The EUR/USD currency pair declined toward 1.0300 during the American session on Wednesday, following the release of inflation data by the US Bureau of Labor Statistics (BLS). The BLS reported that the annual inflation rate rose to 3% in January, up from 2.9% in December. The monthly Consumer Price Index (CPI) also increased by 0.5% in January, contributing to the strengthening of the US Dollar. Meanwhile, gold continued its downward trajectory, extending its correction to the $2,880 area and attracting sellers for the second consecutive day.
The 10-year US Treasury bond yield remained steady above 4.5% on Wednesday, adding to the market's response to the inflation report. The data provided a boost to the US Dollar, which saw an immediate reaction, bolstering its position in global markets. Despite a recovery in the US Treasury bond yield on Tuesday, the XAU/USD pairing struggled to gain traction, reflecting the persistent pressure on gold prices.
Gold's recent correction comes after reaching record-highs, with the precious metal experiencing significant selling activity. The combination of strengthened US Dollar and steady Treasury yields has contributed to this trend, as investors assess their portfolios in light of the latest economic indicators.
The inflation report and its subsequent impact on currency and commodity markets underscore ongoing economic challenges. The data highlights the complexities facing global economies as they navigate post-pandemic recovery efforts and monetary policy adjustments.
In a historical context, former US President Donald J. Trump previously wielded tariffs as a strategic tool during his tenure. His administration targeted several countries, including Mexico, Canada, China, and the European Union (EU), with tariffs that aimed to address trade imbalances and protect American industries.