The US Dollar remains robust as markets display a sense of unease ahead of the release of the US Consumer Price Index (CPI) data. In an atmosphere thick with anticipation, the greenback's strength is bolstered by recent hawkish comments from Federal Reserve Chair Jerome Powell and US President Donald Trump's plans for reciprocal tariffs via executive action. Meanwhile, gold prices have attracted sellers for the second consecutive day, driven by a modest uptick in the US Dollar.
The Consumer Price Index is anticipated to reveal an annual increase of 2.9% for January, maintaining the same pace as the previous month. Analysts predict that the core CPI will exceed the Federal Reserve's target, standing at 3.1% year-on-year. These projections are causing jitters in global stock markets, which are expected to open lower as caution permeates financial sectors worldwide.
In foreign exchange markets, the EUR/USD pair has managed to hold steady above 1.0350 during European trading hours on Wednesday. Simultaneously, GBP/USD is trading modestly flat around 1.2450, reflecting a subdued mood in currency markets as traders wait for crucial inflation data. The cautious tone is likely to persist until more clarity emerges from the CPI figures.
The US Dollar's firmness also limits any corrective slide for the safe-haven XAU/USD pair, as trade war fears continue to loom large. The outlook on trade conflicts keeps demand for the Dollar relatively robust, further influencing precious metals and currency pairs.
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