EUR/USD remains trapped within a narrow trend channel

KBC Market Research Desk KBC Bank

Currencies

EUR/USD remains trapped within a narrow trend channel. A break higher would probably require improving European data.

The pound sterling further erased pre-election gains as markets shifted focus to the potential difficult trade talks with the EU. The move ran into resistance near EUR/GBP 0.86. The Bank of England might decide over sterling’s near term future by the end of this month.

USD/JPY settled above 110 amid an overall constructive sentiment. The fall-out of geopolitical tensions at the start of the year on USD/JPY (rising yen) proved very short-lived.

The Czech currency enjoyed a nice bid on the back of improved sentiment, a solid economy and relatively high interest rates. EUR/CZK 25.00/15 is key support.

The Hungarian forint remains close to historically weak levels. High inflation (4%) turns real interest rates negative, hurting the currency.

Polish zloty rallies as markets bet the central bank will raise rates sooner than later with inflation running high. EUR/PLN 4.24 is an important technical reference.

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KBC Market Research Desk

KBC Bank

EUR/USD struggles near 1.1850, with all eyes on US CPI data

EUR/USD holds losses while keeping its range near 1.1850 in European trading on Friday. A broadly cautious market environment paired with a steady US Dollar undermines the pair ahead of the critical US CPI data. Meanwhile, the Eurozone Q4 GDP second estimate has little to no impact on the Euro.

GBP/USD recovers above 1.3600, awaits US CPI for fresh impetus

GBP/USD recovers some ground above 1.3600 in the European session on Friday, though it lacks bullish conviction. The US Dollar remains supported amid a softer risk tone and ahead of the US consumer inflation figures due later in the NA session on Friday.

Gold remains below $5,000 as US inflation report looms

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US CPI data set to show modest inflation cooling as markets price in a more hawkish Fed

The US Bureau of Labor Statistics will publish January’s Consumer Price Index data on Friday, delayed by the brief and partial United States government shutdown. The report is expected to show that inflationary pressures eased modestly but also remained above the Federal Reserve’s 2% target.

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