The US Dollar maintains its strength as market participants grow anxious ahead of the release of the Consumer Price Index (CPI) data, expected to show an annual increase of 2.9% for January. With the previous month's CPI reading also recorded at 2.9%, investors are closely watching for any signals that might influence Federal Reserve policies. Meanwhile, the core CPI is predicted to stay above the Federal Reserve's target, at 3.1% year-over-year, contributing to market apprehension.
Hawkish comments from Federal Reserve Chair Jerome Powell have bolstered the US Dollar, drawing increased demand for the currency. Investors are also reacting to US President Donald Trump's intentions to introduce reciprocal tariffs through executive action, which further supports the Dollar's position. In contrast, the gold market is experiencing a sell-off for the second consecutive day, as trade war concerns provide a safety net for the XAU/USD pair against a significant downturn.
On the European front, the EUR/USD pair is trading steadily above 1.0350 during Wednesday's European trading hours. Simultaneously, the GBP/USD remains relatively flat near 1.2450 in the same session. The stability in these currency pairs reflects broader market caution as global stock markets brace for a lower opening, influenced by the prevailing tone of caution across financial markets.
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