The cautious market mood continues today as the DXY index holds steady slightly above 106.00. US CPI is the key data point for the week and markets are waiting in high anticipation for the outcome on Wednesday.
Recent gains towards 1.0600 have eroded away as the pair consolidates around 1.0560 as markets wait for the ECB monetary policy meeting on Thursday.
A mixture of increased dovish bets surrounding the ECB meeting, along with softer US dollar movement, is seeing the pair in a holding pattern until market dynamics evolve later this week.
Broader US dollar softness has led to the pair touching the 1.2800 level before settling to 1.2750 ahead of US CPI data coming out tomorrow.
After hitting a three-week high, cable awaits US inflation data during a relatively light UK data week, with a bearish bias while the pair holds below the key 200-day SMA.
EURGBP trades with mild gains around 0.8280, however any upside is limited by rising bets that the BoE will maintain a gradual script for rate cuts, providing support for the pound against the euro.
World News
The Reserve Bank of Australia (RBA) followed market expectations and left the OCR unchanged at 4.35% after its December meeting. The RBA noted that “inflationary pressures are declining in line with these recent forecasts, but risks remain.” AUDUSD was last seen trading at 0.6380 and dropping more than 0.8% on the day, coming under bearish pressure following the announcement.
China recently announced plans to embrace a “moderately loose” monetary policy in 2025, moving away from the typical prudent strategy they’ve kept for the past 14 years.
