EUR/USD currency pair continues to show its resiliency. It has remained above the 1.1200 level in the face of explosive US data that was decidedly better than expected. The duo recovered their footing and scuttled through the 1.1200 ceiling. This occurred after the US released much worse than expected Producer Prices. This data added to the somewhat dovish tone surrounding the flight of the US Dollar.
There is a clear explanation for the recent volatility in the EUR/USD currency pair. The US Producer Price Index disappointed. Firming retail sales prints worked to underpin the dollar. Continuing tailwinds from a strong report from the US labor market further boosted confidence in the nascent economic recovery. Yet, all of this positivity failed to boost strength for the US Dollar.
At the same time, gold prices have recovered from several-week lows around $3,120 per troy ounce. Yet, gold is still capped under the important $3,200 level, a sign of continued volatility in the precious metals market. XAU/USD pair is getting support on the back of marginal weakness in US Dollar. It too is reeling from effects of a nervous mood across the deeper markets.
The GBP/USD currency pair is breaking out above the 1.3300 level. Despite all of this upshot, earlier preview prints from the UK economic data managed to hardly cause a ripple. The second reason behind the British Pound’s upward momentum is US Dollar weakness across the board. This lack of strength has come on the back of a spate of disappointing prints from the US economic calendar, undermining demand for the dollar.
And as for the economy, we know that Federal Reserve Chair Jerome Powell doesn’t want to take a position on monetary policy these days. This vagueness has really shaped overall market sentiment. Investors need to discern the meaning of recent data on future interest rate moves. This view deepens GBP/USD’s wider fundamentals, price action, and sentiment.
With markets continuing to be jittery, both gold and the GBP/USD cross show the impact of this risk-off sentiment. Gold is trading unevenly under $3,200. On the flip side, GBP/USD is being lifted by the generalised weakness of the US dollar.