Market Outlook

EUR/USD extends its daily slide and trades at a fresh weekly low below 1.1850 in the second half of the day on Tuesday. Renewed US Dollar strength, combined with a softer risk tone keep the pair undermined alongside downbeat German ZEW sentiment readings for February. 

GBP/USD remains under heavy bearish pressure and falls toward 1.3500 on Tuesday. The UK employment data highlighted worsening labor market conditions, bolstering bets for a BoE interest rate cut next month and making it difficult for Pound Sterling to stay resilient against its peers.

Gold (XAU/USD) stages a rebound but remains deep in negative territory below $4,950 after touching its weakest level in over a week near $4,850 earlier in the day. Renewed US Dollar strength makes it difficult for XAU/USD to gather recovery momentum despite the risk-averse market atmosphere.

The cryptocurrency market extends weakness with major coins including Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) trading in sideways price action at the time of writing on Tuesday.

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months. 

Safe-haven flows dominate the action in financial markets early Tuesday as trading conditions normalize following the US holiday. The economic calendar will feature ZEW sentiment figures from Germany, the weekly ADP Employment Change 4-week Average data from the US and January inflation report from Canada.