Forex Today: Yields once again in the driver’s seat

FXStreet Team FXStreet

What you need to know on Thursday, February 25:

US Treasury yields reached fresh multi-month highs but pulled down as Wall Street advanced. The DJIA closed at fresh record highs, while the S&P trimmed a got part of its latest losses. The dollar traded accordingly, advancing alongside yields and later retreating, ending the day lower against most high-yielding rivals.

EUR/USD can not attract investors, stuck below the 1.2170 price zone. GBP/USD jumped to 1.4237 but retreated some 100 pips ahead of the US close. The AUD and the CAD reached fresh 2021 highs against the greenback, settling nearby. USD/JPY trades around 106.00 not far from this year’s high, getting a double boost from equities and yields.

The Bank of England took note of the pound’s strength, as BOE’s Deputy Governor Ben Broadbent, testifying on monetary policy, noted that sterling appreciation could have some depressive effect on inflation, adding that inflation expectations are not a level that would be worrisome for policymakers.

US Federal Reserve head, Jerome Powell, repeated his testimony before another Congress committee. His words had a limited impact on the dollar, but for sure boosted equities as he reiterated that substantial progress in employment is needed before talking of easing monetary support, adding that the US is far from returning to full employment.

Gold settled below 1,800 while WTI advanced above $63.00 a barrel, reflecting the upbeat tone of US equities .

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EUR/USD flirts with daily highs, retargets 1.1900

EUR/USD regains upside traction, returning to the 1.1880 zone and refocusing its attention to the key 1.1900 barrier. The pair’s slight gains comes against the backdrop of a humble decline in the US Dollar as investors continue to assess the latest US CPI readings and the potential Fed’s rate path.

GBP/USD remains well bid around 1.3650

GBP/USD maintains its upside momentum in place, hovering around daily highs near 1.3650 and setting aside part of the recent three-day drop. Cable’s improved sentiment comes on the back of the Greenback’s irresolute price action, while recent hawkish comments from the BoE’s Pill also collaborate with the uptick.

Gold clings to gains just above $5,000/oz

Gold is reclaiming part of the ground lost on Wednesday’s marked decline, as bargain-hunters keep piling up and lifting prices past the key $5,000 per troy ounce. The precious metal’s move higher is also underpinned by the slight pullback in the US Dollar and declining US Treasury yields across the curve.

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Bitcoin's upside remains largely constrained amid weak technicals and declining institutional interest. Ethereum trades sideways above $1,900 support with the upside capped below $2,000 amid ETF outflows.

Week ahead – Data blitz, Fed Minutes and RBNZ decision in the spotlight

US GDP and PCE inflation are main highlights, plus the Fed minutes. UK and Japan have busy calendars too with focus on CPI. Flash PMIs for February will also be doing the rounds. RBNZ meets, is unlikely to follow RBA’s hawkish path.

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