Forex Today: Markets turn their attention to US inflation

Renewed speculation about a probable US-Iran agreement has put the US Dollar (USD) under fresh selling pressure, eroding part of Friday’s strong gains. The prospect of a deal has also weighed heavily on crude oil prices.

With US inflation figures approaching, investors have remained cautious as the US Dollar Index (DXY) opened the week lower, slipping back below 102.00 alongside a modest fall in US Treasury yields across the curve. The NFIB Business Optimism Index is first on the release calendar, followed by ADP Employment Change Weekly, the Inflation Rate and the API’s weekly US crude oil inventories report.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

After two consecutive daily declines, EUR/USD has recovered momentum to test the key 1.1200 resistance level. Speeches from the ECB’s Cipollone and Lane are the only events on an otherwise empty domestic calendar.

A broad advance among risk-sensitive currencies has helped GBP/USD regain ground above 1.3400, with sizeable gains reversing two successive daily falls. On the calendar, the BRC Retail Sales Monitor precedes speeches from the BoE’s Lombardelli and Pill.

A break below 158.00 has left USD/JPY on the defensive at the start of the week, although its multi-day consolidation has continued for another session. The forthcoming releases comprise Household Spending, Current Account figures, Bank Lending data and the Eco Watchers Survey.

A marked improvement in appetite for risk assets has lifted AUD/USD back above 0.6900, ending a run of two daily declines. Australia’s next scheduled releases are Westpac Consumer Confidence and NAB Business Confidence.

Fresh optimism surrounding the US-Iran-Hormuz conflict has sent front-month WTI futures (December contract) lower again after two consecutive daily gains. Prices have edged towards multi-week lows below $87.00 per barrel.

Renewed US Dollar selling, lower US Treasury yields across the curve and another day of falling crude oil prices have supported Gold, which has reached two-day highs above $4,100 per troy ounce.