Dollar Holds Steady, Eyes Fixed on US Inflation Data

London: 12 February 2024 (TraderMade): While Asian markets remained closed on Monday, the US Dollar edged higher, setting the stage for a potentially volatile week brimming with crucial economic data releases. Inflation numbers from the US take center stage - as market participants decipher when the Federal Reserve might shift its stance on interest rates.

The GBPUSD pair dipped 0.14% to 1.2612.

The EURUSD pair dropped 0.17% to 1.07662.

The USDJPY pair slightly decreased by 0.08% to 149.148.

_{Please note that the live rates are taken at about 01:43 PM GMT - compared to Friday, 9 February Close values.}

Dollar Inches Upward, Awaits Inflation Verdict

• The Greenback saw a slight bump despite a subdued start due to the Asian holiday.
• Market focus gravitates toward the release of US Consumer Price Index (CPI) data on Tuesday.
• Positive inflation figures could bolster the Dollar, reflecting continued tightening by the Fed.
• Weaker inflation numbers, however, might hint at an earlier rate cut, potentially weakening the Dollar.

Other Major Currency Movements

Euro (EURUSD): Briefly climbed to a one-week high before retreating - awaiting US CPI data for direction.

Pound Sterling (GBPUSD): Expected to dip further on concerns about a potential recession and rising inflation in the UK.

Japanese Yen (USDJPY): Strengthened marginally - but likely to be swayed by US economic developments. Intervention warnings loom if it surpasses 150.

_{Please note that this is not financial advice.}

Key Factors Shaping the Dollar's Fate

Changing Expectations for Rate Cuts: Markets adapt their projections for policy tightening by central banks based on evolving inflation trends.

Strong US Jobs Data: Pushed back the possibility of a March Fed rate cut, supporting the Dollar in the short term.

ECB Rate Cuts: Market perception now places the first cut by the European Central Bank later than initially anticipated.

US CPI Data (Tuesday): This release stands as the pivotal event, potentially altering the trajectory of the Dollar depending on the inflation figures.

What Lies Ahead

This upcoming week promises to be dynamic for the foreign exchange market as investors weigh the implications of various economic data releases. The US inflation report takes precedence, potentially influencing the Federal Reserve's stance and consequently impacting the Dollar's value.

Stay informed as the week unfolds and the crucial data unveils its verdict!

_{Image by Alexander Miler on Unsplash}