Forex Today: Markets now look at US inflation

Pablo Piovano FXStreet

Firmer-than-expected US GDP figures lent support to the US Dollar and further reinforced the already resilient stance of the economy, relegating to a secondary role the impassive ECB event, where C. Lagarde kept the summer rate cut in the pipeline.

Here is what you need to know on Friday, January 26:

The resurgence of buying interest in the greenback sparked a strong rebound in the USD Index (DXY), especially after flash Q4 GDP figures came in above estimates and despite declining US yields across the curve. Looking at Friday’s US docket, the salient event will be the release of inflation figures tracked by the PCE for the month of December, seconded by Personal Income, Personal Spending and Pending Home Sales.

EUR/USD sank to the proximity of the 2024 lows near 1.0820 on the back of usual dollar dynamics and the irresolute message from the ECB at its gathering. Moving forward, GfK will release its Consumer Confidence gauge for the month of. February, which will be the only scheduled release on the old continent, at the end of the week.

The intense bounce in the greenback kept GBP/USD’s price action depressed and forced it to break below the key 1.2700 support. On Friday, Gfk’s Consumer Confidence reading is due across the Channel.

USD/JPY partially faded Wednesday’s marked downtick and gathered decent upside traction well north of 147.00 the figure. The BoJ will publish its Minutes at the end of the week, while the final prints of the Coincident Index and the Leading Economic Index are also on tap.

Another inconclusive session saw AUD/USD maintain its trade around 0.6580, following another fruitless move beyond the 0.6600 barrier on Friday.

Geopolitics, shrinking US oil production, and the larger-than-expected weekly drop in US crude oil inventories, coupled with Chinese stimulus, lifted the barrel of WTI to a new two-month high past the $77.00 mark per barrel.

While Gold prices remained stuck in their current consolidative range, Silver prices rebounded further and clinched their third straight day of gains, this time flirting with the $23.00 mark per ounce.

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

RBNZ set to pause interest-rate easing cycle as new Governor Breman faces firm inflation

The Reserve Bank of New Zealand remains on track to maintain the Official Cash Rate at 2.25% after concluding its first monetary policy meeting of this year on Wednesday.

UK jobs market weakens, bolstering rate cut hopes

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.

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.