Forex Market Update: Focus Shifts to US Inflation Data

The recent resurgence of buying interest in the US dollar has triggered a notable rebound in the USD Index (DXY). This rally gained momentum, particularly after the release of better-than-expected flash Q4 GDP figures, despite a decline in US yields across the curve. The upcoming highlight on Friday’s US economic calendar is the release of inflation data, including the Personal Consumption Expenditures (PCE) for December, alongside key indicators like Personal Income, Personal Spending, and Pending Home Sales.

EUR/USD experienced a decline, reaching close to its 2024 lows near 1.0820, influenced by standard dollar dynamics and the ambiguous message from the European Central Bank (ECB) during its recent meeting. Looking ahead, GfK will unveil its Consumer Confidence gauge for February, the sole scheduled release in Europe for the week.

The robust rebound in the US dollar weighed on GBP/USD, causing a break below the crucial 1.2700 support level. Gfk’s Consumer Confidence reading is anticipated on Friday in the UK.

USD/JPY, after a partial recovery from Wednesday’s decline, gained significant upside traction, surpassing the 147.00 mark. Towards the end of the week, the Bank of Japan (BoJ) will publish its Minutes, accompanied by the final prints of the Coincident Index and the Leading Economic Index.

AUD/USD had an indecisive session, hovering around 0.6580 and struggling to breach the 0.6600 barrier on Friday.

Various factors, including geopolitical events, a reduction in US oil production, a significant weekly decrease in US crude oil inventories, and Chinese stimulus measures, propelled WTI crude oil prices to a new two-month high above $77.00 per barrel.

Gold prices remained within their current consolidative range, while Silver prices recorded a third consecutive day of gains, nearing the $23.00 per ounce mark.

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