Forex Today: Sentiment improved but the US Dollar remains strong ahead of US CPI

What you need to take care of on Tuesday, February 14:

Tensions between the US and China weighed on the market mood at the weekly opening, with the Greenback making the most out of it. However, a better market mood during European trading hours pushed the US Dollar into the red across the FX board.

Still, the absence of relevant macroeconomic releases and the upcoming US Consumer Price Index update limited the intraday US Dollar slide. Market players await the release of the January United States Consumer Price Index (CPI). Inflation is foreseen raising at an annualized pace of 6.2%, easing from 6.5% YoY in December. The core reading, excluding volatile food and energy prices, is expected at 5.5%. Although the US Federal Reserve does not base its decision on this particular figure, it has a high impact on financial markets, as it reflects price pressures in the country.

The EUR/USD pair bottomed at 1.0655, bouncing towards the 1.0720 price zone. The pair retains gains in early Asia, despite ignoring early headlines. The European Commission released the quarterly Economic Growth Forecasts report. Economic growth in the Euro Zone has been upwardly revised, now seen at 0.9%. Additionally, inflation forecasts have been downwardly revised to 5.6% for this year and 2.5% in 2024.

The British Pound was among the best performers, advancing vs its American rival to 1.2144, retreating modestly ahead of the close. The UK will publish its latest employment figures on Tuesday.

The AUD/USD pair currently trades at around 0.6960, while USD/CAD is down to the 1.3330 region, with commodity-linked currencies benefiting from the better tone of Wall Street. US indexes pulled back from their intraday highs but anyway ended the day with gains.

Government bond yields seesawed across the day, appreciating during Asian trading hours but shedding some ground at the end of the day amid a better mood. However, the yield on the 2-year Treasury note advanced, while that on the 10-year note finished the day pretty much unchanged.

Spot gold eased and trades at fresh February lows just above $1,850 a troy ounce. Crude oil prices, on the other hand, followed equities with WTI up to $80 a barrel.