measured rebound, but crowding makes late entries risky.

How could Trump tariffs Europe affect Canadian investors?

Tariffs on Europe can hit autos, machinery, and luxury goods, with spillovers to Canadian suppliers and rails. Risk-off moves often lift the U.S. dollar, which can help CAD-based investors owning U.S. assets, but it may raise import costs. We suggest smaller positions, clear stop levels, and flexible hedges.

Is the Dow overbought after today’s move?

Short-term signals are stretched. RSI near 65, CCI above 130, and Williams %R near -5 suggest limited near-term upside. We prefer adding on dips toward 48,570 or 48,000 rather than chasing strength. If momentum cools without bad news, the trend can resume. If tariffs return, risk increases quickly.

What are practical steps for Canadians using the TACO trade?

Plan entries near support, not at resistance. Hedge U.S. exposure to CAD when risk improves and unhedge if tariff noise worsens. Keep positions smaller, use staged buys, and predefine exits. If headlines shift against you, reduce cyclicals quickly and move toward defensives, cash, and selective duration.

Global Market Insights

^DJI Today: January 22 TACO Trade Tested as Trump Pauses EU Tariffs

ByHuzaifa Zahoor January 22, 2026January 22, 2026

The TACO trade moved back into focus after Donald Trump paused new EU tariffs tied to a Greenland framework. The Dow Jones Industrial Average (^DJI) rose to 49,077.24, up 1.21%, as traders leaned into the TACO trade playbook. Relief may be smaller this time because markets now expect Trump to blink. Canadian investors should track cross‑border supply chains, CAD moves, and rate expectations as this policy twist plays out.